Philippine Rice Imports May Drop by a Third as Stockpiles Rise

By Max Estayo and Luzi Ann Javier

Sept. 24 (Bloomberg) -- The Philippines, the world's largest rice buyer, may cut imports by more than a third next year as domestic stockpiles surge and local production gains, a government official said.

Imports may drop 35 percent to 1.5 million metric tons from 2.31 million tons this year, Finance Undersecretary Jeremias Paul said in an interview in Manila yesterday. Paul oversees spending by state companies including National Food Authority, which handles rice imports.

``They still have a lot of stocks so I don't think we'd need to buy so much next year,'' Paul said. ``We're also expecting improved domestic production.''

President Gloria Arroyo abandoned a plan to balance the budget this year as it boosted spending on rice purchases, subsidies to farmers and repairs to irrigation after the price of the grain more than doubled.

Rough rice futures rose to a record $25.07 per 100 pounds in Chicago on April 24, after China, Vietnam and Egypt curbed exports to safeguard domestic supplies and the Philippines increased imports. The contract for November delivery fell 0.3 percent to $19.99 per 100 pounds at 10:10 a.m. in Singapore.

The benchmark export price of white rice from Thailand, set weekly, fell 1.3 percent to $761 a ton on Sept. 17 from a week earlier, according to the Thai Rice Exporters' Association.

Domestic Purchases

National Food sought approval from economic managers to double the volume of rice the government plans to buy from domestic farmers to 1 million tons in the last quarter of the year, from 500,000 tons approved in August, to take advantage of higher output and help damp local prices, Spokesman Rex Estoperez said on Sept. 17.

Rough rice production is forecast to expand 3.2 percent to 9.82 million tons in the second half of the year, about two- thirds of which will be harvested in the last quarter, according to a government estimate in August. It takes 100 tons of rough rice to make 65 tons of milled rice.

The Philippines will end the year with a government rice stockpile equivalent to 27 days of consumption, Agriculture Secretary Arthur Yap told reporters in Manila today. The nation consumes 33,000 tons of rice a day.

To contact the reporters for this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net; Max Estayo in Manila at mestayo@bloomberg.net