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
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