Legal Rights

Private traders no longer to import rice

Rice industry groups that have been complaining of the current government’s apparent lack of will to curb smuggling — consequently, eroding farmers’ incomes — welcomed the move.

The task of importing rice to ensure food security will now be solely in the hands of the state grains agency, the National Food Authority (NFA), incoming President Rodrigo R. Duterte’s choice for agriculture secretary and a former governor of North Cotabato, Emmanuel F. PiAol, said in a radio interview.

Rice imports are politically sensitive in the country, with the government pushing to keep tariffs high to protect local farmers but also sometimes needing to quickly import thousands of tons to ensure adequate domestic supplies.

Private traders are currently allowed to bring in up to 805,200 tons annually, with a 35% tariff, under a World Trade Organization (WTO) agreement.

“The directive of our president-elect is that there will be no more rice importation by the private sector. It will only be the NFA,” said Mr. PiAol, a former governor of North Cotabato.

Rice importation is regulated by the NFA, which issues permits and allocations to private traders via auctions — a practice prone to abuse because permits can be sold by importers or officials award them only to favored traders.

In 2014, the country moved to loosen restrictions on rice imports by reducing tariffs to 35% from 40% and increasing the so-called annual minimum access volume covered by such tariffs to 805,200 tons from 350,000 tons.


A group of rice millers and wholesalers welcomed the impending policy change.

“Very good, that’s a very positive development,” said Herculano C. Co, Jr., president of the Philippine Confederation of Grain Associations, Inc., in a mobile phone message.

“The import permit given to the private sector was the biggest blunder for the rice sector as most — if not all — use it to smuggle rice, depressing the price of palay produce of farmers.”

The leader of a group of 33 farmer groups shared this sentiment.

“This has been our position ever since… three years ago. Smuggling has become rampant with private traders allowed to import, because permits are recycled,” Rosendo O. So, president of the Samahang Industriya ng Agrikultura, said partly in Filipino in a telephone interview.

Saying it is difficult to monitor imports of rice traders under this loose permit system, Mr. So said it is easier to control imports via government-to-government (G2G) deals.

“With G2G, you know where the imports will land, who the parties to the transaction are and what the volume is,” he explained.

“We have been batting for that (preventing private traders from importing rice) as one of the solutions to curb rice smuggling.”

But a Manila-based rice broker said that getting around the WTO agreement could be an obstacle to Mr. PiAol’s plans.

Private rice importers under the scheme can buy a maximum of 293,100 tons each from Thailand and Vietnam, as well as 50,000 tons each from China, India and Pakistan. Importers can also buy up to 15,000 tons from Australia, 4,000 tons from El Salvador and up to 50,000 tons from other countries.

Rice traders in Thailand and Vietnam were monitoring the situation but some expressed concern about reduced demand.

“It doesn’t make much difference on who buys, what is important is how much they buy,” said a Bangkok-based trader.

In Vietnam, a trader said Manila’s ban on private sector importation could mean lower demand if Vietnam had to only work with the NFA for deals.

The new plans for rice trading come as benchmark Thai rice prices RI-THBKN5-P1 hit a two-year high on Tuesday, as drought cuts the output of Asia’s top growers.

Last week, Mr. Duterte’s campaign spokesman Peter T. LaviAa said a plan by the incumbent government to import an additional 500,000 tons of rice this year would be reviewed and said there was a preference for more government-to-government deals.

The Philippines regularly imports more than a million tons a year of rice for its growing population, although Lavina said the Mr. Duterte government wants the country to become self sufficient in one to two years.

Source: Bworld Online