Gov’t hopes to head off impending price hike

RP races to secure rice supply for 2010

MANILA, Philippines – The Philippines could import as much as three million tons of rice next year as the world’s largest buyer of the grain, worried about a potential spike in prices, moves quickly to secure supplies.

The government’s call for a fourth import tender would bring in a total 2.05 million tons of milled rice until May—already above the 1.8 million tons secured for the whole of 2009 and near the record 2.3 million tons bought in 2008.

The government has already scheduled three tenders for next month happening a week apart.

“We’re trying to take advantage of better prices because we foresee that, maybe next year, especially if India will come in, prices will really go up,” Ludovico Jarina, deputy administrator at National Food Authority (NFA), told reporters.

“It may not be as high as in 2008, but it’s definitely going up.”

Thailand’s benchmark 100 percent B white rice stands at $565 a ton, up from $520 in mid-October shortly after Manila announced its first tender for 2010.

The grade nearly trebled to a record $1,080 in April 2008, driven by a series of Philippine tenders and export curbs by key producers.

India, the world’s second largest producer and normally a major exporter as well, has issued small tenders after its rice crop fell below consumption because of the worst monsoon in nearly 40 years.

“I think many were expecting the Philippines to buy between 2.2-2.4 million tons of rice for 2010, but maybe the pace of buying is a little bit surprising,” said a Thai rice exporter based in Bangkok.

The agency’s Dec. 15 tender for 600,000 tons of rice would be its last this year, although total purchases for 2010 could hit 3 million tons, an NFA official said.

“That’s the worst case scenario, you’ll never know if harvests may be damaged again, and there’s also El Niño,” said NFA spokesperson Rex Estoperez.

The Philippines, which lost the equivalent of around 845,000 tons of milled rice when storms hit key rice-growing areas in the main Luzon island from late September, has options for purchases thanks to high rice stocks in producing countries.

Thailand has proposed selling the Philippines a million tons of rice each year for the next three years.

“I think that is good for the Philippines because, in a way, you’re being guaranteed that any time you need it, you have supply,” Jarina said.

Thailand has plans to release state-held rice stocks equivalent to 6 million tons of milled rice by selling around 950,000 tons through government-to-government deals with countries including the Philippines, Malaysia, Indonesia and India.

The Philippines has a similar three-year deal with Vietnam, which has committed to supply 1.5 million tons annually from 2008. —Reuters