The National Food Authority (NFA) Council has approved the purchase of about $100 million worth of rice from Vietnam after accepting a revised offer from Hanoi as the state agency scrambles to build up buffer stocks of the staple in anticipation of the June-August lean season.
According to an NFA statement, the interagency NFA Council, in a special meeting last June 17, awarded the contract for the supply of 100,000 metric tons (MT) of long grain white rice (25 percent brokens) to Vietnam based on their revised offer of $416.85/MT under the government-to-government procurement scheme.
Vietnam was earlier awarded the supply contract for 150,000 MT, 25 percent brokens well-milled long grain rice. With the 100,000-MT supply contract, it now has a total contract award of 250,000 MT.
The average price of $412.81 per MT for the 250,000 MT is lower than the $421/MT offered last February and $475/MT in September 2014. The total price for the 250,000 MT to be supplied by Vietnam is $103.2 million.
The NFA said the first rice shipment from Vietnam is expected to arrive in the country by August 15.
Vietnam’s winning revised offer was above the $408.14 per MT price ceiling set by the Philippines.
The NFA Council accepted Vietnam’s revised offer after the NFA committee on government-to-government procurement (CGGP) elevated the case to the council.
The CGGP initially rejected the offers from Cambodia, Thailand and Vietnam, which are way above the government’s reference price for 100,000 MT well-milled long grain white rice at 25 percent brokens.
Thailand offered $418 per MT for 100,000 MT; Vietnam offered $417/MT for 100,000 MT; and Cambodia offered $464/MT for 50,000 MT.
In the second round of bidding, Thailand withdrew, saying that the Philippine government’s reference price was too low against the average prevailing price in the world market.
Cambodia revised its offer to $455.50/MT for the supply of 50,000 MT, while Vietnam offered $416.85 per MT for the supply of 100,000 MT. Both offers were still beyond the price ceiling set by the NFA Council. It was at that point that the CGGP elevated the case to the NFA Council.
The 100,000 MT is part of the 250,000 metric tons approved by the NFA Council for importation through the recommendation of the food security committee in preparation for the lean season when supply of rice is traditionally low and prices are high.
The NFA has to maintain a 30-day buffer requirement beginning the lean month of July. The NFA has at present a buffer stock of 750,000 MT of rice. This is enough for the next 24 days.
The NFA Council is chaired by Francis N. Pangilinan, the presidential assistant for food security and agricultural modernization, with representatives from the NFA, the Bangko Sentral ng Pilipinas, Development Bank of the Philippines, Land Bank of the Philippines, Department of Finance, Department of Trade and Industry, National Economic and Development Authority and a farmer’s representative.