NFA rejects rice supply offers

MANILA, Philippines – The National Food Authority (NFA) on Tuesday, June 16, rejected offers for the supply of 100,000 metric tons (MT) of rice as both initial and revised orders were above the reference price.

The NFA Council is expected to decide Wednesday, June 17, based on the provisions of the terms of reference of the tender, if the lowest offer for the day, $416.85 per metric ton (MT), may be considered for award.

The offer was made by Vietnam’s Southern Food Corporation (Vinafood 2) against the reference price of $408.14 per MT.

All initial offers from the governments of Thailand (represented by the Department of Foreign Trade); Vietnam (Vinafood2); and Cambodia (Green Trade Company/Cambodia Rice Federation) were way above the reference price with offers of $418 per MT, $417 per MT, and $459.50 respectively.

Thailand declined to make another offer.

“The price is too low, it is even lower than the last (reference) price,” said Malou de Leon, marketing officer of the commercial affairs of the Royal Thai embassy.

Cambodia and Vietnam then revised their offers to $455.50 per MT and $416.85 per MT respectively.

De la Cruz said the 3 countries likely placed high offers because they have other markets or buyers who can buy at higher prices. China, for instance, is keen on importing around 2 million MT, an attractive supply destination for major rice exporters.

Patricia Galang de Jesus, lawyer and executive assistant to the NFA administrator, said the agency is deferring the decision, saying that under the terms of reference, the mechanism is that NFA should reject the offers – if these are above the reference price.

“But the second sentence says the revised offers will be evaluated based on the lowest price [thus] we are referring the matter to the NFA Council for their decision,” De Jesus said.

NFA bids and awards committee chair Joseph de la Cruz said another option for the council is to order a fresh tender using a new reference price. He added there is no precedence to considering the lowest revised offer and that the agency may be questioned by the state auditors.

Why import?

The 100,000 MT of rice should be imported by August to boost the NFA’s buffer stock for the lean season.

The government was able to procure only about 150,000 MT of the 250,000 MT programmed rice importation for buffer stocking in the second half of the year.

De la Cruz said domestic stocks are still abundant as traders and millers have large inventories at hand.

The government, however, has to pursue the importation of the remaining volume under the programmed importation to secure buffer stock in the event of calamities. This will allow them to respond to relief requirements.

NFA maintains a stockpile sufficient for 24 days equivalent to 750,000 MT. The state grains procurement agency is mandated to maintain a buffer stock sufficient for 30 days. – Rappler.com