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July 27, 2015


Vol 5 ,Issue VII

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Can India Replace PDS Rice with Cash


Transfers?
Jul 24, 2015

The present government of India, which took charge last year, has come out with an ambitious
plan of replacing the rice distributed to the below poverty line (BPL) families under the public
distribution system (PDS) with direct cash transfers in order to address some problems such as
corruption. However, whether India can smoothly handle the transition is a big question. An
aticle in Bloomberg analyses the issues related to the Indian cash transfer system.
Nearly two-thirds of the India population, especially in villages, receive the PDS rice. The Indian
government distributes about 10 kilograms of rice to each family every month as part of efforts
to ensure food security.

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But certain problems like middlemen, corruption and missing stocks have been making the
system inefficient. The High Level Committee set up by the Prime Minister to make
recommendations for the Food Corporation of India (FCI) restructuring has suggested to replace
PDS rice with cash transfers. The suggestion is beneficial as it reduces a lot of financial burden
on the government to procure, store and distribute rice as well as ensure financial security to the
people of India.
However, the implementation of the system is associated with several problems. Most of the
rural Indians do not have bank accounts, which are crucial for implementing cash transfer
system. The government helped open nearly 170 million bank accounts in the rural areas and
also started pilot testing of the cash transfer in three states. A testing in the state of Pondicherry
has not proven fruitful and has been dismantled after three months. Several beneficiaries
complained of hardships in collecting money from the banks.
A Professor in the Indian Institute of Technology (IIT), New Delhi, who surveyed the PDS
across 10 states in 2013, noted that lack of proper financial/banking infrastructure in India is a
major hurdle to the cash transfer system. There are not sufficient bank branches in rural India to
make payments to the beneficiaries on time and most importantly, they may not be able to afford
to buy rice in the private shops. Some experts say, they may even spend the whole lot of money
paid by the government on other things and remain hungry. In that case, the purpose of the
government to ensure food security is lost.
The Senior Vice-President for sovereign risk at Moodys Investors Service noted that the success
of cash transfers would depend on the public administration and the extent to which it is
understood and accepted by the public.

Oryza Overnight Recap Chicago Rough


Rice Futures Turn Negative as Sharply
Lower Grains Weigh on Prices
Jul 24, 2015

Chicago rough rice futures for Sep delivery are currently seen trading 13 cents per cwt (about $3
per ton) lower at $10.980 per cwt (about $242 per ton) during early floor trading in Chicago. The
other grains are seen trading lower this morning; soybeans are currently seen trading about 0.9%
lower, wheat is listed about 1.4% lower and corn is currently noted about 1.9% lower.

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U.S. stocks traded mixed on Friday, despite surprisingly strong Amazon earnings, as signs of
slower global growth weighed on sentiment. Stocks briefly attempted gains before turning lower,
with the Dow and S&P a touch below the flatline and the Nasdaq clinging to gains. Overnight,
the Caixin Markit flash general manufacturing PMI for July came it at 48.2, a 15-month low. The
July euro zone flash PMI was 52.2, a 2-month low. The flash manufacturing PMI for the U.S.
comes at 9:45 a.m. and new home sales comes at10:00 a.m.
European stocks traded lower and Asian stocks closed in the red, with metals falling further and
gold hitting a fresh five-year low. The precious metal held near $1,081 an ounce in early trade.
The Dow Jones Industrial Average traded 17 points lower, or 0.11%, at 17,713. The S&P 500
traded down 3 points, or 0.12%, at 2,099, with health care leading six sectors lower and
consumer discretionary leading gainers. The Nasdaq traded up 6 points, or 0.12%, at 5,151. Gold
is currently trading about 1.1% lower, crude oil is seen trading about 0.3% higher, and the U.S.
dollar is currently trading about 0.3% higher at 8:45am Chicago time.

India 2015-16 Main Paddy Rice Sowing Area


Continues to Pick Up Despite Deficient
Monsoons
Jul 24, 2015

Total area planting to India's 2015-16 Kharif (main) rice crop (June - December) stood at around
18.85 million hectares as of July 24, 2015, up about 7% from around 17.65 million hectares
planted during the same time last year, according to a press release by the Agriculture Ministry.
India received 7% below normal rainfall in the fourth week of July, according to the Indian
Meteorological Department (IMD). Central, south peninsular and north-east regions received
12%, 12% and 6% below average rains during the week. However, the north-west region
received 6% above-average rainfall. Some areas of Maharashtra are still dry. Analysts are still
concerned that a long dry patch in major rice growing areas could severely impact rice yields.
Monsoon rains in July were only 7% below normal though they were forecast to be 12% below
normal. According to the Economic Times, the Director of the Central Rice Research Institute
(CRRI) noted that the 2015-16 kharif rice output may not be significantly impacted if the
monsoon deficit is curbed at 10. "Current rainfall is very encouraging to farmers. If distribution
of rains is same and there are no major spells of drought, we should not worry about the deficit,"
he was quoted as saying.

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A likely drought-inducing El Nino this year is expected to lower production prospects this year.
The IMD has forecasted the El Nino pattern to reach to moderate to a strong one during the
monsoon season (June September).
The total Kharif crop sown area stands at 69.38 million hectares as on July 24, 2015, up about
26% from around 55.04 million hectares during the same period last year, according to the
Agriculture Ministry.

Oryza Weekly: Global Rice Prices Rebound


on Supply Slump
Jul 24, 2015

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The Oryza White Rice Index (WRI), a weighted average of global white rice export quotes,
ended the week at about $404 per ton, down about $3 per ton from a week ago, down about $1
per ton from a month ago and down about $73 per ton from a year ago.
The USDA estimates 2015-16 will be the third crop year in a row with declining global rice
stocks due to lower carryover from the 2014-15 crop year. Stocks are expected to tighten in
Thailand and India in particular, as dampened exports prices and lower demand; dry weather
from El Nino; and declining government support in Thailand all lower production incentives.
Thailand

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Thailand 5% broken rice is today shown at about $380 per ton, down about $15 per ton from a
week ago, up about $10 per ton from a month ago and down about $45 per ton from a year ago.
The Thai Commerce Ministry, which planned to hold an auction to sell about 1.29 million tons
of sub-standard rice in early July, is likely to postpone the auction to early August as the
separation procedure of the rice is delaying the preparation process.
The government of Thailand has decided to conduct a large-scale survey of drought-affected
farm land in the Central Region in order to assess the severity of the damage in order to provide
adequate support to the affected farmers.
The Thai Rice Exporters Association (TREA) expects this years rice exports to be lower than
the target of 10 million tons due to extending drought conditions and a sluggish world
economy. New estimates are around 9.5 million tons.
The TREA expects that the ongoing drought conditions will increase Thailands domestic and
export rice prices in the second half of 2015.
The Thai Commerce Ministry plans to auction about 500,000 tons of rice in its next auction, the
fifth of this year.
Vietnam
Vietnam 5% broken rice is today shown at about $350 per ton, unchanged from a week and a
month ago and down about $100 per ton from a year ago.
The Vietnam Food Association (VFA) has forecasted Vietnam to export around 5.91 million tons
of rice in 2015, down about 6.5% from an earlier estimated 6.32 million tons exported in 2014
due to a likely fall in exports in the fourth quarter.
Vietnam rice exporters are expecting the Philippines traders to import the entire quota of 293,100
tons from Vietnam under the WTO minimum access volume (MAV) country specific quota
(CSQ).
Vietnam exported about 2.875 million tons of rice during the period January 1 July 16, a
decrease of about 21% from the first seven months of 2014.
Rice exports from Vietnam declined about 10% y/y in the first half of 2015, reaching only about
2.71 million tons. The decline is due to stiff competition from countries such as India, Thailand,
Pakistan, Myanmar, and Cambodia, but analysts expect Vietnams exports to improve in the
second half of 2015.

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Vietnams Ministry of Agriculture and Rural Development has converted around 78,735 hectares
of rice are in the Mekong Delta into higher value crops under a two-year agricultural
restructuring project.
As negations between the European Union and Vietnam regarding the EU-Vietnam Bilateral
Free Trade Agreement (EU-V BFTA) are in their final stages, the European association of EU
farmers unions and cooperatives (Copa-Cogeca) has expressed concern about the future of the
EU rice growing sector. The Secretary General of Copa-Cogeca is reportedly sending a
document highlighting all the concerns regarding the EU rice sector in the light of increasing
duty free imports from Asian countries to the Directorate General (DG) Trade and DG
Agriculture.
India
India 5% broken rice is today shown at about $390 per ton, unchanged from a week and a month
ago, and down about $50 per ton from a year ago.
Total area planting to India's 2015-16 Kharif (main) rice crop (June - December) stood at around
18.85 million hectares as of July 24, 2015, up about 7% from around 17.65 million hectares
planted during the same time last year
The government has removed quantitative restrictions on exports of rice bran oil and allowed for
its bulk export, according to local sources. Exporters anticipate higher interest from Japan.
Rice farmers in Bangladesh are avoiding hybrid rice varieties this year due to high production
costs.
Pakistan
Pakistan 5% broken rice is today shown at about $375 per ton, unchanged from a week ago,
down about $15 per ton from a month ago and down about $65 per ton from a year ago.
Pakistan Finance Minister has met with the Kenyan High Commissioner and requested him to
review the high level of import duty on Pakistani rice as the high import duty was affecting
Pakistan rice exports to Kenya in recent months.
The rice sector in Pakistan is currently facing problems with excess stocks as it faces stiff
competition from other rice exporting countries such as Thailand, India, and Vietnam. High
input costs and low crop prices, along with low global demand, are further impacting stocks.

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Rice exporters in the country are expressing concern that the rice sector lacks a specific forum
that would fix, maintain and control rice prices in the country.
Central & South America
Brazil 5% broken rice is today shown at about $500 per ton, unchanged from a week ago, down
about $50 per ton from a month ago and down about $165 per ton from a year ago.
Five percent broken rice from Uruguay and Argentina is today shown at about $540 per ton,
unchanged from a week ago, down about $25 per ton from a month ago, and down about $85 per
ton from a year ago.
Peru lost its trade dispute against Guatemala at the World Trade Organization Appellate Body,
who said that Perus additional duty on rice and other agricultural imports was illegal under
global trade.
Ecuadors winter rice crop (December-June) output is expected to increase about 3% y/y due to
a 3% y/y increase in acreage.
U.S.
U.S. 4% broken rice is today shown at about $475 per ton, unchanged from a week ago, up about
$20 per ton from a month ago and down about $80 per ton from a year ago.
The United States Agriculture Departments Animal and Plant Health Inspection Service has
published a new rule further restricting entry of certain commodities, including rice, from
countries where the Khapra beetle is known to exist.
Other Markets
The Chairperson of Senate Agriculture and Food Committee urged the government of the
Philippines to consider rice imports only through G2G deals and avoid imports through the
private sector in efforts to curb rice smuggling in the country.
An NFA official says that Philippines rice traders may not import all 805,200 tons of rice under
the WTO MAV quota. The government is studying demand and supply conditions and assessing
whether more rice imports are needed.
Monsoon rains have damaged about 18.8 million peso (around $415,455) worth of rice crop in
the northern Luzon region of the Philippines.

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Myanmar is looking to secure an export deal with the Philippines as part of its efforts to
diversify its export markets and reduce dependence on China.
Chinas rice imports increased sharply in the first six months of 2015, reaching 1.42 million
tons, up about 7% from the same period last year.
Rice farmers in Laos are worried that dry conditions and insufficient rainfall linked to the El
Nino phenomenon are likely to severely impact rice production in the country.
Scientists from China, Sweden and the U.S. have developed a new genetically-modified rice
variety called SUSIBA2 that is low methane-emitting.
South Korea's state run Agro Fisheries & Food Trade Corporation (KAFTC) is seeking to buy
about 41,000 tons of non-glutinous rice in tenders for delivery between October 15, 2015 and
February 29, 2016.
Italy will host its 105th rice seed contest for breeders, with applications due by September 30.
Rice prices for Italian paddy remain unchanged in the second week of July 2015.

South Korea Seeks to Buy 41,000 Tons of


Non-Glutinous Brown Rice in Tenders
Jul 24, 2015

South Korea's state run Agro Fisheries & Food Trade Corporation (KAFTC) is seeking to buy
about 41,000 tons of non-glutinous rice in tenders for delivery between October 15, 2015 and
February 29, 2016, according to a statement on its website.
The details of the tonnage and volume of the rice sought:
Registration of tenders will close at 4.00 p.m on July 30, 2015. Electronic bidding will take place
on July 31, 2015 between 10:00 and 11:00 a.m.

Thailand, Vietnam, India Rice Sellers Lower


Some of Their Quotes Today; Pakistan Rice
Quotes Unchanged
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Jul 24, 2015

Thailand rice sellers lowered their quotes for 5% broken rice by about $5 per ton each to around
$375-$385 per ton today. Vietnam rice sellers lowered their quotes for 100% broken rice by
about $5 per ton to around $310-$320 per ton. India rice sellers lowered their quotes for
parboiled rice by about $5 per ton to around $375-$385 per ton. Pakistan rice sellers kept their
quotes mostly unchanged.
5% Broken Rice
Thailand 5% rice is indicated at around $375 - $385 per ton, down about $5 per ton from
yesterday and about $30 per ton premium on Vietnam 5% rice shown at around $345 - $355 per
ton. India 5% rice is indicated at around $385 - $395 per ton, about $15 per ton premium on
Pakistan 5% rice shown at around $370 - $380 per ton.
25% Broken Rice
Thailand 25% rice is shown at around $355 - $365 per ton, about $30 per ton premium on
Vietnam 25% rice shown at around $325- $335 per ton. India 25% rice is indicated at around
$350 - $360, about $20 per ton premium on Pakistan 25% rice shown at around $330 - $340 per
ton.
Parboiled Rice
Thailand parboiled rice is indicated at around $390 - $400 per ton. India parboiled rice is
indicated at around $375- $385 per ton, down about $5 per ton from yesterday and about $40 per
ton discount to Pakistan parboiled rice last shown at around $415 - $425 per
ton.

100% Broken Rice


Thailand broken rice, A1 Super, is indicated at around $320 - $330 per ton, about $10 per ton
from premium on Vietnam 100% broken rice shown at around $310 - $320 per ton, down about
$5 per ton from yesterday. India's 100% broken rice is shown at around $305 - $315 per ton,
about $20 per ton premium on Pakistan broken sortexed rice shown at around $285 - $295 per
ton.

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University of Arkansas Pathologist Suggests


Means to Cope with Rice Sheath Blight
Jul 24, 2015

Rice sheath blight, which is caused by a soil pathogen/fungus, is considered to be a major disease
affecting rice plants in Arkansas. The disease is said to prevail in rice fields if there are
prolonged periods of high humidity and high temperatures. Experimental plots inoculated on
July 9 have started showing symptoms of a spreading disease.
Experts are concerned if the disease may impact the state yields this year. Currently,
temperatures are not very high for the fungus to survive, but they fear it may develop in fields
where inoculum is active and nights are dewy and warm.

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The fungus survives as sclerotia (tiny masses of fungal structure called mycelia) which are
capable of floating on flooded rice fields. These floating fungal structures come into contact with
the rice plant at or just above the waterline and spread throughout the plant tissue. Sheath blight
starts at the panicle initiation (green-ring) and spreads to panicle differentiation (1/2 internode
elongation).
Yeshi Wamishe, a University pathologist says farmers should search for the presence of sheath
blight from green ring to pre-heading. Further he adds that any rice variety is not completely
resistant to sheath blight. But its intensity varies between short and long rice verities and the
ambience under which it develops. But application of appropriate level of fertilizer may reduce
the sheath blight incidence. He warns that sheath blight may be confused with other rice diseases
such as aggregate sheath spot, bordered sheath spot, stem rot, or black (crown) sheath
rot, which do not require fungicides.
He notes that fungicide application also depends on varietal susceptibility, the height of the
variety, weather condition, the field management (seeding rate and nitrogen fertilizer rate), and
the treatment threshold. He says that optimum fungicide treatment should be between 7-14 days
after it reaches panicle differentiation. However, adequate knowledge of the distribution of the
disease in a field and its intensity between internode elongation and early heading can
decide the correct usage of fungicides.
The following table shows the recommended fungicides and their usage.

Venezuela Orders Rice Farmers to Sell


Output to State to Overcome Food Shortages
Jul 24, 2015

The government of Venezuela has ordered rice farmers to sell between 30% and 100% of their
output to state stores to address the problem of food shortages, according to the Telegraph.
Producers of milk, pasta, oil, sugar and flour have also been asked to sell their output to the state.
However, the decision is criticised by some experts. They say there are only 7,245 state stores in
the country compared to nearly 113,000 private stores. People may have to travel several
kilometers to reach a state store and wait in the queues for longer times.

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The President of the Venezuelan Food Industry Chamber noted that the decision does not help
address the issue of food shortages. Most of the traders will resort to hoarding by buying from
the state owned shops and then resell at higher profits.
The only way is to increase production in the country, he said. The official added that the
government has not discussed the plan with the Chamber before implementing it.
Venezuelan government imposes rigid currency controls and consequently a shortage of foreign
exchange makes it very difficult for traders to import rice and other goods.
Recently, Venezuelan government also hinted that it would not renew the PetroCaribe deal with
Guyana after it expires in November this year. Local sources say the government is in talks with
the Uruguayan government to strike a new rice import deal.

VFA Lowers Vietnam Rice Export Forecast


to 5.91 Million Tons
Jul 24, 2015

The Vietnam Food Association (VFA) has forecast Vietnam to export around 5.91 million tons
of rice in 2015, down about 6.5% from an earlier estimated 6.32 million tons exported in 2014,
Reuters quoted a report from the VFA.

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The decline is mainly due to a likely fall in the last quarter shipments. The VFA is forecasting
Vietnam to export around 1.4 million tons of rice in October-December 2015 period, down about
22% from an estimated 1.8 million tons in July-September 2015 period. Vietnam exported
around 2.71 million tons of rice the first six months of 2015, down about 10% from around 3.015
million tons last year.
The VFA's latest forecast is much below the government's projection at around 7 million tons.
The UN's Food and Agriculture Organization (FAO) is estimating Vietnam to export around 6.3
million tons , almost unchanged from last year. USDA estimates Vietnam to export around 6.7
million tons of rice in 2015.
Vietnam 5% broken rice is currently quoted at around $350 per ton compared to Thai 5% rice at
around $380 per ton, India 5% rice at around $390 per ton and Pakistan 5% rice at around $375
per ton.

EU Farmers Association Warns About


Impact of Increasing Duty-Free Rice Imports
Jul 24, 2015

As negations between the European Union and Vietnam regarding the EU-Vietnam Bilateral
Free Trade Agreement (EU-V BFTA) are in their final stages, the European association of EU

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farmers unions and cooperatives (Copa-Cogeca) has expressed concern about the future of the
EU rice growing sector.
The EU may import about 76,000 tons of rice, mostly husked and milled, from Vietnam at zero
percent duty if the EU-V BFTA goes ahead. The Secretary General of Copa-Cogeca is reportedly
sending a document highlighting all the concerns regarding the EU rice sector in the light of
increasing duty free imports from Asian countries to the Directorate General (DG) Trade and DG
Agriculture.
In the document, the Copa-Cogeca Secretary General noted that already increasing rice imports
from Cambodia (about 22% of EU rice imports) and Myanmar (about 3% of EU rice imports) in
the past three years have led to a decline of about 40% in the EU indica rice acreage to around
96,000 hectares from around 156,000 hectares. He warned that if the zero-duty rice imports
continue at this pace, there is a danger that the cultivation of Indica rice in Europe will disappear
entirely by 2020.
The Copa-Cogeca official noted that inclusion of Vietnam rice will further deteriorate the EU
rice situation as Vietnam FOB prices are the lowest in the South East Asia region and at zero
percent duty, they would be even more competitive and may directly compete with European
local indica varieties.
He also noted that the EU's ongoing FTA negotiations with India (which already accounts for
24% of EU rice imports), Thailand (which accounts for 18% of EU imports) and the U.S. (which
accounts for 4% of EU imports) despite granting all the tariff rate quotas (TRQs) to the third
world countries are likely to lead to an unrecoverable crisis in the EU rice sector.
He reiterated that the EU's stance to decouple specific support for rice production since 2012 has
put the position of European rice producers in even more vulnerable position. He also noted that
continuation of rice production in the delta area of the EU is most important to maintain
biodiversity in the region.
The official urged the EU not to grant further duty free TRQ for rice to any other country after
the EU-Vietnam FTA. He also stressed on the inclusion of a strict safeguard clause mechanism
in the same FTA in order to avoid any future crises in the EU rice sector.

Pakistan Urges Kenya to Lower Import Duty


on Rice
Jul 24, 2015

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Pakistan Finance Minister has met with the Kenyan High Commissioner and requested him to
review the high level of import duty on Pakistani rice, according to local sources.
He reportedly told the Kenyan official that the high import duty was affecting Pakistan rice
exports to Kenya in recent months.
Pakistan has accumulated around 600,000 tons of surplus stocks for the last two years and this
year's bumper crop of around 7 million tons is expected to push up the surplus stocks to over one
million tons. This year, Pakistan has been facing a stiff competition with India, Thailand and
Vietnam. Declining global prices and lack of demand from traditional importers is also a major
concern for Pakistani rice exporters.
Kenya, which is a part of the East African Community (EAC), imposes 75% duty on rice imports
from non-EAC countries. The EAC is keen on protecting the region's local rice sector from the
cheap imported rice from the Asian countries.

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Both Pakistan and Kenya agreed to discuss matters related to trade and business cooperation at
the upcoming Pak-Kenya Joint Ministerial Commission (JMC) meeting that will be held in
Pakistan.
Pakistan exported a total of around 3.73 million tons of rice in FY 2014-15 (July-June), up about
11% from around 3.37 exported in FY 2013-14, according to data from the Rice Exporters
Association of Pakistan (REAP).

Vietnam Expects High Interest from


Philippines Private Rice Traders
Jul 24, 2015

The Philippines National Food Authority (NFA), which has already imported around 550,000
tons of rice from Vietnam under government-to-government (G2G) contracts to ensure adequate
stocks in the lean season (June September). It has further allowed private rice traders to import
around 805,200 tons of 25% broken rice at 35% tariff under WTO minimum access volume
(MAV) country specific quota (CSQ) before November 30, 2015.
Under the quota, Philippines traders can import up to 293,100 tons each from Thailand and
Vietnam; up to 50,000 tons each from China, India and Pakistan; 15,000 tons from El Salvador
and the rest from other countries.
Vietnam rice exporters are expecting the Philippines traders to import the entire quota of 293,100
tons from Vietnam, according to local sources. The Vietnam rice export sector is facing trouble
as China, its major importer has increased imports from Thailand.
Vietnam is struggling hard to increase its exports this year due to a stiff competition from
Thailand, India, Pakistan as well as emerging exporters such as Cambodia and Myanmar.
Vietnam exported about 2.875 million tons of rice in January 1 - July 16, 2015, down about 21%
from about 3.63 million tons of rice exported in first seven months of 2014, according to data
from the Vietnam Food Association (VFA). Average rice export price so far in this year stands at
about $415 per ton (FOB), down about 4% per ton from about $431 per ton recorded during
same last year.
The Philippines private rice traders have so far applied to import only 300,000 tons of rice from
Thailand and Vietnam, Reuters quoted a NFA official.

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While the NFA is authorized to import another 250,000 tons of rice if the El Nino-induced
drought conditions intensify. The government is currently assessing the need for importing the
additional volume of rice, the Director of the Department of Economic Research at the Bangko
Sentral ng Pilipinas (BSP) told reporters.

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Page 19

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