GOVERNMENT EYES DIRECT RICE PROCUREMENT
MANILA, MAY 7, 2008 (STAR) By Paolo Romero - President Arroyo ordered authorities to scrap the rice tenders and resort to direct rice purchases from foreign governments or local farmers to boost the country’s grains reserves following the failed bidding last Monday.Mrs. Arroyo told reporters in Camarines Sur late Monday that suppliers from Thailand and Vietnam, two of the world’s top producers, and other rice-producing nations are reluctant to join biddings that tend to drive up the price of rice in the international market.
The Philippines, the world’s largest rice importer, was earlier blamed by foreign analysts for driving up rice prices with its rice tenders. This was strongly denied by officials, who said bidding rules require transparency.
The National Food Authority (NFA) tried to purchase 675,000 metric tons of rice last Monday but the bidding failed after the sole bidder – Vietnam’s state-owned Vinafood II – lacked documents necessary for the transaction to push through.
Agriculture Secretary Arthur Yap told reporters prior to a Cabinet meeting at the Palace yesterday that under Republic Act 9184 or the law on procurement, a negotiated contract can be entered into if there is a failed bidding.
He said the government can either go through government-to-government negotiation to buy rice or the NFA would purchase rice directly from local farmers or both.
“Now that we have our 10 percent volume (from previous rice imports), I have instructed the NFA to go all out to ensure that the last remaining harvest from the summer crop can be bought by the NFA,” Yap said.
“I think the important thing to note is we would enter the lean months with more than 30 days’ buffer stock. That’s the most important thing, that we managed to contract the 10 percent gap, so whatever we would be buying in the coming months, we have flexibility and it is to maintain the buffer stock until December because the buffer stock would be depleted if we don’t add to it,” he explained.
He said he met Monday night with local wholesalers and traders and invited them to join the May 9 private sector bidding for 163,000 metric tons of rice. At least 400,000 MT of rice are needed to ensure the 30-day buffer stock, he said.
He gave assurances that there would be transparency in the new modes of rice purchases through the Government Procurement Policy Board.
Yap said sourcing rice locally or through direct government-to-government procurement is very easy to do.
“It could be a mixture of these two options,” he said.
He said the government will decide on which mode to use based on “what’s ready to go.”
He said a government-to-government purchase could allow the Philippines to import rice at lower prices.
Malacañang clarified that there is no cause for alarm over the failed bid of Vietnam’s state-owned Vinafood II to supply 675,000 tons of rice to the NFA.
Press Secretary Ignacio Bunye told reporters the 675,000 tons of rice from Vietnam were intended to serve as a rice buffer stock.
Vinafood was the only firm that participated in the bidding but the supplier’s documentation was incomplete, prompting authorities to declare the bidding a failure.
The NFA canceled its latest tender after the Vietnamese state firm refused to post a required bank guarantee.
Bunye said Secretary Yap had assured the people that the primary requirements for rice reserves are filled despite the failed tender of Vinafood.
“I don’t think this (failed tender) will really affect our rice supply since we already bought what we need,” Bunye said.
He said the country is well on its way to being self-sufficient in rice with the recent signing of a Memorandum of Agreement between the Department of Agriculture (DA) and the International Rice Research Institute (IRRI), which will lead to improved rice production in the country.
Under the agreement, the DA and IRRI will undertake joint efforts to increase rice production in the Philippines starting this rainy season by planting new high yielding varieties and hybrids.
Officials also said that they preferred to hold back importing more rice until prices fall, sending a signal to world grain markets that rice prices might have peaked.
The government’s willingness to wait could give some breathing space to importers. Prices have trebled this year with world stocks at their lowest since the early 1980s and demand strong.
The Philippines, the world’s top rice importer, said prices were on a downward trend and, after canceling a tender for 675,000 tons, said it could wait until later this year, possibly the third quarter, to return to the market.
And in Spain, the chairman of Ebro Puleva, one of the world’s biggest rice sellers, said rice prices could fall to as low as $600 a ton next year.
Thai 100-percent B grade white rice, the world’s benchmark, was trading at $990 a ton on Monday after touching $1,000 on panic buying fueled by export curbs by India and Vietnam.
“Next year it is likely we find a level of prices in Bangkok and India ... that could be in the range of $600 and $750,” Ebro Puleva chairman Antonio Hernandez said. “I don’t think current prices can be maintained much longer.”
Developing countries have borne the brunt of food price inflation – dubbed by the World Food Program as a “silent tsunami” sparking a rash of protests in Africa, the world’s poorest continent.
Leaders attending the annual meeting of the Asian Development Bank in Madrid said on Sunday the region was at risk of undoing a decade of gains because of soaring food prices that could also spark social unrest.
Finance ministers spoke of dire consequences, including riots, if the food price spiral continued.
In Southeast Asia, countries have agreed to cooperate over the rice market, but no measures have been unveiled.
The Association of Southeast Asian Nations (ASEAN) already has an emergency rice reserve of around 87,000 tons.
Thai Prime Minister Samak Sundaravej has revived talks of an “OPEC-style” rice cartel in Southeast Asia involving producers Thailand, Vietnam, Myanmar, Laos and Cambodia. But analysts have said the idea was unlikely to gain traction.
Cambodia’s Prime Minister said on Monday that a rice cartel would be designed to help and not hinder food security.
Sen. Manuel Roxas II lamented yesterday that over 20,000 grade school students in Eastern Visayas are affected by the rice crisis after the Department of Education suspended the food-for-school program due to the worsening rice crisis.
“The food-for-school program has been successful in improving nutrition and reducing dropout rates among school children. It is extremely worrisome that the rice crisis now poses a direct threat to the viability of this education program,” Roxas said.
Roxas urged the executive branch to cut public expenditures in other areas in order to sustain the government’s food-for-school program.
Roxas, chairman of the Senate committee on trade, supports the expansion of the food-for-work program, where poor families are harnessed to help in their communities.
Some 120,000 bags of rice shipment from Vietnam have arrived and are being unloaded at Poro Point in San Fernando, La Union, while 214,050 more bags of Thailand rice are expected to arrived this week.
Susan Buncab, senior grain operations officer of the NFA regional office, told The STAR that the shipment is part of the 2.2 million rice bags allocated for Ilocos and the Cordillera regions.
Of the 2.2 million bags, a total of 1,049,050 bags were already delivered and the whole shipment will be completed by August.
Joseph dela Cruz, NFA regional director, said the country should find more suppliers to sustain the rice needed by the public especially during lean months.
San Fernando Mayor Pablo Ortega distributed 250 bags of hybrid rice seeds to local farmers as one of the counter-measures against the continuing rice crisis that had befallen the country. – With Christina Mendez, Jun Elias
Reported by: Sol Jose Vanzi
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