July 7 (Bloomberg) -- Philippine officials will meet next week to consider more rice imports and ending farmers’ subsidy to cut debt at the National Food Authority, Presidential Assistant for Food Security Francis Pangilinan said.
“We’re going to have to bite the bullet and make hard decisions to squarely address the issue of buying high and selling low,” Pangilinan, 50, said in an interview in his office in Manila today. “Instead of price subsidies, my inclination is, why don’t we bring down the cost of production?” He declined to give more details.
More rice imports are “needed” and the quantity will depend on the impact from El Nino, the expected yield of the next harvest, and the government’s buffer stock, said Pangilinan. Domestic rice prices, which rose to a record in June, may ease by end of September as 600,000 metric tons of imports are expected to arrive this quarter, he said.
Philippine President Benigno Aquino is seeking to curb food inflation running at the fastest pace since 2009, boosted by the higher cost of rice, a staple food. Food prices surged 7.4 percent in June from a year earlier, while the inflation rate was 4.4 percent. Food and non-alcoholic beverages have a weightage of about 40 percent in the consumer price basket.
Debt at the National Food Authority, which subsidizes farmers by buying their rice at higher prices, will probably climb to 180 billion pesos ($4.1 billion) by end-2016 without changes to the program, Aquino has said. That is about twice the defense budget this year, according to Bloomberg calculations.
Policy makers will consider a proposal in July to adopt a free market and allow traders to import as much rice as they want, Economic Planning Secretary Arsenio Balisacan said in an interview last month. The Philippines, the largest importer of rice in Southeast Asia and the biggest buyer in Asia after China, may import 2 million tons this year and 1.8 million tons in 2015, according to the U.S. Department of Agriculture.
The meeting of economic officials to decide on the rice policy will take place July 16, Pangilinan said.
“The increase in rice prices really is inflationary; it affects other products,” said Pangilinan, who holds a masters in public administration from Harvard University. He was appointed to his current position in May this year.
--With assistance from Norman P. Aquino in Manila and Supunnabul Suwannakij in Bangkok.