In 2018/19, the Philippines became the largest rice importer, following the removal of quantitative restrictions on its imports. However, in 2020/21 imports are set to decline for the second year in a row amid higher production, government interventions, and high prices from its traditional suppliers.
Production within the Philippines is estimated to be larger in 2020/21, rising slightly to 12.0 million tons on higher area and yields. The Philippines Department of Agriculture is implementing programs to boost production through better quality seeds, machinery, farm credit, and extension through the Rice Competitiveness Enhancement Fund.
Although no longer maintaining quantitative restrictions, the government has maintained a role in regulating trade by implementing policies related to importing licensing and the timing of license distribution. The Philippine government has slowed the distribution of sanitary and phytosanitary (SPS) import clearances in recent months, which in turn has slowed import pace in the first half of the marketing year compared to the previous year.
The government also recently shortened the length of time between the issuance of the SPS licenses and shipment. With the additional requirements, rice shipped from Association of Southeast Asian Nations (ASEAN) countries, excluding Burma, will need to arrive within 35 days, and within 65 days if sent from Burma and other countries.
High export prices for Thailand and Vietnam rice are also lessening rice purchases by the Philippines. Primary rice exporters to the Philippines are from ASEAN partners since they face lower import tariffs compared to other countries.
Typically, Thailand and Vietnam are the largest suppliers to the Philippines due to their proximity and competitive prices. Both Thailand and Vietnam had droughtreduced rice crops in 2019/20 that continue to limit exportable supplies at the beginning of 2020/21.
The Philippines is expected to continue being a large rice importer. Still, improved production, government policies that constrain trade, and record high prices from traditional suppliers are key factors limiting imports this year. As a result, the Philippines is forecast to fall to the number two spot in 2021 as the largest global rice importer after the European Union.
Bangladesh Boosts Rice Imports as Domestic Prices Rise
Bangladesh is expected to return to the global market as a significant rice importer in 2020/21. Reduced production due to unfavorable weather has resulted in higher domestic prices, spurring purchases from the global market.
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Local marketing year 2020/21 imports have been revised up this month by a half million tons to 700,000 tons. Bangladesh is the third largest producer of rice globally, but fluctuations in production and domestic prices cause it to enter and exit the international market in significant ways.
For 2020/21, Bangladesh rice production is forecast down 2 percent due to inclement weather and flooding that impacted the Boro harvest in May 2020 and excessive rain that impacted the Aman and Aus growing seasons. These production factors, combined with a prohibitive 62.5 percent tariff on imported rice, resulted in prices rising by 37 percent from January to December 2020.
The Bangladesh government has responded to the situation by tendering for rice imports and lowering the import tariff. The Bangladesh State Grain Agency issued and bought its first rice tender in 3 years for 50,000 tons in November 2020 and has continued to issue further tenders.
In addition, in December Bangladesh lowered its rice import tariff from 62.5 percent to 25 percent which makes imported rice from India extremely competitive for private sector buyers. Indian export prices are $360/ton (f.o.b.), well below the current Bangladeshi price of $560/ton.
Despite concerns about the current availability of shipping containers, which is impacting rice exports from Vietnam and Thailand, India can export to Bangladesh via rail and truck. Competitive Indian prices combined with lower Bangladeshi tariff rates should encourage private sector importing activity on top of government tenders.