The Philippines is planning to hold a tender for around half a million tonnes of rice in May, the second in as many months, as it seeks to secure its 2008 requirements ahead of a traditional third quarter lean period. "We are working on a tender for May," said an official with the National Food Authority (NFA), the grain-importing arm of the government, on Tuesday.
"It will probably be for another 500,000 tonnes." He declined to be named because he does not have authority to speak to the media. Demand from the Philippines, the world's largest importer of rice, has helped more than double the price of 100 percent parboiled Thai rice, considered a global benchmark, so far this year. US rice futures rose to an all-time high on Tuesday, extending this year's gains to more than 60 percent.
So far for 2008, the NFA has paid $626 million for 1.22 million tonnes of the Philippines' national staple and has had to dig deeper at each tender to match soaring prices. At its last rice tender in March, the Philippines bought 335,500 tonnes of rice at an average price of $708.04 per tonne cost and freight, about one and a half times the price it paid in January and only around 61 percent of the total volume it had wanted to attract.
Manila has said it may import up to 2.2 million tonnes of rice for this year, its biggest purchase of the grain in a decade. Later this week, the NFA will hold a tender for 500,000 tonnes of rice for delivery between April and June. The NFA, which sells subsidised rice at 18.25 pesos ($0.44) a kilo for poor consumers, is now the biggest drain on public finances with net liabilities in 2006 of nearly 43 billion pesos, the latest figures available.
In a recent research note, investment bank Credit Suisse calculated that the Philippine government could lose up to $1.3 billion or 0.7 percent of gross domestic product this year by importing up to 2.6 million tonnes of rice at climbing world prices and selling it at lower prices domestically.
The NFA has said that it may raise the price of subsidised rice, but that would be a controversial move in a country where people are already spending the bulk of their income on food and facing rising costs for other commodities such as bread and fuel.