Philippines eyes re-tender, govt-to-govt deal for 500,000 T rice imports

By Enrico Dela Cruz, Reuters

Posted at Aug 28 2014 09:41 AM | Updated as of Aug 28 2014 05:41 PM

MANILA - The Philippines is considering re-issuing a buy tender or doing a government-to-government deal for its rice import requirement of up to 500,000 tonnes, after rejecting all offers in a tender that closed on Wednesday because the prices were too high.

The imports, originally for arrival between September and November, were meant to beef up state stockpiles and bring down local retail prices. Expensive domestic rice has helped push food price inflation to its highest in more than five years.

The government had set an undisclosed budget of $456.60 per tonne and rejected bids that came in ranging from $460 to $496.75 per tonne.

Food security chief, Francis Pangilinan, said he was seeking a special meeting of the government panel that approves rice imports as early as Thursday to decide between the two options.

"We either rebid or go to government-to-government importation," he told reporters after the National Food Authority (NFA), the state grains procurement agency, announced its rejection of the bids submitted in Wednesday's tender.

Four traders submitted bids, namely Vietnam's Vinafood 1 and Vinafood 2 and global commodities traders Louis Dreyfus and LG International.

The budgeted price may have been "unrealistic" because it was set two weeks ago, said NFA Spokesman Rex Estoperez. The state stockpiles were still at "safe" levels despite the possible delay in shipment, he said.

The Philippines can enter into government-to-government deals with Vietnam and Cambodia, with which it has emergency supply agreements. A similar agreement with Thailand expired last year.


A new supply deal would bring the Philippines' total duty-free shipments this year to around 1.7 million tonnes, the most in four years. Additionally, the private sector can import 350,000 tonnes this year subject to a 40 percent tariff.

The Philippines expects to miss its rice output target of 19.07 million tonnes this year by 2 percent, based on the latest forecast by the Philippine Statistics Authority.

The forecast could be revised down if strong typhoons hit rice-producing provinces in the second half of the year and damage crops or prevent farmers from planting more.

With crop losses possible in the next four months, the government has also authorized the NFA to import 500,000 tonnes more for emergency needs, on top of the volumes tendered on Wednesday and in previous months.

Major rice exporters such as Vietnam and Thailand are looking for any signs the Philippines may need to import more, hoping to unload grain from their huge stockpiles.

Vietnamese rice prices are expected to rise over the next few weeks on expectations that the supplies to fill Philippine demand will come from Vietnam, traders said on Wednesday.

Vietnamese 5 percent broken grade rice was quoted at $450-$455 a tonne, free-on-board Saigon Port, on Wednesday, compared with $455 a week ago.

With Philippine rice imports this year possibly exceeding 2 million tonnes, the country is on track to become the world's No.3 buyer as ranked by the United States Department of Agriculture (USDA), up from the No.8 spot last year.

The USDA has forecast that the Philippines may also need to import as much as 1.6 million tonnes in 2015.

The Philippines has agreed to loosen tariff restrictions on rice imports starting next year under a new deal with the World Trade Organisation.