VietNamNet Bridge – Vietnamese rice exporters are expected to offer low prices in an aim to win a contract to sell 500,000 tons of rice to the Philippines. Their major competitor in the bidding war is Thailand.

The National Food Authority (NFA) of the Philippines has invited bids, with rice deliveries required before April 30. The agency plans to choose suppliers and sign contracts before March 10.

Several local newspapers have quoted NFA as saying that Thailand will sell 100,000 tons of 15 percent broken white rice and 100,000 tons of 25 percent broken rice at $369 and $421 per ton, respectively.

The prices are lower than those offered by Vietnamese exporters. However, sources said Vietnam will lower prices and is likely to have the right to sell 150,000 tons of each kind of rice.

Vietnam fell into the same situation last year when it competed with Thailand to sell 500,000 tons of rice to the Philippines.

Thailand last year offered to sell 300,000 tons at $475 per ton, the lowest price among the bidders, and Vietnam offered 400,000 tons at $479 per ton.

NFA decided to buy 300,000 tons of rice from Thailand and asked Vietnam to supply the other 200,000 tons at the same price. Vietnam finally accepted the suggestion.

NFA also signed an 800,000 ton procurement contract with Vietnam Vinafood 1 and Vinafood 2 in 2014.

Vinafood 2 then won the bid to provide 600,000 tons at for three bidding packages (200,000 tons each) at US$436.5 USD, US$437.75 and US$439.25, respectively.

Vinafood 1 won the contract to sell 200,000 tons of rice at $436 for the first 100 tons, and $439 per ton for the remaining.

According to NFA, Vietnam offered the lowest price at the April 15th bid, which allowed Vinafood 1 and Vinafood 2 to win the bid over rivals from the Netherlands, Thailand and China.

Local analysts said that Vietnamese exporters had lost huge amount of money by offering such low prices. Many rice exporters later refused to work with Vinafood 2 to fulfill the contract.

Professor Vo Tong Xuan, considered the most renowned rice expert in Vietnam, commented that the Philippines has “seen the cloven hoof of Vietnamese exporters”.

Xuan noted that it was the low bidding price offered by Vietnam, $28-30 per ton lower than the price levels offered by other rivals, which prompted NFA to set the ceiling prices at low levels for subsequent bids.

Vietnamese rice exporters said at a conference in late 2014 that they are uncertain about export volume to the concentrated market (government-to-government, or G2G) in 2015 because of stiffer competition in the market.

Dat Viet