The Philippines is expected to be the second-largest importer in 2021, and recently announced a change to its import tariffs that has the potential to shift its suppliers. In February 2019, the Philippine government removed quantitative restrictions and replaced them with tariffs, offering a lower tariff rate for countries from the Association of Southeast Asian Nations (ASEAN).
As a result, ASEAN countries such as Vietnam expanded their shares, but India and other non-ASEAN countries lost market share. In May 2021, the President of the Philippines issued a new policy lowering the Most Favored Nation (MFN) tariff, so that the original 40 percent in-quota tariff and 50 percent out-of-quota tariff have both been reduced to 35 percent.
The result is that all exporting countries face the same tariff as ASEAN countries. Traditionally, ASEAN members Vietnam and Thailand have been the most prominent exporters given the proximity, established trade relationships, and ability of these countries to provide government-to-government agreements during the period of quantitative restrictions.
However, since 2019, Vietnam has become the primary rice supplier to the Philippines due to its lower prices.
The new policy on MFN tariffs is likely to have less impact on Western Hemisphere suppliers than other non-ASEAN exporters in Asia. Exports from the Western Hemisphere are expected to remain limited, as combined price, tariff, and transportation costs are higher than Philippines domestic prices.
Non-ASEAN countries, including India and Pakistan, have more competitive prices and the reduced tariffs would result in lower landed prices. However, these non-ASEAN Asian countries would need to increase consumer awareness and build business relationships in order to make significant gains in market share in the Philippines.
While India has the greatest potential to expand market share as the top global exporter with competitive prices, Vietnam is expected to continue being the major supplier to the Philippines.
India Rice Export Growth Continues with New Monthly Record in March
The 2021 rice export forecast for India has been raised to a new record of 17.0 million tons, nearly triple the next largest exporter, Vietnam. India also hit a new monthly export record in March of nearly 2.5 million tons, resulting in over 6 million tons shipped in the first quarter of 2021.
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India export growth has been a result of stronger demand from its neighbors and from countries in Sub-Saharan Africa, as well as the emergence of new buyers such as China and Vietnam.
Bangladesh is currently the top export destination for India, importing nearly 900,000 tons in the first quarter of 2021. The Government of Bangladesh lowered its import tariff on rice to curb high domestic prices. Imports are now forecast to reach 1.5 million tons in 2021, up from only 20,000 tons in 2020.
Imports by neighboring Nepal are also set to rise on growing demand. India exports have expanded to Senegal and several other African countries on competitive prices. In addition, China recently granted India access for non-basmati rice. China began importing rice from India for the first time in decades, reaching nearly 300,000 tons in the first quarter.
In the same period, India even exported nearly 250,000 tons to Vietnam, the world’s second largest rice supplier. India rice exports have been supported by large supplies and successive bumper crops, the world’s most competitive pricing, and improved export infrastructure capable of shipping rice in bulk.
Meanwhile, major suppliers like Vietnam and Thailand have had reduced supplies and strong domestic demand. These countries have also faced worldwide container shortages, creating delays and driving up costs. India has increased export capacity by using deep water ports where exporters can take advantage of shipping in bulk.
For 2022, India is forecast to have abundant supplies while its exports are expected to decline moderately to 15.5 million tons, mostly on lower demand from Bangladesh.