NFA shuns negotiated deal for Thai rice

The National Food Authority (NFA) is not willing to go into a negotiated contract with the Thai government for the procurement of the 200,000 metric tons (MT) of rice which is part of the concession package Manila granted to Bangkok in exchange for the former’s retention of higher tariff on imported sugar.

"The NFA is constrained in negotiating because we cannot deviate too much from the prices of the winners of the March 12 bidding for rice imports," said NFA Administrator Arthur C. Yap.

Last month, NFA awarded four international companies the contract to bring in 210,000 metric tons (MT) of rice which is part of the 400,000 MT of rice the country is importing in the first semester to ensure buffer stocks for the lean months and as part of its contingency measures for the US-Iraq war.

The importation will cost approximately $404 million or about P2.2 billion.

The NFA awarded the contracts to state-trading agencies Vietnam Southern Foods Corp. (VSFC) which got the biggest chunk of 150,000 MT and Malaysian International Trading Corp. (MITCO) which bid for 20,000 MT. Two private trading companies were awarded 20,000 MT each: German firm Toepfer International and Thai firm Chaiyaporn Rice Co.

The lowest-price offer on the 25 percent brokens came from Toepfer which offered to bring in the staple at $183.44/ MT (C & F), followed by MITCO at $185/ MT (C & F), Chaiyaporn at $189/MT (C & F), and VSFC at $194.75/MT (C & F).

The Thai government has not yet set the price for the 200,000 MT of rice it wants to bring into the Philippines, but it wants to peg prices at the rate set by the Thai Board of Trade which are said to be slightly higher than the prices offered in last month’s auction.

"We can only consider negotiating with the Thai government, but they have to be more flexible and at least match the prices that we got in the bidding," Yap said.

Yap said that if the Thai government refuses to reduce its prices, the NFA will just auction the volume that needs to be brought in.

The Philippines and Thailand are set to sign a bilateral agreement that will allow the Philippines to maintain the 50 to 56 percent tariff on imported sugar, and even possibly raise this to as high as 80 percent.

The Department of Trade and Industry has agreed to allow Bangkok, a global rice exporter, to bring about 200,000 MT which will be bought by the NFA.

Out of this year’s projected rice imports of 800,000 MT, the NFA is mandated to buy half the entire volume while the other half is to be brought in by farmers’ organizations (FOs).

Thailand, a major rice exporter is a steady supplier of the country’s rice import requirements. Aside from being a big rice exporter, Thailand is also a leading sugar producer in the region.

"We should come up with a pricing mechanism for rice that should be favorable to the Philippine government," said Yap earlier.

He added the final volume to be imported by NFA will be bought under the minimum access volume (MAV) scheme which is the minimum volume of agricultural products that a country is obliged to allow into its market under the World Trade Organization (WTO). Under the MAV schedule, the rice import volume allowed for this year is 207,000 MT. Rice bought under the MAV is slapped a 50 percent tariff while volumes outside of the MAV is 100 percent.

The concession given by the Philippine government to Thailand involves importation of a substantial volume of Thai rice this year in exchange for the postponement of a bold cut in sugar tariff that should have beeen imposed on Jan. 1, 2003.— Rocel Felix