A retired banker has questioned the propriety of importing rice from Vietnam at prices much higher than what other countries had paid for.

Manuel Q. Bondad said that from January 1 to June 30, 2009, Vietnam sold 3.65 million metric tons (MMT) of rice for $1.502 billion, free on board (FOB), or $1.717 billion cost, insurance and freight (CIF).

Output was higher by 59.1 percent in volume and 23.48 percent more in vakue (FOB) or 31.53 percent CIF compared to the first semester of 2008.

The average export price was $411.39 per metric ton (MT) at FOB or 22 percent lower for the same period the previous year.

Bondad computed the average export price to all destinations at $470/MT but such average dips to $415/MT for all countries save for the Philippines.

For the same period, the Philippine contract price was $549.50/MT CIF.

He claimed that based on statistics, there is reason to believe that the government-to-government (G2G) contract entered into by the National Food Authority (NFA) and Vietnam in December 2008 for 1.5 MMT million was, indeed, overpriced.

“The NFA contract price of $549.50 C&F, against allegations of $380 cannot be dismissed as baseless, and the amount of $825 million was staggering. It was followed by the open tender by NFA for 75,000 MT on July 22 that was won by three private outfits from Thailand and Pakistan. Curiously, Vietnam Southern Food Corp. (Vinafood 2), the state-owned trading firm, and Philippine supplier for two mega contracts involving 2.1 million tons, including the December 2008 deal, was a participant but lost,” Bondad said.

He suspected that the rice stocked by the NFA was 25 percent brokens and not 5 percent and 15 percent, the latter two comprising the commercial rice varieties sold by government between P22 per kilo and P25 per kilo.

Under FAO standards, high quality rice refers to grain that has 20 percent brokens or less. Herculano Co, longtime president of the Philippine Confederation of Grains Associations (Philcongrains), says 25 percent brokens is still good but regarded it as medium grain rice.

Bondad noted the sacks used for 25 percent brokens also bore the markings “Grade No. 4 Super” from Vinafood 2, with only the crop years and milling periods differentiated.

“This is an indication that the rice variety always in stock was officially, the 25-percent brokens, the latter true enough published data by the USDA point to a substantial share of the rice grade in our Vietnam imports. We were billed $549.50 for the December 2008 contract for three grades; 5 percent, 15 percent and 25 percent,” Bondad argued.

“In 2008, Vietnam’s best grade, the 5-percent rice brokens contributed a negligible proportion of our imports. For 2009, there is basis that the mix will be again lopsided in favor of the lower grades, the surplus production of which Vietnam was having problems on account of storage costs and the risk of spoilage, aggravated by reduced demand and shifting preference for higher rice grades,” he noted.