A retired banker who spoke on condition of anonymity said it was strange for Vinafood 2 to export the staple to its subsidiary last August at prices below the minimum posted prices of late July 2009.

He noted the transaction between the principal and the subsidiary violated the rules covering rice exports, with other Vietnamese traders demanding an investigation by Trade Minsiter Nguyen Thanh Bien.

Vietnamese rice exporters insisted the deal was anomalous, unfair and inconsistent with the policy of maintaining a level playing field in the southern part of Vietnam.

Vinafood 2 is the country’s biggest rice exporter and it practically controls the Vietnam Food Association (VFA).

The Filipino economist explained that Vinafood 2 and three other allied firms sold rice to Saigon Food Co. last August below the $410 per ton floor price set in July while Vinafood 2 claimed the price was based on the July posting of the VFA and the problem was a matter of communication.

“This is not a case of miscommunication,” the economist stressed, “since Vinafood 2 may be using its clout at the VFA to undermine the ground rules followed by other players.”

He expressed fears that Vinafood 2 may be placing its stocks offshore and sending the same inventory to foreign buyers at higher prices later.

“Note that the tenders made by the National Food Authority (NFA) comes in the heels of the releases of the posted prices in Thailand, and Vietnamese prices follows the trend set by Thailand even when the market knows that historically the price of Vietnamese rice is lower,” he said.

By doing this, the price of Vinafood 2 rice will be higher than the prices at source and this would naturally benefit the exporter rather than the importer.

He surmised that the price difference, which could be upwards of $60 per ton, represents the profits of Vinafood 2 and commissions for officials of the importing country.

Vietnam supplies up to 1.6 million metric tons (MMT) of 25 percent brokens to the Philippines through the National Food Authority (NFA).

This volume leaves Vietnam with only 100,000 MT for local consumption, much of it used for cattle feed since consumers prefer glutinous rice or better quality grain.

By Marvyn Benaning - Manila Bulletin - December 30, 2009