Rice export to Philippines seen harder

Vietnam’s rice export to the Philippines, which opens an international bidding on July 25, is expected to face tougher competition as the latter has decided to shift trade from government-to-government (G2G) to government-to-private (G2P) importation.

Early this month, the Philippines’ National Food Authority (NFA) announced its plan to import 250,000 tons of rice under government-to-private (G2P) contracts to guarantee competition and prevent corruption, instead of government-to-government (G2G) trade as previously.

The change is feared to cause big problems for Vietnamese rice exporters penetrating the Philippine market, since rice exports to the Philippines over the years have mainly been performed by State-owned traders. In addition, new conditions for rice trade may also be barriers for private traders from Vietnam.

Specifically, the volume of 250,000 tons to be imported will be divided to eight lots, comprising two 50,000-ton lots and six 25,000-ton lots.

Prospective bidders may bid for any lot but a supplier can bid for a maximum of 50,000 tons only.

Furthermore, the competition is likely to be fiercer as the Philippines has invited large corporations from India, Pakistan and some other countries besides Vietnam, Thailand and Cambodia as regular suppliers to the Philippines.

A report by the Vietnam Food Association (VFA) shows that 12-13 local enterprises have registered to participate in the bidding.

However, Pham Thai Binh, director of Trung An Co Ltd, said that only six Vietnamese enterprises may put their names down to join the bidding due to strict requirements.

Those wanting to win any bid must have shipped the corresponding volume of rice to the Philippines in the past two or three recent years. For example, if an enterprise wants to bid for a 50,000-ton lot, it must have sent at least 50,000 tons of rice to the Philippines.

There are many Vietnamese enterprises shipping 100,000-200,000 tons of rice to the Philippines, but normally with only 3,000-5,000 tons for each shipment. Meanwhile, the number of rice traders with 25,000 or 50,000-ton shipments remains modest, so Vietnamese firms find it hard to meet the requirements of the tender, said Lam Anh Tuan, director of Thinh Phat Co Ltd.

Tuan did not answer directly if Vietnam could win the tender but he advised enterprises not to set high prices.

According to an announcement of the NFA, the winner will have to ship rice to the Philippines from August to September this year.

Despite uncertainties over the rice export to the Philippines this time, domestic rice prices have increased over the past few days.

Lam Anh Tuan of Thinh Phat Co Ltd told the Daily that the dried type of IR 50404 rice is being sold at VND7.200-7.250 a kilo, an increase of VND100-150 a kilo compared to last week.

Meanwhile, traders in the Mekong Delta purchased a kilo of fresh IR 50404 rice at VND4.700-4.800, up VND100 a kilo versus last week.