Rice import rights to be awarded to traders next month

THE NATIONAL FOOD Authority (NFA) plans to award before the middle of next month permits to import rice to traders who qualified to do so in the auction last Wednesday, an official of the state grain agency said yesterday.

Farmers feed newly harvested rice stalks to a thresher in a ricefield in Mogpog town on Marinduque island in this photo taken last March 13. -- Reuters

NFA expects delivery of the private sector rice -- totaling 600,000 metric tons (MT) -- to start in May and targets to have all targeted 860,000 MT in the country before the annual three-month lean season starts in July.

"We plan to grant notices to import to the final list of qualified traders two to three weeks from now, so they can partake of the spring harvests of exporting countries while prices haven’t shot up," Gilberto E. Lauengco, special assistant to NFA Administrator Angelito T. Banayo and co-chairman of the bids and awards committee (BAC), said in a phone interview yesterday.

Arrival by June 30

He said that qualified traders will be given 60 days from receipt of NFA notice to complete their orders and that shipments should arrive at Philippine ports from May 10-June 30.

The government accepted last Wednesday bids from 35 traders totaling 693,748 MT.

Twenty bidders from Luzon offered to bring in 394,748 MT, while 15 bidders from the Visayas and Mindanao accounted for the balance of 299,000 MT.

The pre-qualified traders vied for a portion of the quota by offering a service fee above the floor price of P100 per 50-kilogram bag or P2,000/MT.

Each trader was allowed to propose an import volume of 2,500 MT-20,000 MT.

The National Food Authority could earn at least P1.2 billion from the service fees pledged by the private sector importers, Mr. Lauengco said.

The top bidder hailing from Luzon proposed P2,305/MT for 19,650 MT of rice amounting to P45.29 million.

Stricter now

The pre-qualified bidders were narrowed down from an initial pool of 59 interested traders, based on their financial, logistical and operational capabilities to import hefty volumes of rice, the BAC official explained.

"As dictated in RA (Republic Act) 9148, bidders are required to submit around 20-30 government documents so we can weed out dummy corporations, smugglers, traders with little to no experience in large-scale importing, and corporations that may not have the money to import," Mr. Lauengco explained.

The pre-qualified bidders, however, will still go through a post-qualification process lasting a week or two to determine the veracity of their papers, he noted.

On the other hand, 24 bidders were disqualified for failing to pass BAC criteria or for mere technicalities such as submitting incomplete requirements or uncertified copies of government forms, Mr. Lauengco said.

"We used to give leeway to some traders who forgot to include certain requirements in their envelopes, allowing them a few days to complete their documents, but we are much stricter now with compliance," the official said.

"Some bidders complained about our tougher screening process, but they have to understand that we are putting national food security into the hands of the private sector," he continued.

Penalty

Moreover, the cash-strapped NFA will be forced to bring in any amount a winning bidder will fail to import by June.

"There would be no time to bid out the remaining volume anymore, so I suppose we will just have to beg for funding to fulfill the import requirement," Mr. Lauengco said.

BAC rules state that an erring trader will have to pay a performance bond equal to 5% of the total value of its committed volume, apart from forfeiting its right to import rice, he added.

Last year, the private sector was allowed to import 200,000 MT of a total record volume of 2.45 million MT, which drove global rice prices to record highs.

The current private sector quota makes up nearly 70% of the total target volume of 860,000 MT, reducing the state grain agency’s import burden to 200,000 MT this year.

The remaining 60,000 MT will be allocated to small farmers’ cooperatives that will be bidding for the volume on April 4, Mr. Banayo said via text.

An invitation to the event will be published on newspapers on Sunday, March 27, he added.

Traders who were disqualified from Wednesday’s tender have until Saturday, March 26, to appeal to the BAC, which will spend a week to decide on their cases, Mr. Lauengco qualified.

The final roster of importers, therefore, could change depending on the results of the appeal period and post-qualification process, Mr. Lauengco said. -- Eliza J. Diaz

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Not enough funds for local purchases

THE GOVERNMENT may be able to buy just three-fourths of its targeted 870,000 metric tons (MT) of locally grown rice this year, even as the National Food Authority (NFA) moves to channel funds from frozen capital expenditures and service fees from private rice importers.

"It’s possible for NFA to procure only 3.8% or close to 4% of total palay production this year, since we are short on funding," the grain agency’s administrator Angelito T. Banayo said in a phone interview earlier this week.

NFA’s target procurement volume equals 5% of the Agriculture department’s palay production target of 17.4 million MT for 2011, but the state grain agency would need P14.79 billion to buy the targeted local amount based on a purchasing price of P17 per kilogram.

NFA’s projected shortfall in local purchases could be as much as 208,800 MT, or 24% of the targeted 870,000 MT. This, even as the agency moves to augment the P2.5 billion it has allocated for local purchases this year with funds from import service fees and those freed up from suspended projects.

Last year, NFA planned to buy 612,000 MT of local palay, about 3.5% of the production target of 17.4 million MT. Bureau of Agricultural Statistics show, however, that palay production in 2010 was only 15.77 million MT, while Mr. Banayo said actual procurement totaled a little over 500,000 MT. "Palay procurement last year was about 3.2% of actual production last year," he noted.

Mr. Banayo said NFA could use about P900 million of the expected P1.2 billion in service fees to be paid by private rice importers this year.

He added that he "postponed the construction of new warehouses and I do not intend to approve them this year, so this should give us an additional P250 million-P300 million."

"Since we are reducing our imports, it’s doable for us to make do with our current warehouses," he said. -- Eliza J. Diaz

(Source: http://www.bworldonline.com/content.php?id=28650)