USDA cuts Philippine rice import forecast due to two-month ban

Philippine rice imports are projected to decline by 500,000 metric tons (MT) this year compared to initial projections due to the two-month import ban set to take effect in September, according to the United States Department of Agriculture (USDA).

In its Grain: World Markets and Trade Report issued in August, the USDA’s Foreign Agricultural Service estimated that the country’s rice imports will fall by 9.3% to 4.9 million MT this year, from an earlier projection of 5.4 million MT.

The US agency attributed the lower projections to President Ferdinand R. Marcos, Jr.’s order to suspend rice imports for two months beginning Sept. 1 to protect local farmers.

He made the decision after the Department of Agriculture recommended the two-month ban amid declining farmgate prices.

Despite the lower projections, the USDA report showed the Philippines will remain the world’s largest rice importer this year.

The Bureau of Plant Industry reported that 2.58 million MT of rice had arrived in the country as of Aug. 7. Last year, the country imported 4.81 million MT of rice.

Meanwhile, the USDA projected for the Philippines’ milled rice production to reach 12.37 million MT in the marketing year 2024 to 2025, while it anticipates an output of 12.3 million MT for the marketing year 2025 to 2026.

The marketing year for rice starts in July and ends in June of the following year.

Earlier this year, the DA said that it expects the country to achieve a record rice harvest of 20.46 million MT or even surpass it.

Data from the Philippine Statistics Authority showed that the first six months of palay production reached 9.08 million MT, up 6.41% from 8.53 million MT in the same period last year.

In 2024, the country’s palay production reached 20.06 million MT, the highest-ever harvest of the Philippines’ national staple.

Sought for comment, Federation of Free Farmers National Director Raul Q. Montemayor said that the original projection of over 5 million MT in rice imports “was excessive in the first place.”

“Removing the supply glut through the import ban, and hopefully reverting the tariff to 35%, will bode well for farmers in terms of palay prices,” he said in a Viber message.

“In any case, the original USDA projection of rice imports of more than 5 million tons was excessive in the first place,” he added.

Mr. Montemayor also noted that rice prices should not increase “given current international prices and ample supply in the market.”

However, he warned that the mere suspension of rice imports will only lead to the rescheduling of rice imports, and not necessarily reduce it.

“The import ban will temporarily halt further decline in palay prices but will also raise prices at the retail level. While import volume will be lower than last year, imports will remain substantial at around 4 million MT,” former DA Undersecretary Fermin D. Adriano said.

Samahang Industriya ng Agrikultura Executive Director Jayson H. Cainglet said that the impact of the import ban is negligible.

“The prevailing 15% tariff on imported rice remains unchanged. This low rate makes rice importation still highly profitable,” he said.

“While we welcome the import ban, the agriculture sector is steadfast in its appeal to restore rice tariffs to their original levels to discourage excessive importation and protect local producers,” he added.

For the marketing year 2024-2025, the USDA projects world rice imports to reach 62.04 million MT and reach 61.71 million MT in the following year.

Meanwhile, the USDA also projected a 4.2% decline in Philippine wheat imports for marketing year 2025-2026 to 6.9 million MT due to lower feed consumption.

It was initially expected to reach 7.2 million MT.

Vietnam to challenge Philippines’ import ban

Meanwhile, the Vietnam Food Association has asked the country’s Trade ministry to challenge a move by the Philippines to suspend rice imports for two months, two sources told Reuters, with traders saying it will harm local production.

The Philippines, Vietnam’s biggest rice buyer, said last week that it would suspend rice imports for 60 days starting from Sept. 1 in an effort to protect local farmers impacted by falling prices during the harvest season.

“The Philippines is Vietnam’s largest rice export market and the suspension would have significant impacts on rice production in Vietnam,” said one of the sources, a trader with knowledge of the matter.

The association and the Ministry of Industry and Trade didn’t immediately respond to Reuters’ requests for comments.

Vietnam exported 2.44 million metric tons of rice to the Philippines in the first seven months of this year, accounting for 44.3% of its total rice shipments over the period, according to official customs data.

Last year, the Philippine market accounted for 46.7% of Vietnam’s total rice exports, with shipments in September and October higher than monthly average.

Vietnam early this year signed a memorandum of understanding on rice trade with the Philippines, where rice production is often prone to flooding and typhoon risks. “They are suspending rice imports this year to protect their farmers ahead of an expected bumper harvest,” said a second trader based in Ho Chi Minh City.

Traders said the Philippines’ move to suspend rice imports will put pressure on export prices of Vietnamese rice.

Vietnam’s 5% broken rice was offered at $395 on Tuesday, down by nearly 30% from a year earlier, according to data from the association.

“We fear that prices will fall further if there’s the suspension,” the second trader said. — Justine Irish D. Tabile, Reporter with Reuters