Philippines closes new rice supply deal at $424.85/MT

02.09.2016

THE GOVERNMENT has accepted the bids of Vietnam and Thailand in a tender that closed on Wednesday for a combined 250,000 metric tons (MT) of rice imports for shipment later this month and the next.

In a statement released on Thursday, state grains agency National Food Authority (NFA) said the award was given after the two rice exporters -- the Philippines’ top rice suppliers too -- offered to close the government-to-government deal at $424.85 per MT. That price was $0.15 lower than the reference price of $425/MT set by the Philippines.

“The National Food Authority Council approved in a special meeting on August 31, 2016, the awarding of contract for the supply of 250,000 MT [metric tons] imported rice, 25% brokens, well milled at $424.85/MT to the Kingdom of Thailand and the Socialist Republic of Vietnam under a Government-to-Government (G-to-G) Procurement Scheme held on the same day,” the NFA statement read.

The accepted price would translate to a total of $106.21 million for the purchase of the 250,000 MT.

Of the 250,000 MT, Thailand through its Department of Foreign Trade will supply 100,000 MT, while Vietnam’s Vina Foods II, the rest.

Forty percent of that volume is for delivery end of September while the remaining 60%, by end-October, the NFA said.

The grains agency initially rejected higher bids from both countries and asked them to submit revised offers citing a government-to-government procurement scheme, where the offer should be equal to or lower than the reference price. The scheme is covered by a memorandum of agreement between the Philippines and the two rice-exporting countries.

The 250,000 MT will be the first shipment of the 500,000 MT standby authority earlier approved by the NFA Council “for buffer stocking of the government to fill-in the gap estimated at 5% of national production caused by the El Niño phenomenon that hit the country in the last quarter of 2015 until the second quarter of this year.”

NFA is mandated to maintain a 30-day inventory level during the lean months of July to September and a 15-day stock at any given time.

“This will give NFA sufficient lead time to preposition the stocks nationwide in time for the season of tropical storms and typhoons which usually occur during the end of the third quarter until the fourth quarter,” read the NFA statement.

Earlier, Socioeconomic Planning Secretary Ernesto M. Pernia said that the country had sufficient rice stocks “for the rest of the year” but the country is poised to take advantage of the prevailing low global prices of rice to cover portions of 2017 demand.

Hence, the government plans to import a total of 1 million MT, of which 750,000 MT will be through government-to-government deals and the balance of 250,000 will be brought in by private traders.

“The shipment will be delivered door-to-door to NFA designated warehouses under the cost insurance freight-delivered at place terms,” according to the statement.


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