Pangilinan explains low budget for rice buffer stock imports

MANILA, Philippines - After Wednesday’s failed bidding for the importation of rice buffer stocks, Food Security chief Francis Pangilinan said the government used conservative estimates in determining the approved budget for contract (ABC) for the shipments.

“We tried to bring it down as much as possible because we don’t want to burden the government with such a huge expense. That is why we put it in conservative estimates,” said Pangilinan on the sidelines of a coconut industry stakeholder meeting in Pasig yesterday.

“Market prices are very difficult to predict and it’s very difficult to over budget. So we will be discussing that according to the prevailing market prices,” he said.

The NFA special bids and awards committee on Wednesday rejected all bids for the importation of 500,000 metric tons rice buffer stock as all offers were way below the ABC of $456.60 per MT.

Bids submitted by LG International, Vietnam Northern Food Corp. (Vinafood 1), Louis Dreyfus Corp., and Vietnam Southern Food Corp. (Vinafood II) ranged from $460 per MT to as high as $496.75 per MT.

None of the bidders are prepared to supply the full volume. Only Vinafood 2 is prepared to supply as much as 400,000 MT. The three others were only prepared to supply up to 200,000 MT.

The NFA is expected to re-bid the supply contract by amending the ABC in the terms of reference, and possibly the period of delivery as the first tranche of deliveries are scheduled for the end of September. Once the rebidding for the contract is open, new suppliers may join the tender.

The government is still considering to procure the volume through government-to-government procurement, which would narrow down the supply competition between Cambodia and Vietnam, the only two countries with supply agreements with the Philippines.

A source from the Department of Agriculture (DA) said Thailand has not yet renewed its supply agreement with the Philippines.

The NFA Council held a special meeting yesterday afternoon, during which, it is expected to deliberate on the procurement options.

Either way, the government would strive to bring in stocks within the year, preferably within the original delivery period of September.

We’re working on the same delivery date by end of September, Pangilinan reiterated yesterday.

The high bids submitted by importers imply that they are unwilling to sell supplies at low prices because of prevailing high prices in the world market brought about by the prevailing lean season in Southeast Asia.

There is also a large demand for imports as Indonesia is also procuring 500,000 MT of rice this year. The NFA Council has also approved on standby the importation of another 500,000 MT for this year if needed.