Greater than normal palay weakness expected if global rice prices decline

RICE TRADERS are expected to depress their offer prices for palay, or unmilled rice, to give themselves a margin of safety should the international price of rice fall, threatening to flood the Philippine market with cheap imports, a farming organization said.

Federation of Free Farmers National Manager Raul Q. Montemayor said the buying price of palay, the form in which farmers sell their crop, could be purchased at “lower than normal prices to play safe” should traders come to believe that “international prices will eventually go down and cheap imports might surge again.”

Currently, Mr. Montemayor said in a mobile phone message, high international rice prices are keeping import volume down.

“I would have expected imports to be much larger but I think the high international price is discouraging imports,” Mr. Montemayor said.

“Most importers will wait and see for the meantime.

Importers will bring in mostly premium grade rice that they can sell at a high price to welloff consumers to maintain their margins,” he added.

Import values, as reflected in rice tariff collections, are signaling higher international rice prices on a year-on-year comparison. The Department of Finance said in a statement Friday that the average value of rice imports in January rose 11.5% year on year to P20,262 per metric ton (MT). As a result, tariffs from rice imports collected by the Bureau of Customs (BoC) rose 58% to P2.04 billion in January.

Preliminary data from the BoC also indicated that volumes imported in January rose to 287,957 MT, up 29% from a year earlier.

In 2020, the BoC announced the collection of P15.494 billion from imports of 2.38 million MT, down 24% from collections in 2019, the first year of implementation of Republic Act No. 11203 or the Rice Tariffication Law. —