NFA rice arrival being delayed

Will the government’s rice import from Vietnam arrive by deadline of month’s end? If new Presidential Adviser on Food Security Francis Pangilinan demands answers, he would uncover a scam. Perpetrator: the National Food Authority, an agriculture agency he is tasked to clean up.

It takes about 15 days to gather, load, ship, unload, and deliver 200,000 tons of rice from Vietnam to NFA warehouses. But as of mid-May, the Vietnamese government still couldn’t locate the Manila-based cargo handler that the NFA imposed on it. Vietnamese officials are frantic. That anointed firm has withdrawn its original service offer to them, and is demanding higher fees. This would delay shipment, and open Vietnam’s government to fines and blacklisting. The Philippines’ rice buffer against drought and typhoon would be imperiled. At risk too are ties between the two states, which only this week agreed jointly to decry China’s territorial encroachments.

Last May 8, Vietnam acknowledged receiving the identity and the rate of the NFA’s preferred cargo handler for the 200,000 tons. But there was a drawback. “We are trying to make contact and have meeting directly with the said company ... in order to come to mutually sign the cargo handling service agreement,” Vietnam wrote. “But to date, (they have) just informed us that they are withdrawing their offer sent to us and only in position to meet us for further discussion and new offer on next Thursday, 15 May 2014.”

Vietnam assured that “we are ready to ship our rice to the Philippines in May 2014 as contracted.” But the NFA’s exclusive cargo handler “may cause unexpected delay in rice delivery beyond our control,” Vietnam warned. The NFA was asked to compel its cargo handler “to urgently renew their offer and fix the service agreement.”

How did this mess come about? Pangilinan, as acting NFA chair, might wish to call in Administrator Orlan Calayag, who is readying to leave once a substitute is found. An American who took dual Filipino citizenship only six months after placement to the NFA board in July 2012 and three weeks after becoming head in Jan. 2013, Calayag knows all the sordid details.

It all began with a new policy to make international rice sellers deliver to NFA storages. Before, sellers provided only the rice in 50-kilo sacks, insurance, and freight to Philippine ports. From there the NFA took over, unloading from ships and trucking to warehouses. But the agency was so inefficient, losing $5-$7 per ton to short landing, short weight, wet bags, and spoilage. Besides, its handling cost, around $27.60 per ton, was always higher than market rates of $23-$24. So now having sellers take on the final unloading-trucking, the NFA would save money. Its P180-billion debt would stop ballooning.

That’s all only on paper, though. In reality, the NFA did something odd in its import of 800,000 tons of Vietnam rice for 2014. Instead of letting sellers pick their own cargo handlers, the NFA imposed on them its chosen one.

The NFA has only one accredited handler. In screenings last April, it stated that only those with nationwide experience in grains in the past five years could apply. Only that one Manila-based firm qualified — for the NFA has been contracting only it since 2004. (In 2009 shipping lines in Cebu, the country’s freight capital, decried the NFA-imposed monopoly even in their province and nearby Bohol.)

The oddity had a motive. Crooks at the NFA needed a new mode to hide multibillion-peso kickbacks behind the cargo handling cost.

The crooks can’t steal anymore by overpricing the rice imports. They were caught doing that last year. Graft-busters simply checked websites (like oryza.com) that post daily grains trading worldwide, and discovered padding — by P3.4 billion — of the NFA’s 705,200-ton import from Vietnam. Calayag and Agriculture Sec. Proceso Alcala have been charged with plunder for it. Impleaded is a Manila businessman who brokered the G-to-G deal between food agencies adept in rice logistics.

A $30-kickback per ton is embedded in the cargo handling of this year’s rice import, NFA insiders aver. Here’s how:

Last Apr. 15, for the first time in decades, the NFA held a public bidding for the supply of 800,000 tons. State-owned Vietnam Northern Food Corp. (Vinafood-1) and Vietnam Southern Food Corp. (Vinafood-2) won 200,000 tons and 600,000 tons, respectively. Their bids were for $439 per ton. That includes the fee that the NFA dictated on them for its cargo handler. Yet at the time of the bidding, their price of well-milled long grains, 15-percent broken, was $385 a ton, freight on board (delivered to buyer’s nearest port). Add to that the $24 cargo-handling rate prevailing in the market, and the final contract should be only $409 per ton.

But the $439 shows padding by $30 per ton. For the 800,000-ton deal, at P45:$1, the kickback is P1.08 billion (see Gotcha, 19 May 2014).

Meanwhile, Vinafood-1 and Vinafood-2 are under the gun. They jointly must deliver 200,000 tons in May to Aug., before the end of each month. There’s no problem with them shipping to the ports near the 14 NFA warehouses. The hitch is with the NFA’s “missing” cargo handler, who must unload from the ships and truck to the storages. Every day’s delay would cost Vinafood-1 and Vinafood-2 tens of thousands of dollars (millions of pesos) in berthing and wharf charges -- not to mention potential spoilage. And the very crooks in the NFA are poised to fine, blacklist them for contract breach.

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