Philippines Cancels Rice Tender..

This is from Bloomberg.This is the second time in two months tenders have failed to attract sufficient bids. Some Worl Bank and IMF policies have discouraged countries from pursuing an agricultural policy of food self-sufficiency.




Philippines Cancels Rice Tender; Futures Rebound (Update6)

By Luzi Ann Javier

May 5 (Bloomberg) -- The Philippines, the world's biggest rice importer, canceled a tender to buy 675,000 metric tons after only one company submitted an offer amid limited global supplies. Grain futures rebounded in Chicago.

Vietnam Southern Food Corp. was the only company to offer the grain, National Food Authority Deputy Administrator Vic Jarina said. The authority will wait until the ``market softens'' before holding another tender, possibly in the second half, he said today.

The Philippines failed to fill a tender last month, helping rice prices rise to a record in Chicago on April 24. Philippine Agriculture Secretary Arthur Yap said on May 2 that today's planned purchase was intended to boost stockpiles and the country was prepared to reject offers if it deemed prices were too high.

``Global supply until the end of the year will remain tight,'' Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said in a telephone interview. The Philippines ``will probably need to issue another tender.''

Thailand, the world's largest rice exporter, and Vietnam both signaled that they would not take part in today's tender. The Thai government couldn't guarantee contracts, the commerce ministry said on April 28.

Rice, the staple food for half the world, surged 90 percent on the Chicago Board of Trade in the past year on higher demand and export curbs by some nations, including Vietnam. The most- active contract, which advanced to a record $25.07 per 100 pounds on April 24, rose 14.5 cents, or 0.7 percent, to $21.09.

`Any Price'

The surge in the price of rice and record energy costs have stoked concern that global poverty may increase and social unrest may spread. Ministers from Association of Southeast Asian Nations, which includes the Philippines, Thailand and Vietnam, agreed May 3 to work together to cope with rising rice prices.

Yap's statement that the Philippines may reject bids if prices were too high may have discouraged potential suppliers, said Luz Lorenzo, an economist at ATR-Kim Eng Securities Inc. in Manila, the Philippine capital.

``When the government was willing to buy at any price, it attracted a lot of bidders,'' Lorenzo said by phone. ``There's less willingness now to pay top price.''

Twelve companies including suppliers from Thailand and Vietnam offered on April 17 to sell the Philippines 325,750 tons of rice at prices ranging from $872.50 a ton to $1,220, including freight costs. The nation had sought 500,000 tons, prompting the government to raise the amount it was seeking today.

`Critical Volume'

``We've already procured the critical volume of 1.713 million tons'' needed to fill the gap in supply, Jarina told reporters in Manila this morning as the tender details were announced. That volume included imports bought with loans from the U.S., he said.

The Philippines will likely hit a production target of 17.3 million tons of rough rice this year, Yap also said on May 2. That's equivalent to 11.2 million tons of milled rice. The nation's demand for the grain is about 12 million tons a year.

The National Food Authority, which has been authorized to import up to 2.1 million tons of rice this year, is in talks to secure an extra 300,000 tons, including 100,000 tons from the East Asian Emergency Rice Reserve, Jarina said by phone this afternoon.

If the government fails to secure the additional supplies and prices fall, ``we may do the tender in the third quarter, or the fourth quarter,'' Jarina said by phone. The price may drop between August and September as Thailand and the U.S. harvest second crops, Jarina said in the interview.

Rising food prices are creating ``a silent tsunami'' and threatened to plunge more than 100 million people on every continent into hunger, the World Food Programme said last month.

United Nations Secretary-General Ban Ki-moon is to chair a new UN task force to counter the effects of soaring food prices. There was ``mounting hunger and increasing evidence of severe malnutrition,'' Ban said April 29.

To contact the reporter for this story: Luzi Ann Javier in Manila at ljavier@bloomberg.net

Last Updated: May 5, 2008