NFA saves P95M in Vietnam rice purchase


The National Food Authority (NFA) has clarified that contrary to reports, not a single centavo was lost but it instead managed to save some P95.45 million from the 205,700 metric tons of rice that it imported from Vietnam in April this year.

This developed as the NFA described as malicious and pure lies the report that some P457 million were lost from the government coffers as a result of such transaction.

In a statement, NFA Deputy Administrator Ludovico Jarina raised the possibility that some groups that are directly affected by the reforms being initiated by Agriculture Secretary Proceso Alcala and Administrator Orlan Calayag, could be behind the smear campaign against the agency.

They also believe that the groups deliberately fed lawyer Argee Guevarra with false data and information to earn his sympathy and use him in their campaign to put the NFA in a bad light.

Jarina explained that Guevarra used the wrong formula to make it appear that the $459.75 per metric ton that the NFA bought from Vietnam’s Southern Food Corp. II was overpriced.

He noted that on the contrary, the freight on board (FOB) price of $365 per metric ton that they entered was way lower than the FOB reference price of $376.28 or P15,480 per metric ton that Guevarra proposed.

As a result, the NFA managed to save P95.45 million because its buying price was lower by $11.28 or P462.48 per metric ton than what Guevarra wanted based on P41.14 to $1 exchange rate.

“Atty. Guevarra made an erroneous conclusion because the FOB price he referred to was FOB for delivery up only to the ports of Vietnam, while the FOB price for the rice purchased by the NFA will be delivered directly to our warehouses all over the country” he averred.

“In the delivered duty unpaid-free on warehouse [DDU-FOW] system, the seller is obligated to deliver the [rice]in their pre-determined destinations and they will be the ones who will shoulder payments for insurance, transportation and others costs except for the tariff” he added.

“In contrast, the FOB that Guevarra preferred is good only for delivery up to the port of origin even as the seller will not be responsible anymore on other necessary expenses and payments” Jarina pointed out.

He also belied the claims of Guevarra that the agency purchased an additional 18,700 metric tons of rice under the government to government agreement noting that the move was authorized under the so called 10 percent more or less at supplier’s option provision.

Jarina stressed that being the seller, Vietnam exercised the option and opted to sell additional 10 percent to the NFA or an equivalent of 18,700 metric tons, which was subsequently approved by the NFA Council under Resolution 682-2013.

Jarina elaborated that the move also got the green light from the Fiscal Incentives Review Board (FIRB) under the tax expenditure subsidy (TES), which was also in stark contrast to the allegations of Guevarra that it did not pass the FIRB.

He added that the Bureau of Customs would not have allowed the product to leave the port had it not been properly settled under the TES.

“In short, the additional 18,700 metric tons was a legitimate deal but our critics want to make it appear that it was done under dubious circumstances” Jarina said.

“We just want to stress that our conscience is clear and that we are doing the best that we can to fulfill our mandate to ensure the stability of the supply and price of rice” Jarina declared.

“Interestingly, during the periods when we were importing a substantial volume of rice, no question was ever raised against the procedure followed to effect importation,” Calayag said.

“We can only surmise that the media campaign against our importation for this year may be the handiwork of those who have been affected by our efforts to cleanse the NFA,” he added.

“The NFA was judicious in dealing with Vietnam Southern Food Corporation II. In reference to the FOB price of $365, the CFR-FO price up to the port of destination was estimated at $459.75 per MT,” he said.

As at the contract with Vetnam is at CIF, DDU terms, Calayag said the estimation included transportation and other attendant costs in the delivery of rice to NFA warehouses for a total cost of $531.66.

Calayag also refuted claims that the NFA inserted, without any authority, an additional 18,700 MT to its government-to-government importation.

The NFA has awarded the supply of 187,000 MT of rice to Vietnam under the government-to-government tender, a fact that Guevarra failed to highlight in the reports.

The volume, which will be enough for six days, will form part of the Philippine government’s buffer stock for the lean months of July to September. It will also serve as contingency stocks during natural or man-made calamities.

The rice stock specified under the tender is 10 percent long grain white rice with 25-percent broken.

Asean member countries with existing memorandum of agreement for the supply of rice to the Philippine government were invited to submit their sealed offers and quotations, but only Thailand and Vietnam joined the tender held on April 3.

Thailand, through its Department of Foreign Trade, had a price offer of $568/MT with a minimum offered volume of 100,000 MT to a maximum of 187,000MT. For its part, Vietnam Southern Food Corp. had a price offer of $459.75 for the total maximum volume.

Calayag said that Vietnam’s offer was lower by $108.25/MT, noting that the bid offer was lower than the NFA’s 2012 rice import at $470.70/MT.

Vietnam’s quoted offer was significantly lower and therefore advantageous to the Philippine government.


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