VietNamNet Bridge – If there was any celebration last month when Vietnam beat its rivals – with an exceptionally low bid – for a deal to export rice to the Philippines, the hangover may kicking in right about now.

Many rice export companies in the Mekong Delta have officially refused to join the program on exporting the 800,000 tons of rice,certain that it could only result in a loss.

The Southern Food Corporation (Vinafood 2), representing Vietnamese rice exporters, won the bid to supply 600,000 tons of rice to the Philippines with selling prices of 436.50 USD per ton, 437.75 USD per ton, and 439.25 per ton of rice for three lots of 200,000 ton each.

Meanwhile, the Northern Food Corporation (Vinafood 1) secured the contract to supply the other 200,000 ton of rice, with selling prices of 436 USD per ton and 439 USD per ton for two shipments of 100,000 tons each.

Nguyen Van Don, Director of Viet Hung Company Ltd., a Tien Giang-based exporter, said his company has sent a document to the Vietnam Food Association (VFA) and Vinafood 2, officially refusing to implement the authorized rice export to the Philippines. Viet Hung had been offered an authorized contract on exporting 6,956 tons of 15 percent broken rice to the Philippines. However, it cannot implement the contract.

Don said the bid price was too low, while exporters have to fulfill many unprecedented requirements. Therefore, he can foresee losses if he accepts the contract.

Also according to Don, the export price to the Philippines is as low as $370.06 per ton (delivery at HCM City ports). Meanwhile, the price of the same kind of rice exported to China and other markets is much higher, at $390 per ton, with no special requirements. Therefore, rice exporters are not really interested in the export to the Philippines.

“As far as I know, some other businesses have also refused to export rice with the total volume of up to 100,000 tons so far,” Don said.

The director of another rice export company has also confirmed that he has “given back the quota of exporting 5,500 tons of 15 percent broken rice to the Philippines because of the low prices and strict requirements”.

Rice exporters have been told that if companies deliver rice which does not meet the requirements set by the Philippines, they will be heavily fined. The fine would be $3 per ton for every one percent of excessive broken rice and $30 per ton for more than 10 percent. Other fines have also been set up for other transgressions.

Meanwhile, Lam Dinh Quoc, Director of the SocTrang Food Company, said the company has confirmed it will export 10,500 tons of rice to the Philippines as assigned by VFA. Because the company began collecting rice for storage early, it can expect a profit of $7 per ton.

By contrast, if exporters were to collect rice now, at its current higher price, they would be looking at losses of $20 per ton.

“I have heard that many other businesses have refused the rice export contracts for this reason,” Quoc said.

Vinafood 1 and Vinafood 2 have been violently criticized for offering the low bids to the Philippines, which were $30 per ton lower than those offered by Thailand and Cambodia, the main rivals of Vietnam in the bidding.

Vietnam had exported 1,750 million tons of rice by the end of April.

NLD