By Adrian H. Halili, Reporter

RICE IMPORTS are expected to surpass projections issued by both the US and Philippine Agriculture departments due to the El Niño-induced dry conditions, analysts said.

Calixto V. Chikiamco, Foundation for Economic Freedom president, said that due to El Niño and the possibility of more typhoons this year, “it’s highly likely that our imports will be higher than the DA (Department of Agriculture) forecast.

The government weather service, known as PAGASA (Philippine Atmospheric, Geophysical and Astronomical Services Administration), has said that El Niño is likely to peak in late 2023 and early 2024.

“Importing is more logistically simple and efficient and therefore traders can fulfill the forecasted deficit with more imports,” Mr. Chikiamco said in a Viber message.

The US Department of Agriculture (USDA) said in its latest Grain: World Markets and Trade report, that the Philippines is projected to import 3.8 million metric tons (MT) during the marketing year 2023-2024.

The Philippine DA, however, said imports will be “much less” than the USDA’s forecast.

“We expect to import much less than USDA’s 3.8 million MT projected rice imports in 2023. This indicates that the volume we imported in 2022 was much more than the deficit,” Leocadio S. Sebastian, DA undersecretary for rice development, said in a statement.

Mr. Sebastian added that domestic rice production must step up to curb the need for imports.

“The uncertainty of depending on external sources for our staple and the high price of imported rice makes it imperative for us to produce more locally,” he said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the proposed reduction of rice import tariffs, which are designed to somewhat temper imports, may also cause imports to surge.

“The proposed temporary reduction in rice import tariffs would reduce the price of imported rice, which could further boost demand for imported cheaper rice varieties,” Mr. Ricafort said in a Viber message.

The Department of Finance (DoF) is proposing to cut tariffs for rice amid a surge in the domestic retail price.

Finance Secretary Benjamin E. Diokno said that the DoF proposed a reduction of the “35% rice import tariff rates, to both ASEAN (Association of Southeast Asian Nations) and MFN (Most Favored Nation) rates, temporarily to zero percent or a maximum of 10% to arrest the surge in rice prices.”

The government imposed a temporary price ceiling on regular-milled rice and well-milled rice of P41 per kilogram and P45 per kilo, respectively.

Federation of Free Farmers National Manager Raul Q. Montemayor said farmers may lose billions because traders will offer lower farmgate prices for their harvest in response to competition from cheaper imports.

Mr. Montemayor said during a Tariff Commission hearing that rice retail prices may fall by P7 per kilo if tariff rates are slashed.

“If rice prices go down by P7 per kilo, the effect of that in palay (unmilled rice) prices would be about (a drop of) P4.44 per kilo,” he said.

“If there is a direct transmission in tariff reduction into a reduction in palay prices, multiply that by palay production in 2022, the farmer’s losses will be about P88 billion in terms of reduced income,” he added.

In 2022 palay production was 19.75 million MT.