Rice importers expected to pass on costs if ordered to maintain reserves

THE Department of Agriculture’s (DA) proposal to require private importers to share the responsibility of maintaining the country’s rice reserves could send retail prices higher, a farmers’ group warned.

Federation of Free Farmers National Manager Raul Q. Montemayor said importers will likely charge consumers for the expense of maintaining extra inventory.

“If importers shoulder the cost for importing the government share, they will try to recover that by raising their selling prices which may defeat the purpose of buffer stocks,” he said via Viber.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. floated a plan to Senators that private importers should take some responsibility for maintaining the national rice reserves, which are tapped during emergencies.

“If we aim to have a 20-day rice buffer stock, we’re thinking of a 50-50 split between the National Food Authority (NFA) and the private sector,” he said.

Under the proposed setup, rice imports will follow a controlled model similar to the sugar import program of the Sugar Regulatory Administration, under which only qualified importers are given import allocations. 

Importers, in turn, would be obligated to procure palay (unmilled rice) from farmers at fair prices to build up their reserves.

Mr. Montemayor noted that the local purchase requirement for importers has been questioned in the World Trade Organization as a restrictive policy.

In Singapore, importers are required to reserve 10% of their imports as government reserves, but noted that “50-50 appears too big.”

“Sugar has a different scheme. SRA issues sugar import quotas, arriving shipments are put into reserve and cannot be sold without SRA approval,” he said. “But the government does not acquire any of the imports.”

Marie Annette Galvez-Dacul, executive director of the UA&P Center for Food and Agri Business, said the proposal, among the DA’s suggested amendments to the Rice Tariffication Law, is “a welcome shift from dependence on imports to strengthening supply chains.”

But she said, “execution will be the real test.”

“I agree with this arrangement where private rice importers are given quotas accordingly,” former agriculture secretary William Dar said.

“We should further support the idea that provinces with less rice production to maintain buffer stocks as well,” he added. — Kyle Aristophere T. Atienza