Lawmaker wants details on 'overpriced' rice imports
abs-cbnNEWS.com | 07/06/2009 3:29 PM
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A farmer lawmaker on Monday said he wants to scrutinize the rice importation contract entered into by the Department of Agriculture with Vietnam, which was reportedly overpriced by 45 percent.
Anakpawis party-list Rep. Rafael Mariano said Agriculture Secretary Arthur Yap should disclose the contract the department entered involving the purchase of 1.5 million tons of Vietnam rice.
A Reuters report over the weekend said the Philippines paid almost $550 a ton for 1.5 million tons of rice it bought from Vietnam earlier this year, far more than initially estimated.
Agriculture Secretary Arthur C. Yap did not disclose how much the government had paid, but said the differential was not unusual for a state contract and that it was "a good deal at the time."
News the government paid almost 45% more for rice could pile more pressure on the Arroyo government, which has been buffeted by controversies over state contracts, including a $329-million telecommunications deal with China’s ZTE Corp., cancelled after reports of kickbacks.
When news of the deal first broke in January, trade sources estimated the price at $380 a ton, C&F, around the level rice cargoes were trading on the spot market, although government-to-government deals are often concluded at much higher rates because buyers want to guarantee supplies.
"It must have been an ’extraordinary’ deal, that’s why there’s an extra premium," said Pablito Villegas, an agricultural economics consultant with the United Nations Food and Agriculture Organization. "There is more to it than meets the eye."
Documents obtained by Reuters placed the deal at about $825 million.
Mariano, who also chairs the peasant group Kilusang Magbubukid ng Pilipinas, recalled that “in February no less than President Macapagal-Arroyo had been in contact with Vietnamese Prime Minister Nguyen Tan Dung to secure an undisclosed volume of the Philippines' food staple.”
“Ms Arroyo’s involvement proves that this so-called government-to-government deal is really extraordinary as UNFAO said. In fact, this multi-billion peso rice deal is a top-level deal,” Mariano said in a statement.
He said Yap should have considered “if there’s really a need to such huge volume of rice importation.”
“First, the agriculture department should have considered the country’s total rice inventory stocks in January, projected harvest for the first half of 2009, and projected total rice inventory stocks by July 1, 2009 before resorting into ‘panic buying,'" he said.
He said the 45 percent per metric ton increase in the prices alone could translate into a 45 percent increase in the prices of imported rice in the domestic market.
The agriculture secretary, meanwhile, said it is incorrect to compare rice spot prices without considering the volume and terms of payment for rice stocks.
Given the huge volume, he said the government "is paying upwards of six months in terms," adding Thailand quoted prices higher than Vietnam when the contract was awarded.
"The process of buying was done very openly. The Vietnamese turned [out] cheaper and were willing to sell future contracts at spot prices with 6-8 months credit. It was a good deal at the time," he said.
The documents from the National Food Authority showed it paid $549.50 a ton, cost and freight, for 1.5 million tons of long grain white rice with grades of 5%, 15% and 25% brokens from Vietnam Southern Food Corp.
Vietnam’s 5% broken variety was quoted between $380-460 a ton, free-on-board basis, in January-February, while the 25% grade was between $330-400, Reuters data show. That compared with $400-410 a ton for 5% brokens and $300-350 for 25% grade in December.
Freight cost should be anywhere between $25-35 per ton or even lower, traders said.
Manila opted for a government-to-government deal to avoid a repeat of what happened in 2008 when a series of tenders helped push prices to a record $1,080 a ton. With Reuters
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