High prices force RP to buy less rice abroad

MANILA, Philippines—An increase in the price of rice has forced the government to cut back on its planned purchase of the grain, deciding instead to buy 509,950 metric tons of the grain, mostly from Vietnam.

In its tender on Dec. 1, the second of four such offers, the government originally sought 600,000 tons of rice.

In a statement, the National Food Authority (NFA) said it has awarded bulk of the order, or 300,000 tons, to Vietnam Southern Food Corp. (Vinafood2).

The first 100,000 tons was priced at $598 a ton, the lowest price offered at the Dec. 1 tender. The next 100,000 tons fetched $630 a ton and the rest, $648 a ton.

The balance of 209,950 tons will come from Thailand, United States, China and Pakistan. The contracts were awarded to Louis Dreyfus Commodities Asia Pte. Ltd., Chaiyaporn Rice Co. Ltd and Asia Golden Rice for the supply of well-milled, long grain, white rice with 25 percent brokens.

Louis Dreyfus Commodities, represented by Canary Square International Corp., will supply 100,000 tons at $599 a ton—the second lowest bid after that of Vinafood2.

Of Louis Dreyfus’ 100,000 tons, about 70,000 tons will come from the United States and Pakistan, while 30,000 tons will come from China.

Chaiyaporn Rice Co. Ltd. of Thailand, represented by LG International Corp., will supply 100,000 tons of Thai rice at $639.95 a ton.

Asia Golden Rice, also from Thailand, will supply 9,950 tons at $653 per ton.

The shipments will be delivered in the first half of 2010.

When asked if the government would buy less than 500,000 tons in the next tender, which would be awarded next week, NFA spokesperson Rex Estoperez said: “That can happen. We cannot spend more than the budget.”

$331M budget

The NFA only had a budget of $331.5 million for the tender, indicating a price of $553 a ton. Offers ranged from $618.95 to $768.50 a ton.

Even if all the rice was bought at the cheapest price, the budget would only be enough for 535,000 tons.

On Nov. 4, the NFA bid out supply for 250,000 tons of white rice. The winning bids were priced at $468.50 and $480 a ton.

In its second tender on Dec. 1, the government sought 600,000 tons of grain. The government held a third tender on Dec. 8 for the same volume.

In its fourth tender on Dec. 15, the government raised its budget to P18.525 billion from P15.26 billion upon learning that rice prices had gone up.

The Philippines is considered to be the world’s largest importer of rice, securing 10 percent of its grain requirements from abroad. It imported 2.4 million tons in 2008 and 1.775 million tons in 2009.

NFA Administrator Jessup P. Navarro said the imported rice would serve as a food security buffer to offset storm-related crop damage during the main harvest season.

According to estimates from the Department of Agriculture, the country lost some 1.3 million tons of palay (unmilled rice) or an equivalent of 850,000 tons of white rice. Because of this, the government raised the NFA’s import ceiling to 2.4 million metric tons of rice for 2010.–Riza T. Olchondra
Philippine Daily Inquirer with a report from Reuters