Voluntary Report - public distribution

**Date:** 8/11/2003

**GAIN Report Number:** TW3028

TW3028

**Taiwan**

**Grain and Feed**

**Update on Rice Tenders for Public Sector Imports**

**2003**

**Approved by:**

![](media/image1.wmf)Jonathan P. Gressel

American Institute in Taiwan

**Prepared by:**

ChiouMey Perng

**Report Highlights:**

On August 8, Taiwan announced the 6^th^ public rice tender for 11,000
metric tons of medium grain brown and 2,000 metric tons of long grain
brown. The tender is scheduled for August 22 for technical bids and
August 26 for price bids. U.S. rice captured a 95% share of Taiwan's
first five public rice tenders or 39,000 of the total 41,000 tons. The
U.S. accounted for all of the medium grain brown rice purchases while
Egypt supplied a 2,000-ton tender for short grain rice. The tender
process continues to be hampered by the use of a ceiling price in a
competitive tendering process. A number of tenders have had to be rebid
and, after a delay of two weeks or more, Taiwan has often ended up
paying more for the rice than if they had accepted the original low bid.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Taipei \[TW1\]

\[TW\]

**The upcoming 6^th^ Rice Tender**

On August 8, Taiwan announced the 6^th^ public tender for 11,000 metric
tons of medium grain brown and 2,000 metric tons of long grain brown
rice. The tender is scheduled for August 22 for technical bids and
August 26 for price bids. This is the first tender for long grain. The
quality specifications for long grain are listed below.

Type: Long grain brown rice

-   Length: from 6.61 mm to 7.50 mm with length/width ration equal or
    greater than 3.1

-   Amylose content: from 10% to 20% at 14% moisture

Quality Specifications:

  ---------- ------------ --------- --------- ------------ ---------- ------------ ---------- --------- -------
  Maximum                                                                                               
  Limit                                                                                                 

  Moisture   Impurities   Broken    Damaged                           Immature     Off-type   Chalky    Paddy
                          kernels   kernels                           Kernels      kernels    kernels   
                                                                      (including                        
                                                                      Rice                              
                                                                      Screening)                        

                                    Total     Discolored   Sprouted                                     

  14.5%      0.3%         6%        3%        0.3%         0.4%       10%          3%         5%        0.4%
  ---------- ------------ --------- --------- ------------ ---------- ------------ ---------- --------- -------

**Results of the First Five Tenders in 2003**

To date, Taiwan has tendered and contracted for 41,000 metric tons of
the public rice quota, accounting for 44% of the total. The remaining
56% will be scheduled in August and September. The U.S. rice accounted
for 39,000 tons or a 95% share of the first five rice tenders, all for
medium grain brown. Egypt supplied 2,000 mt of short grain brown. The
following table shows results and schedules for the 2003 public rice
tenders.

TABLE 1- Results and Schedules for the 2003 Public Rice Tenders (brown
basis)

+-----------------+-------------------------+--------+---------------+
| **Tender        | **Quantity/Type**       | **     | **Winner by   |
| Number**        |                         | Date** | Origin**      |
+-----------------+-------------------------+--------+---------------+
| 1^st^           | 5,000 mt/medium brown   | March  | U.S.          |
| (GF4-920042)    |                         | 18     |               |
+-----------------+-------------------------+--------+---------------+
| 2^nd^ + 3^rd^   | 14,000 mt/medium brown  | May 30 | U.S.          |
| (GF4-920147)    |                         |        |               |
|                 |                         |        |               |
| (Note: The      |                         |        |               |
| 2^nd^ and 3^rd^ |                         |        |               |
| tenders         |                         |        |               |
| combined)       |                         |        |               |
+-----------------+-------------------------+--------+---------------+
| 2^nd^ + 3^rd^   | 2,000 mt/short brown    | May 30 | Egypt         |
|                 |                         |        |               |
| (GF4-920148)    |                         |        |               |
+-----------------+-------------------------+--------+---------------+
| 4^th^           | 10,000 mt/medium brown  | July   | U.S.          |
| (GF4-920185-1)  |                         | 18     |               |
+-----------------+-------------------------+--------+---------------+
| 5^th^           | 10,000 mt/medium brown  | July   | U.S.          |
| (GF4-920209)    |                         | 25     |               |
+-----------------+-------------------------+--------+---------------+
| 6^th^           | 11,000 mt medium brown  | August |               |
| (GF4-920241 &   |                         | 26     |               |
| GF4-920242)     | 2,000 mt long grain     |        |               |
+-----------------+-------------------------+--------+---------------+
| 7^th^           | 20,000 mt (two 10,000   | Sep    |               |
|                 | mt bids)                | tember |               |
+-----------------+-------------------------+--------+---------------+
| 8^th^           | 20,000 mt (two 10,000   | Sep    |               |
|                 | mt bids)                | tember |               |
+-----------------+-------------------------+--------+---------------+
| **2003 Total    | **94,068 mt**           |        |               |
| Quota**         |                         |        |               |
+-----------------+-------------------------+--------+---------------+

Note: Beginning with the 4th tender the delivery term was changed to 115
days from 100 days. Starting from the 6^th^ tender, all rice tenders
will be specified for the new crop (2003 crop) only. Taiwan authorities
at the Council of Agriculture (COA) said that they will follow last
year\'s operation that U.S. suppliers can submit old crop rice samples
for the technical bid for the upcoming tenders if new crop rice is not
available at the time and deliver new crop rice in actual shipments. All
other rice specifications for 2003 rice tenders for medium grain brown
rice remain unchanged. Taiwan has conducted small trial tenders for
other size grains than medium grain brown.

**Ceiling Prices**

The current rice tender system has experienced problems because of the
ceiling price bidding mechanism. If the bid price exceeds the ceiling
price determined by COA, then the tender is rejected. Although COA has
flexibility to accept bids up to 8 percent over the ceiling price, Post
does not believe that they have done so. The ceiling price is based on
available world price information for medium grain brown rice, as well
as data indicative of shipping costs. However, available world price
information represents past transactions and likely does not accurately
reflect the future market situation. Due to reduced supplies, medium
grain prices are rising this year and COA has evidently had a difficult
time accurately determining a ceiling price as demonstrated in Table 2.
Given the competitive bidding process, the use of a ceiling price may
actually end up costing COA more to buy rice than if the lowest bid
price was accepted. For example, the first time that the second tender
was bid, COA received a low bid equivalent to \$396/mt, but COA did not
accept this bid. By the time this tender was finally concluded, over a
month later, the price had risen to \$421/mt.

# TABLE 2- Lowest Bid Prices at the Designated Warehouse Destination for the First Five Tenders 

+---------------------------+----------------+-------------+----------+
| Tender \#                 | Lowest Bid     | Lowest Bid  | Exchange |
|                           | Price in       | Price in    | rate to  |
|                           | NT\$/mt        | US\$/mt     | US\$     |
+---------------------------+----------------+-------------+----------+
| On March 18, GF4-920042   | NT             | US\$397/mt  | N        |
| was awarded at the first  | \$13,815.00/mt |             | T\$34.73 |
| bid.                      |                |             |          |
+---------------------------+----------------+-------------+----------+
| On April 24, GF4-920104   | NT             | US\$396/mt  | N        |
| failed at 1^st^ bid       | \$13,798.33/mt |             | T\$34.80 |
+---------------------------+----------------+-------------+----------+
| On May 9, GF4-920104-1    | NT             | US\$411/mt  | NT34.78  |
| failed at the 2^nd^ bid   | \$14,313.66/mt |             |          |
+---------------------------+----------------+-------------+----------+
| The prescheduled 2^nd^ &  | MG             | MG-\$421/mt | NT\$34.7 |
| 3^rd^ tender were lumped  | -NT\$14,633/mt |             |          |
| together for 14 tmt of    |                | SG-\$392/mt |          |
| medium grain (MG),        | SG             |             |          |
| GF4-920147, and 2 tmt of  | -NT\$13,595/mt |             |          |
| short grain (SG),         |                |             |          |
| GF4-920148. On May 30,    |                |             |          |
| GF4-920147 & GF4-920148   |                |             |          |
| were awarded at the first |                |             |          |
| bid.                      |                |             |          |
+---------------------------+----------------+-------------+----------+
| On July 3, GF4-920185     | NT\$ 15,385/mt | \$445/mt    | N        |
| failed at the 1^st^ bid.  |                |             | T\$34.54 |
+---------------------------+----------------+-------------+----------+
| On July 18, GF4-920185-1  | NT\$15,510/mt  | \$450/mt    | N        |
| was awarded at the second |                |             | T\$34.42 |
| bid.                      |                |             |          |
+---------------------------+----------------+-------------+----------+
| On July 25, GF4-920-209   | NT\$15,801/mt  | \$459/mt    | N        |
| was awarded at the first  |                |             | T\$34.42 |
| bid.                      |                |             |          |
+---------------------------+----------------+-------------+----------+

Note: The rice tender document number has a format for the year 2003 as
GF4-92xxxx. For re-tender document, the document number will attach a
dash with additional one digital, GF4-92xxxx-x. For example,
GF4-920185-1 stands for the first time re-tendering of the 4^th^ tender.
If the 4^th^ tender failed twice, the tender document number for the
second time re-tendering of the 4^th^ tender will be GF4-920185-2.