The government of the Philippines was presented with an enormous challenge following the havoc wreaked by Typhoons Ketsana and Parma which struck the country in September. The twin typhoons caused hundreds of deaths and widespread destruction. The storms damaged around half a million hectares of rice fields likely destroying more than 800,000 tonnes of palay. The storms have forced the authorities to bring forward import tenders for rice for 2010 delivery to make sure there are no shortages in the first half of 2010. With the rice market likely to be tighter in 2010 owing to the poor monsoon in major exporters India and Pakistan, the Philippine government will be desperate to avoid any domestic shortages of rice or dramatic rise in prices, especially with a general election looming. The government announced a tender for 250,000 tonnes of rice at the end of October for delivery in the first quarter of 2010. With rice production now forecast to fall, we expect imports to climb back above 2mn tonnes again. Vietnam will once again be the major supplier owing to the low price of Vietnamese rice compared to Thailand. The Philippine rice import policy has been causing friction with its ASEAN neighbours in the second half of 2009. Under the terms of the ASEAN Free Trade Area (AFTA), tariffs on all products not on the Highly Sensitive List are to be reduced to between 0% and 5% by January 2010. The Philippines does have rice listed as highly sensitive, but the country's refusal to agree to a gradual reduction of tariffs has threatened to delay implementation of the agreement. Malaysia and Indonesia, which also have rice on their highly sensitive lists, have agreed to make significant cuts in their import tariffs for the grain. Indonesia has committed to cutting its tariff from 40% to 25% by 2015, while Malaysia has gone further and will cut its tariff from 40% to 20% at the beginning of 2010. The Philippines, however, has offered to cut its tariff by a mere two percentage points to 38% by 2015. The Philippines is also manoeuvring to have sugar moved onto the Highly Sensitive List to avoid having to make a drastic cut in tariffs from 38% to less than 5% at the beginning of 2010. The last-minute wrangling reflects badly on the country's agricultural policies. Successive governments have had the best part of two decades to improve the productivity of the country's agricultural sector to be able to compete with products from the rest of South East Asia. However, with the 2010 deadline looming, the Philippines is still lagging far behind Thailand in productivity. This has raised fears of a flood of cheap imported agricultural goods, especially rice and sugar, undercutting domestically produced food and putting the goal of self-sufficiency even further out of reach.
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