Vietnam joins race to sell rice to Philippines

With the current balance of power, Vietnam and Thailand will participate in a ‘duel’ to obtain the right to sell 250,000 tons of rice to the Philippines.

Race for quota-based rice sale

The Filipino National Food Authority (NFA) has bought 750,000 tons of rice so far this year through three bids, while leaving open another 250,000 tons that can still be purchased.

The Philippines will also buy 805,200 tons of rice more under the WTO’s MAV (minimum access volume) mode. However, the purchase will be undertaken by private businesses, not the government.

Of the 750,000 tons of rice, 550,000 tons will be provided by Vietnamese enterprises, and the remaining 200,000 tons by Thai exporters.

As for the package of 805,200 tons of rice under the MAV, Vietnam has been assigned to provide 293,100 tons. The same volume has been allocated to Thailand. Each of the three other Asian countries including China, India and Pakistan will provide 50,000 tons. 

Nevertheless, the Filipino private businesses may be unlikely to import enough 805,200 tons of rice.

Analysts believe that only Vietnamese and Thai rice can be competitive, thanks to the low prices, and therefore, Vietnam and Thailand would be the top choices for Filipino businessmen.

Meanwhile, “made in China” rice will not likely enter the Filipino market because of its high price. Indian rice is now sold in some Chinese provinces at $625-635 per ton. If counting the 35 import tariff, the selling price would be no less than $840-860 per ton, higher than the Filipino market price, hovering around $770 per ton.

Analysts also think that Filipino private importers are not likely to import 100,000 tons of rice from India and Pakistan, because the two countries have offered the export price which is $18-33 per ton higher than Vietnam.

The big disadvantage of the two rice exporters India and Pakistan in the competition to sell rice to the Philippines is that they are relatively far from the country.

Statistics show that since 2011, when India’s rice exports exploded, it exported only 105,000 tons to the Philippines in the 2012-2013 season. It sold 60,000 tons in total in the other three seasons.

NFA and Vietnam-Thailand duel

If Filipino private importers cannot import enough 805,200 tons of rice as predicted, it is highly possible that NFA would be assigned to import 250,000 tons out of 805,200 tons.

Analysts believe that with the current balance of power, Vietnam and Thailand would have to join a duel to obtain the right to sell rice to the Philippines. 

Myanmar will unlikely be able to compete with Vietnam and Thailand in prices.