Rice imports overprice reached P825 million — NBI, BOC

INQUIRER FILE PHOTO

MANILA, Philippines — The government’s rice imports from Vietnam in 2013—which totaled 705,700 metric tons or around 14.1 million bags of 50-kilogram long grain white rice—were allegedly overpriced by as much as $18.8 million (around P825.4 million), according to National Food Authority and Bureau of Customs insiders.

Documents furnished the Philippine Daily Inquirer showed that some 205,700 MT of rice imports in April 2013 were overpriced by $34 per MT, while 500,000 MT imported in November were overpriced by $23.69.

“Multiplying an unexplained difference of $34 by 205,700 MT amounts to $6,993,800. At the prevailing exchange rate of P43.50 to $1 at the time of purchase, we have a peso value of P304,230,300,” said the NFA source.

The source, who asked not to be named for not having been authorized to speak to media, also said that in the November shipment, “if we multiply the $23.69 overprice by 500,000 metric tons, the unexplained difference would be $11,845,000.”

When the government entered into rice supply contracts with Vietnam Southern Food Corp. (Vinafoods II), the prevailing import prices for Vietnamese rice in April and November were $425.70 and $438.56 per MT, respectively. These amounts included additional costs for freight ($25/MT), insurance ($5/MT) and delivery from the port of entry to the NFA warehouse ($30.70/MT). Vinafoods II is a Vietnamese government-owned corporation.

But the NFA paid Vinafoods II $459.70 and $462.25 per metric ton for the shipments.

Several NFA insiders pointed out that in the US Department of Agriculture’s Grains Agricultural Information Report in late April 2013—the same period as NFA’s rice importation contract with Vinafoods II. “Vietnam rice averaged only $358.57 per metric ton.”

The NFA Council, headed by Agriculture Secretary Proceso Alcala, approved the importation of 205,700 MT of rice in March 2013 and an additional 500,000 MT in November to “serve as a buffer stock for the December 2013-March 2014 period.”

At this writing, Alcala had yet to respond to the Inquirer’s request for an interview.

Copies of official documents obtained by this paper also pointed to other possible irregularities covering the shipments:

*  In three memorandums, lawyer Ramon Cuyco, customs director for collection service, observed that at least three rice shipments under the NFA’s regular rice importation program “arrived in the Philippines more than 30 days” before their importation documents were submitted to the Bureau of Customs.

Two of the memos, both dated Sept. 16, were addressed to the customs district collector in the Port of Cebu.  The third memo, also with the same date, was addressed to the district collector at the Port of General Santos City. All three shipments were promptly released by the BOC.

*  The rice shipments had already been ordered and shipped before the NFA secured the required approval from the government’s Fiscal Review Incentives Board (FIRB), which includes the Department of Finance, Department of Trade and Industry, Department of Budget and Management, and the National Economic and Development Authority. Under its rules and regulations, the NFA cannot order rice imports until the FIRB gives the go-ahead for the tariff exemption.

Said the source: “The fact that the NFA allowed the shipment even without prior clearance from the council or the FIRB is an indication of either a fear of a rice shortage or something anomalous.”

*  In the 2013 rice importation, the NFA limited the bid participants to only two countries, Vietnam and Thailand, both of which had earlier entered into rice supply agreements with the Philippines.

The official added: “Clearly, the actions of the NFA were disadvantageous to the Philippine government.”

Early this month, Alcala was accused by Sanlakas party-list president Argee Guevarra with receiving kickbacks from the April 2013 Vietnam rice importation.

Sometime in January 2011, then NFA head Angelito Banayo disclosed that the rice imported during the last three years of the Arroyo administration were overpriced by $125 per metric ton.

Citing an audit of the 10-year importation record of the agency, he said its rice imports were overpriced by an average of $60 per metric ton.

In a report to President Aquino, Banayo said the overprice from 2008 to 2010 accounted for 83.6 percent of the total amount of overprice in the 10-year period.

He also said that fictitious cooperatives and corporations that took part in the purchase of cereals from abroad piggy-backed smuggled rice on the agency’s importation program.

The huge overprice and excessive importation of rice pushed up the NFA debt to P177 billion, Banayo added.

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