The National Food Authority (NFA) is now considering buying its 500,000 metric tons rice requirement through a government-to-government (G2G) deal after Wednesday’s failed tender, the Presidential Assistant on Food Security and Modernization (PAFSAM) said.
In an interview on the sidelines of the 28th Cocoweek celebration, PAFSAM Secretary Francis Pangilinan said he has called for a special meeting with the interagency NFA Council to discuss other options for the rice procurement, including rebidding the failed tender or a negotiating a government-to-government transaction.
“We will finalize the details. Right now, we have supply agreements with the governments of Vietnam, Thailand and Cambodia,” Pangilinan said.
He added that they expect the same delivery date, which is by end of September, for the half million tons of rice.
The G2G proposition, however, may prove to be problematic as Thailand’s rice supply agreement with Manila expired in December 2013, and has not been renewed since.
According to an NFA source, a government-to-government transaction would require an executive agreement for a country to participate in the bidding of the rice. Political crisis in Thailand continues to paralyze its government’s functions, including the much-needed Congressional approval for the renewal of trade agreements.
“To conduct a G2G now will result in Vietnam as a runaway winner. We are also not sure if we can get better price offer,” the source said. Two Vietnamese state-run grain agencies were among the four whose bids were rejected as too high on Wednesday.
Meanwhile, Pangilinan denied that they have intentionally underestimated the budget for the rice procurement, saying that they will study if the approved budget for the contract (ABC) is still realistic with respect to prices in the world market, as traders refused to sell their grains lower than the price ceiling set by the NFA.
“That’s what happens when you conduct a tender. It’s difficult to predict market prices . . . and it is very difficult to over-budget,” he said.
Pangilinan said he would discuss with the NFA Council possible adjustments to the ABC, with consideration to the current prevailing market prices.
On Wednesday, the state-run NFA announced a failure of bidding for Manila’s 500,000 MT rice requirement after qualified bidders submitted offers that were higher than the $456.60 per MT ABC.
The state-run grains agency received a total volume offer of 750,000 MT of rice from four bidders, including Vinafood I, Vinafood II, LG International Corp, and Louis Dreyfus Corp.; the bid offers ranged from $460 per MT to $496.75 per MT.