VIETNAMESE Prime Minister Pham Minh Chinh proposed a five-year rice supply deal to President Ferdinand R. Marcos, Jr., subject to negotiation at minister level, the Office of the President said on Thursday.

The proposal could “stabilize rice supply and pricing” in the Philippines “amid the current volatility in supply,” the Palace said in a statement, citing Mr. Marcos.

“I would suggest that the Ministries of Trade and Agriculture of the two countries will work together so that we can come up with a five-year agreement on supply of rice,” Mr. Pham told Mr. Marcos in a bilateral meeting with Mr. Pham on the sidelines of the ASEAN Summit in Jakarta on Thursday.

Mr. Marcos welcomed a long-term supply agreement as an opportunity to dampen volatility in domestic rice prices.

“The suggestion of a longer-term arrangement is an important one because just having that as an assurance will stabilize the situation, not only for the Philippines, but for all of us in the region,” he said.

“We will work continuously (to arrive at an agreement)… I am very confident that we will once again come to a consensus and agree,” he added.

The Philippines signed a rice supply deal with Vietnam in May 2008, with Vietnam selling the Philippines up to 1,500,000 metric tons of rice between 2008 and 2010 in a government-to-government transaction.

A 2019 law liberalized the rice import market, allowing private importers to ship in rice in exchange for the payment of a 35% tariff on grain from Southeast Asia. The law had removed the National Food Authority’s (NFA) role as monopoly rice importer, which it carried out through government-to-government deals.

“While this is a welcome agreement, this does not solve our problems,” Ateneo de Manila economist Leonardo A. Lanzona said, noting that long-term trade agreements “can vary in stability depending on various factors.” 

The stability of such a deal would depend on “the parties involved, the nature of the agreement, and external economic or geopolitical conditions,” he said via Facebook Messenger.

“Generally, agreements between stable, economically sound countries are more likely to be honored over the long term,” he said, noting that for middle-income countries like the Philippines and Vietnam, “a significant amount of risk exists.”

“Unforeseen events like economic crises, changes in political leadership, or shifts in international relations can potentially affect the stability of long-term trade agreements,” he said.

He said parties involved in such agreements must have mechanisms for dispute resolution and the flexibility to adapt to changing circumstances.

Vietnam supplies about 90% of the Philippines’ rice imports, with Manila receiving 1.5 million metric tons of rice from its neighbor in the first five months of the year.

The Philippines does not have a rice shortage at the moment, Jayson H. Cainglet of the Samahang Industriya ng Agrikultura (SINAG) said in a Viber message.

“Imports to be secured are only meant to be for buffer stock,” he said, noting that unlimited imports have not reduced the commodity’s retail price. “Only bountiful local harvests have resulted in lower rice prices.”

Agriculture officials, including Mr. Marcos, who serves as the Secretary of Agriculture, said last month that the country’s rice inventory is sufficient for the duration of the El Niño weather pattern, which is expected to persist until next year.

The Department of Agriculture (DA) also reported that an estimated 900,000 MT of rice was harvested in Isabela, Nueva Ecija and North Cotabato.

Agriculture Undersecretary for Rice Industry Development Leocadio S. Sebastian has said that improved yields for palay, or unmilled rice, in late September to October will provide a boost to second-half production, estimated at more than 11 million MT.

Before making a decision on the Vietnam supply deal, the Marcos government needs to disclose to the public the terms of the proposed arrangement, Jayson H. Cainglet of the SINAG said in a Viber message.

“At what price and terms? At what volume? At what tariff rates? What is the mode of importation — government-to-government or private initiative?” he said.

“We hope that discussions with any country for rice imports would NOT be at the expense of local producers and our hapless consumers,” he said.

The government last week imposed a price ceiling on the staple, blaming rising prices on hoarders and smugglers.

Economists have warned that imposing price caps on rice could limit supply and force traders to go underground.

They also said traders might exhibit a reluctance to buy rice from farmers, who will be left with no choice but to lower farmgate prices.

Palay prices fell by P3 per kilo in some areas after the order was announced, according to farmers’ groups.

Following the price cap order, Finance Undersecretary Cielo D. Magno left the administration, telling BusinessWorld on Thursday that her resignation will take effect on Sept. 16.

In a social media post on Thursday, Ms. Magno said, “A wise man told me, if you do your job with integrity, you will be back in UPSE.” She was referring to the University of the Philippines School of Economics.

President Ferdinand R. Marcos, Jr.’s economic managers have backed the price ceiling on rice, including NEDA Secretary Arsenio S. Balisacan, who said the measure would “immediately reduce” the price of rice.

Ms. Magno championed the Philippine Extractive Industries Transparency Initiative in the Finance department under the Marcos administration.

“I am not sure what will happen to PH-EITI,” she told BusinessWorld when asked whether the program will be continued after her departure from government.

Ms. Magno also chairs the DoF’s Fiscal Policy Monitoring Group and the Revenue and Operations Group, and Policy Development and Management Services Group.

She had been leading the government’s push to reform the pension system for retired military and uniformed personnel.

Meanwhile, the Palace said Mr. Marcos and his Vietnamese counterpart also discussed the possibility of a fisheries and maritime cooperation agreement to protect the livelihoods of fisherfolk.

“(The) agreement that we are proposing is very important because it (does) not limit itself only to security and defense issues,” Mr. Marcos said.

In 2014, Philippine authorities arrested 11 Vietnamese fishermen found poaching in Philippine waters close to disputed parts of the South China Sea.

“So again, we have an understanding between the two countries so that we will not have any problems between your fishermen and ours,” the Philippine leader told Mr. Pham. — Kyle Aristophere T. Atienza