Rice Policy Level Study_Dr Celia Reyes

7/31/2019 Rice Policy Level Study_Dr Celia Reyes

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The Role of SCF in RiceProcurement and StoragePolicy: the Philippine case

Celia M. Reyes and Christian Mina

Presented during the Orientation Forum on Climate Concepts and

Seasonal Climate Forecasts for Decisionmakers in Agriculture,

December 1, 2005, Malaybalay, Bukidnon.


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Outline

Objectives of the Study

Rice policy of the government

Production of Rice

Procurement of Rice

Storage and Distribution of RiceDecision points


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Objectives of the study

1. Explore the link between SCF and grainstorage policy and evaluate its impact in

terms of efficient grain storage and pricingdecisions at the national and local levels.

2. Analyze the impact of ENSO on the price

and regional supply of rice purchased bythe Philippines, given that ENSO has animpact across Asia.


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Importance of rice

Staple food of about 80% of Filipinos

Major item in the consumption basket

of consumers (13% weight in theconsumer price index)

Major source of income for millions of

Filipino farmers


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Involvement of

Government Supply and distribution aspects of rice

to ensure consumers of a sufficient

and stable supply of rice at low pricesand to maintain reasonable returns torice farmers through adequate price

incentives


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National Food Authority

(NFA) Sets the support price for palay (P10.50 per

kilo of palay or P16.15 per kilo of rice) Sells rice to consumers at P16.50 per kilo of

rice Seeks to minimize seasonal price variations

in the various regions by positioning stocksthroughout the country

Monopolizes the importation andexportation of rice to influence domesticprice levels


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Rice production

About 3 million hectares of land isdevoted to rice production

Two croppings

Main harvest comes in September,October, November (about 50%)

Secondary harvest comes in March, April,May (about 30%)


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Total paddy production 14.5 million metrictons

Area harvested Irrigated: 2.79 million hectares

Rainfed: 1.33 million hectares

Average yield (metric tons per harvestedarea in hectare) Irrigated: 3.92

Rainfed: 2.66

All: 3.51

Rice Production in 2004


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Figure 1. Percentage share of top 10 rice-producing provinces in the Philippines, 2004

Cagayan 3.94

Isabela 7.33

Pangasinan 5.58

Nueva Ecija 7.78

Tarlac 3.31

Camarines Sur 3.46

Leyte 2.88

Iloilo 5.72

Negros Occidental 2.65

North Cotabato 2.88


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0

950

1,900

2,850

3,8004,750

5,700

6,650

7,600

8,5509,500

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

ENSO Year ProductionENSO Intensities:

Weak La Nia Weak El Nio

Moderate La Nia Moderate El Nio

Strong La Nia Strong El Nio

Sources:

Volume of palay production - BAS

ENSO years

PAGASANote: palay converted to rice

Volume of Rice Production (in 000 MT)Philippines, 1980 - 2004


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ENSO Intensities

Weak El Nio SST anomaly (or deviation tothreshold/normal level) is between 0.5 to 1.0 degree Celsius

Moderate El NioSST anomaly (or deviation tothreshold/normal level) is between 1.0 to 1.5 degrees Celsius

Strong El NioSST anomaly (or deviation tothreshold/normal level) is above 1.5 degrees Celsius

Weak La Nia SST anomaly (or deviation tothreshold/normal level) is between -0.5 to -1.0 degree Celsius

Moderate La Nia SST anomaly (or deviation to

threshold/normal level) is between -1.0 to -1.5 degreesCelsius

Strong La NiaSST anomaly (or deviation tothreshold/normal level) is below -1.5 degrees Celsius

Source: PAGASA, 2005


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Impact of 1997-1998 El Nino on

rice production (percent change)1997 1998

irrigated 2.9 -21.2

rainfed -8.4 -32.9

all -0.1 -24.1


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IMPACTS OF ENSO ON PHILIPPINE ANNUALRAINFALL

RED colored years are EL NINO years, BLUE colored years are LA NINAyears and BLACK colored years are NON_ENSO years

Legend:

Severe droughtimpacts

Drought impactswith major losses

Moderate drought

impacts

Near normal toabove normalcondition

Way above normalcondition

Potential for flooddamage

Severe flooddamage

Source:PAGASA


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Procurement operations usually occur twice a year:

Bulk of procurement occurs during the main harvestseason (October to December).

Procurement also happens during the Palagad season(March to May), but only minimal since production isgenerally lower and prices are relatively higher.

NFA Procurement of Rice

Domestic Procurement


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0

950

1,900

2,850

3,800

4,750

5,700

6,650

7,600

8,550

9,500

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

ENSO Year Procurement Production

ENSO Intensities:

Weak La Nia Weak El Nio

Moderate La Nia Moderate El Nio

Strong La Nia Strong El Nio

Sources:

Volume of rice production - BAS

Volume of rice procurement -NFA

ENSO years

PAGASA

Note: palay converted to rice

Volume of Domestically Procured Ricevs. Volume of Rice Production (in 000 MT)Philippines, 1980 - 2003


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Importation is actually resorted to only during aproduction shortfall.

The Inter-Agency Committee on Rice and Corn(IACRC) meets quarterly to assess thesupply/demand situation for rice and corn and[based on this] recommends importation

(volume and timing), if necessary, to the DASecretary and NFA Council.

Procurement of Rice

Importation


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In assessing the supply/demand situation forrice and corn, the following inputs areneeded:

Results of the Rice and Corn Production Survey(RCPS) conducted by the BAS every quarter,which include: (1) final production estimates forthe last quarter; (2) production forecasts for the

next quarter based on standing crops; and (3)production forecasts for the quarter after thenext quarter based on planting intentions

Assessment of the NFA accomplishments, which

include: stock inventories, procurement volume(both domestic and international)

Procurement of Rice

Importation


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Forecast of PAGASA

Other relevant information provided by the

different IACRC member-institutions such asNIA, Farmers Groups and DA Programs

As early as January, there must be a final

decision whether to import or not because ittakes time to conduct negotiation for rice.

Procurement of Rice

Importation


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If importation is finally decided, actualimportation happens as early as February.

The shipment then has to start by March so asto avoid rainy season. Bulk of arrival of importsusually occurs during March to April.

Procurement of Rice

Importation


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Volume of Rice Imports (in 000 MT)Philippines, 1980 - 2005

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Imports

Sources:

Volume of rice imports - NFA

ENSO years - PAGASA


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The food security mandate of the NFAis realized by maintaining an average

of at least 15-day level stock at anygiven time in all warehousesnationwide.

Given that the national average of stockrequirement is good for 15 days, thelocation-specific stocks vary by province

according to their classification:

Storage of Rice


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Surplus (from the level of production, can stillsupply to private traders outside the province):

2 days

Self-sufficient (production is just enough forconsumption): 5 days

Less critical (still has production but is less thanthe food requirement) : 15 days

Very critical (has no production and totallydependent on the inflow delivered by the NFA):

30 days

Storage of Rice


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The NFA has a total of 321 warehousesdistributed nationwide.

NFA already has a distribution plan even beforethe imports arrive so that upon actual arrival, italready knows where and how much todistribute.

In distribution, the NFA prioritizes thoseprovinces classified under the critical areas.The surplus provinces may be allowed to runout of stocks but not the critical ones.

Distribution of Rice


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OCT DEC JANNOV FEB MAR

BAS

Survey(4thround)

BAS

Survey(1stround)

National PlanningConference

Actualimportation

Decision toimport

Main procurement period

Timeline of Activities Related to Rice

Storage period /positioning of the stocks

Minimal

procurement(Palagadseason)

Import

arrivals(targetperiod)


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APR JUN JULMAY AUG SEP

BAS

Survey(2ndround)

BAS

Survey(3rdround)

Timeline of Activities Related to Rice

Storage period / positioning of thestocks

Minimalprocurement

(Palagad season)

Import arrivals (target period)

MidyearPlanning

Conference

Distribution period


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Rice Stock InventoryPhilippines, 1990-1999

0800

1,6002,4003,2004,000

4,8005,600

6,4007,2008,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

ENSO Year Production Consumption Imports Ending Stock


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Monthly Rice stock inventory

Apr May Jun Jul Aug Sep Oct Nov Dec

1 0.8 0.1 0.1 0 1.6 3.3 0.7 0.2

0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75

0

0.25 0.05 -0.7 -0.7 -0.8 0.85 2.55 -0.1 -0.62.5 2.55 1.9 1.25 0.5 1.35 3.9 3.85 3.3

0

1

2

3

4

5

1 4 7 10 13 16 19 22 25 28

Production

Consumption

Imports

Change in Stock

Ending Stock


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Rice Stock Inventory, Philippines1992-1995, monthly

-600

-300

0

300

600

900

1,200

1,5001,800

2,100

2,400

2,700

3,000

Jan-92

Mar-9

2

May-92

Jul-9

2

Sep-92

Nov-92

Jan-93

Mar-9

3

May-93

Jul-9

3

Sep-93

Nov-93

Jan-94

Mar-9

4

May-94

Jul-9

4

Sep-94

Nov-94

Jan-95

Mar-9

5

May-95

Jul-9

5

Sep-95

Nov-95

Beginning Stock Inventory Change in Stocks Supply Production

Imports Demand Local Demand Consumption

Others Exports Ending Stock Inventory


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Decision points affected

by SCFs How much rice to procure domestically

How much rice to import

When to import rice

Where to distribute NFA stocks


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Thank you

Documents

Rice Policy Level Study_Dr Celia Reyes