Vietnam Daily News

Philippines may import 75pct quota of rice from Vietnam in 2012

Written by Dailynews.vn Tuesday, 13 December 2011 18:45

The Philippines' National Food Authority (NFA) said that it would maintain the rice import quota of 500,000 tonnes in 2012 and the quota will be assigned to this nation's private companies, the Thoi bao Kinh Te Vietnam (Vietnam Economic Times) reported.

According to NFA, 75 percent of the quota of 500,000 tonnes of rice will be imported from Vietnam and conducted by private firms. The bidding time will come soon in January 2012.

In 2011, Philippines imported 850,000 tonnes of Vietnamese rice mainly under the governmental contracts, much lower than 1.47 million tonnes recorded in the same period of 2010. It was the first year the Philippines government allowed private companies to dominate the rice import and the government purchased only 200,000 tonnes.

To cope with the change in Philippines' rice import, Vietnam represented by Vietnam Food Association (VFA) proposed to assign the task to four big companies namely a firm in Tien Giang, ATC Kien Giang, Docimexco (Dong Thap province) and Angimex in An Giang province. These firms were responsible for negotiating with Philippines traders, rice volume in the assignable contracts will be allocated to other enterprises.

But, the four traders only succeeded in a small volume.

After unsuccessful negotiations with big rice exporters, Philippines traders purchased rice 2,000-3,000 tonnes of rice per time from Vietnamese private enterprises at low prices. As a result, Vietnamese traders accepted big losses because of signing at low selling prices whereas the domestic paddy prices were on rise. Hence, some Vietnamese firms cancelled contracts and Philippines partners shifted to other exporters. In 2011 early, domestic firms sold 25 percent-broken rice at $400 per tonne (FOB) while the price of this kind of rice was $500 per tonne in the local market.

So, VFA noticed that rice exporters were free in discussing with Philippines companies. Those who could sell rice will have to report to the association.

After several times of rice exports to Philippines this year, the big lesson was learnt that Filipino traders have small finance strength so banks did not accept to open Letter of Credit (L/C) for them. They are capable of paying for importing 3,000-5,000 tonnes of rice.

In addition, a Philippines trader as receiving the government quota of importing 30,000 tonnes at an assigned port, then they will have to move [re-import] rice via another port. And quota will be turned over for many times.

Factually, the Manila government assigned private importers to buy about 650,000 tonnes in 2011, but a source said that in the first 10 months, the traders imported up to 720,000 tonnes of rice from Vietnam.

While Vietnam is unable to supervise, Philippines government seemed to ignore this action of traders.

Actually a lot of Vietnamese rice companies suffered big losses in the rice market of 2011. VFA said to build a suitable solution to prevent the repeat of this happening.

Source: www.intellasia.net/news/articles/business/111350608.shtml