No go-ahead for NFA to import rice despite low inventories

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A worker carries a sack of rice at the National Food Authority warehouse in Quezon City, suburban Manila on July 27, 2010. -- AFP

THE National Food Authority (NFA) said on Wednesday that despite a decline in its rice inventory, the economic managers who control imports do not see an urgent need to import the commodity.

The grains procurement agency has said that stockpiles were thinning, with Reuters reporting that NFA stocks are at 60,000 tons, equivalent to two days’ demand, the lowest level in two decades. However, this estimate was disputed by the NFA.

The reported buffer stock is far below NFA’s mandate to maintain 15 days’ supply at any given time.

Reuters also reported that the NFA Council, a panel of senior economic managers which must approve rice orders from overseas, sees no current need to import because of ample inventory in the market.

“Right now… the council feels the need to import is not that urgent,” the news agency quoted Mercedita A. Sombilla, a Council member, as saying.

“There is no shortage of rice held by commercial traders and households,” NFA administrator Jason Laureano Y. Aquino added in a briefing.

In the briefing, however, Mr. Aquino said that the actual inventory held by the NFA is 35 days’ demand. He added that an import order takes 45 days to ship, suggesting a 10-day gap between the depletion of NFA stock and the arrival of imports if the order were placed today.

The NFA releases rice into the market to help boost supply and stabilize prices, but has had to divert supply to Region V, where agriculture has been disrupted by activity on Mount Mayon. The volcano’s eruption has also sent thousands of people to evacuation centers, where they are fed by local governments and the Department of Social Welfare and Development (DSWD) in part with rice from the NFA.

The NFA’s purchase prices are uncompetitive with those offered by commercial traders, which means it is hampered from replenishing its inventory from domestic sources, leading the agency to seek permission to import as early as November.

“That’s what we requested for, another 250,000 metric tons of rice (for import) but there’s still no approval (from the council),” Mr. Aquino added.

During the briefing, Grain Retailers’ Confederation of the Philippines, Inc. (GRECON) President Jaime O. Magbanua said that despite the NFA’s declining stocks, regional representatives of GRECON have noted no unusual demand pressures. — Reuters with a report from Anna Gabriela A. Mogato