There are many signs showing that the changes in the Philippines' rice import policy just aims to create a competition among rice exporters which will force prices down, according to Nguyen Dinh Bich, a well known trade expert in Vietnam. The Philippines remains the biggest rice importer from Vietnam and consumes 25 percent of Vietnam's total exports. Therefore, the news that the country has decided to apply policies on persifying import markets and importers has worried Vietnamese exporters.
Just within 1.5 months in late 2009, the Philippine government allowed the National Food Agency (NFA) to open four bids to seek 2.176 billion tons of rice for 2010 and it finally bought the volume of rice at 637 dollars C&F.
However, everything seems to be quite different this year. To date, NFA has just completed negotiations on importing 200,000 tons of rice from Vietnam ($445 per ton FOB, 25 percent broken rice). The process of allowing private companies to join bids to seek the import of 660,000 tons of rice has just initiated. Therefore, if everything goes smoothly, the companies will only begin contacting exporters from different countries to conduct negotiations on import deals.
If the country imports 660,000 tons of more rice, the total volume of rice it will import in 2011 will be 860,000 tons. However, a question has still been raised that whether 860,000 tons would be the final decision.
Nguyen Dinh Bich, a well known trade expert in Vietnam, wrote on Thoi Bao Kinh Te Saigon that there is every reason to believe that the moves made by the Philippines so far are just part of a larger strategy that aims to import more rice at the lowest possible prices.
According to the US Agriculture Department, in the last three consecutive crops, the volumes of rice imported by the Philippines were all equal to or higher than two million tons (2.5, 2 and 2.4 million tons).
The department has predicted the import volume will be 1.5 million tons for this year. Meanwhile, the Philippine government has announced it will import 860,000 tons this year, or 640,000 tons lower than the predicted level.
The figures have raised doubts among analysts, because 640,000 tons is an overly high figure, which is well higher than the expected rice output in the Philippines.
In the last three years, the total rice output of the Philippines was only 10 million tons on average, while the country consumed 13 million tons. In such conditions, even though the predicted rice output increase of 580,000 tons in the Philippines comes true, the import volume of 1.5 million tons will still make the country's reserves decrease to 2.23 million tons from 3.35 million tons last crop.
If the figures of the output and consumption predicted by the US Agriculture
Department come true, and the Philippines only imports 860,000 tons as announced, the rice stock of the nation would drop to 1.6 million tons. The small reserved volume proves to be too risky for the country with the population of approximately of 100 million people, and a region that always witnesses natural calamities.
There are also signs that show that the prediction about the 580,000 ton output increase in 2011 may not come true. In order to reduce imports by 640,000 tons, the Philippines will have to increase the rice output of 1.8 million tons of rice, nearly an impossible mission.
While Myanmar has to close doors on the rice market to curb inflation, and Pakistan also has to cut down the exported volume this year, the main targeted markets for Filipino private companies will be Thailand, Vietnam and Cambodia. Thailand's biggest export volume to the Philippines was 600,000 tons (in 2008). Meanwhile, Cambodia's rice export capacity proves to be limited if compared with the import volume of the Philippines.
In related news, Vietnam plans to export two million tons of rice in the second quarter of the year, an increase of 150,000 tons over the first quarter. To date, Vietnamese exporters have orders to export 1.6 million tons or rice, and they only need to seek orders to export the remaining 400,000 tons.
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