Philippines set to sign rice supply deal with Cambodia

March 28, 2012
Business Recorder

The Philippines is close to signing a government-to-government rice supply agreement that would make Cambodia a potential supplier of the grain staple to Manila, along with Vietnam and Thailand, agriculture officials said on Monday.

The Southeast Asian neighbours aimed to sign a memorandum of understanding (MOU) on rice supply in early April, similar to Manila's three-year deal with its major supplier Vietnam, Philippines Agriculture Secretary Proceso Alcala said.

The deal would make Cambodia a potential supplier for the 120,000 tonnes of rice the state grain agency, National Food Authority (NFA), is looking to buy in 2012 to increase its buffer stock.

"Under the MOU, Cambodia will prioritise us if we need to buy rice for emergency requirements," Alcala told Reuters in a telephone interview.

The NFA has previously said it was considering buying rice this year from Vietnam and Thailand, the world's biggest exporter.

"Whoever offers the best price gets the deal," said Gilbert Lauengco, special assistant to the NFA administrator, told Reuters.

The Philippines usually buys two-thirds of its non-private sector annual rice requirements from Vietnam and small volumes from Thailand.

Private sector buyers already purchase rice from Cambodian suppliers.

The MoU may be signed by Philippine and Cambodian leaders during the Association of Southeast Asian Nations' summit on April 3-4 in Phnom Penh, Alcala said.

Last week, Vietnam's 5 percent broken rice rose to $440-$445 a tonne, free-on-board Saigon Port, from $425-$430 the week before on strong demand from China.

The NFA was holding a second auction on Monday for private sector rights to import 190,000 tonnes of rice.

The tender, open to farmers' groups, followed last week's auction for a similar volume.

Lauengco said 272 farmers' groups had submitted bids to import rice in Monday's tender, with total offers likely to reach more than 500,000 tonnes.

The bidders have supply deals with exporters in Vietnam, Thailand, Myanmar, Cambodia and Pakistan, he said.

The Philippines, the world's biggest rice buyer in recent years, cut its rice purchases for 2012 to 500,000 tonnes from 860,000 tonnes last year and a record 2.45 million tonnes in 2010.

It plans to further trim its purchases to 100,000 tonnes next year as the Southeast Asian country aims to become self-sufficient in the national staple by the end of 2013.