RP to buy 600,000 tons of Vietnam rice
Philippine Daily Inquirer
First Posted 01:17:00 06/19/2008
Filed Under: rice problem, Agriculture, International (Foreign)Trade
MANILA, Philippines—The Philippine government agreed on Tuesday to buy 600,000 metric tons of rice from Vietnam through a government-to-government deal, bringing to 2.3 million metric tons its total rice imports for 2008.
The Philippines, the world’s biggest rice importer, paid an average of $940 a ton, including freight, for the latest purchase. The rice is expected to be delivered in July, August and September.
“This is sufficient for the 2008 requirement,” Agriculture Secretary Arthur Yap said in a telephone interview.
In a statement, Yap said the purchase was made in keeping with government plans to go back to the market to further augment its “buffer stocks when the price and other conditions are suitable for us.”
“In this instance, we have been able to secure a good deal with Vietnam and saw this as a good opportunity to expand our stockpile, especially in light of the recent uptick in global rice prices,” he said.
Prices decline
Benchmark Thai rice prices fell to about $795 per ton FOB on Wednesday, continuing a decline from a peak of about $1,080 on April 24 on the back of the Philippine flurry of purchases and export curbs by producing nations.
The trade restrictions, along with higher costs of oil and farm inputs, rising global demand, drought, biofuel production and price speculation, pushed up grain prices to record highs.
The leap in the price of rice, a staple for half the world’s population, fed into a global food crisis that triggered protests around the world and threatened hunger for nearly 1 billion people.
In the Philippines, the rise in the cost of regular milled rice to more than P30 a kilo in April, from about P25-P27 a kilo in March, drove people to queue for state-subsidized rice sold at only P18.25 a kilo.
So far, the Philippines has spent around $1.54 billion importing its rice requirements, mainly from Vietnam and Thailand, for the year.
At its last successful rice tender in April, the Philippines paid an average of $1,136 a ton, up 60 percent from a tender in March.
The Philippines scrapped a tender for 675,000 tons of rice in May, saying it preferred to wait for international prices of the grain to decline as more supply reaches the market.
Market very quiet
“The Philippines-Vietnam deal emphasized that Vietnam had ample supply to export and other buyers would shift to buy from Vietnam,” a Thai trader said.
Another trader said the market was very quiet. “Most buyers are waiting for lower prices in July when Vietnam is expected to lift its ban on rice exports,” he said.
Vietnamese Prime Minister Nguyen Tan Dung said early this month that the country’s total exportable rice stock this year was around 4.1 million to 4.2 million tons, of which 2.12 million tons have already been exported.
The country, one of the world’s top three rice exporters, had banned rice shipments until the end of June as it looked to secure domestic supply in the face of soaring prices, helping boost demand for rice from top exporter Thailand.
Demand to drop
Vietnam’s food association would meet in mid-June to discuss details on resuming rice exports from July, traders said.
Thai rice prices were expected to fall further as the world’s rice supply increases while demand was likely to drop as key buyers, including the Philippines, had already bought big lots.
The Philippines initially sought to buy 2.1 million tons of rice, not only to cover the projected 10-percent production shortfall, but to also keep the buffer stock within the 30-day level until the end of the year.
The National Food Authority is tasked with maintaining a 15-day buffer stock throughout the year, and a 30-day stockpile during the lean months (July-September). Filipinos consume some 33,000 tons of rice daily.
Vietnam is one among the eight countries that the Philippine government wrote a few weeks ago, urging it to sell rice through a government-to-government scheme. It is the lone country that heeded the Philippine request.
Yap had said that Vietnam’s offer formed part of the agreement signed between Manila and Hanoi earlier this year, with the latter pledging to supply as much as 1.5 million tons to the Philippines if and when possible.
Alternative
After it scrapped a tender for 650,000 tons last month, the Philippines resorted to alternative modes of procurement because tenders for huge volumes contributed to the surge in rice prices in the global market.
The Philippine government will still continue to aggressively buy rice in the international market in preparation for the typhoon season, but it will do so confidentially so as not to destabilize world prices, Yap earlier said.
He said the Arroyo administration was committed to ensuring the nation’s food security not only by maintaining adequate supplies, but also by providing access to food at affordable prices and by ensuring fair market practices.
Target production
The government seeks to achieve 98-percent self-sufficiency in rice by 2010, with a target production of 19.8 million tons.
“Our immediate focus continues to be on enhancing the distribution of rice, stabilizing food prices, and cracking down on rice cheats,” Yap said.
“We will continue to provide NFA rice at subsidized prices to those members of our society who are most vulnerable.” Reports from Amy R. Remo and Reuters
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