Junk fertilizer deal, Department of Agriculture urged

June 30, 2020

AN umbrella network of agriculture stakeholders has called for the scrapping of the supply contract awarded to La Filipina Uy Gongco after it failed to fulfill its obligation to deliver 911,073 bags of urea fertilizer in Central Luzon by the end of June.

Samahang Industriya ng Agrikultura (SINAG) chairman Rosendo So said as of June 30, the supplier was only able to deliver about 110,000 bags of fertilizer, or about 12 percent of its total obligation.

"This is ground enough for Agriculture Secretary William Dar to rescind this contract," So stressed.

"This is proof that La Filipina, contrary to its claim, has no stock on hand nor does it have enough incoming supply of urea fertilizer," So added.

Based on the terms of reference of the contract, which was awarded in May, La Filipina should have achieved a 50 percent delivery compliance within May and must meet full delivery by the end of June.

La Filipina's supply contract for Central Luzon at P995 per bag is part of the initial four winning bids in May amounting to P1.8 billion.

La Filipina was also awarded the supply contracts for Calabarzon at P990 per bag and Western Visayas at P995 per bag, while Atlas Fertilizer won the contract for Central Visayas at P900 per bag.

Farmers have questioned the contracts, saying the winning bids were overpriced given that the average retail price of urea in Central Luzon was between P850 to P890 per bag.

At the House of Representatives, the Makabayan bloc of party-list lawmakers have sought a joint inquiry of the Committees on Agriculture and Food and Good Government and Public Accountability on the questionable procurement, including La Filipina's lack of stock on hand.

"The issue on the alleged overpriced fertilizer further raised suspicion because news reports stated that the winning bidder, La Filipina, does not also have available stock of urea fertilizer nor has it shown any bill of lading to prove that it had incoming supply yet it still bagged the contract," the Makabayan bloc said in its resolution.

A bill of lading would indicate a detailed list of incoming shipment of goods.

"We checked with the Bureau of Customs -- wala talagang dumating na supply. How come this supplier was able to bag the contracts?" So said.

The DA earlier disqualified a supplier who tendered a bid of P850 per bag of urea, citing the supplier's lack of available stocks of the fertilizer.

Meanwhile, So said the Department of Agriculture was aware La Filipina had been selling urea fertilizer through its retail partners at an average regional outlet price of P898 per bag in Central Luzon, yet it was still awarded the supply contract despite its higher tender of P995 per bag.

“In fact, a memorandum to Secretary Dar by the department's Central Luzon executive director dated June 19 showed that Amigo Planters, which is the retail brand of the winning bidder, La Filipina Uy Gongco, was sold in outlets for a regional average of P898,” So said.

In the memorandum sent by Crispulo Bautista Jr., the DA's Central Luzon office said Amigo Planters was sold for P923 per bag in Bulacan, P885 in Nueva Ecija, P925 in Pampanga, and P860 in Tarlac, for a regional average of P898.

“This does not make sense at all. First, DA was buying in bulk. That in itself should have resulted in a lower negotiated contract price. Second, DA went straight to the importer. That means you already removed the middlemen and the add-on costs that would be reflected in the outlet retail price,” So said.

“For retail outlets, you add transportation and insurance costs, sales and other taxes, and incidental services cost if applicable. From the importer to the distributor, to the dealer until it reaches the retailer, there is additional cost in every step, yet the regional average retail price was only at P898. Why did the DA award the contract to La Filipina when it was aware that the bid of P995 per bag was way, way higher?”

Under House Resolution No. 992, Makabayan lawmakers cited a monitoring done by the Kilusang Magbubukid ng Pilipinas which showed that the average retail price of urea in the regions covered by the supply contracts were lower by as much as P150 per bag (Tarlac at P850 per bag, Nueva Ecija at P830 to P870 per bag and Iloilo at P880 per bag).

The congressmen said the four supply contracts may be overpriced by some P271.66 million, which could have been used to buy 400,000 more bags.

Over at the Senate, Agriculture committee chairperson Senator Cynthia Villar said she is committed to investigate the alleged overpriced fertilizer supply contracts.

Dar, for his part, has denied any irregularity in the supply contracts, citing a survey by the department's Fertilizer and Pesticide Authority which showed that the average price of urea was from P1,043 to P1,062 per bag from March to May.

However, So disagreed with the Dar, pointing out that the prevailing retail prices during the March to May period urea fertilizer already sold at P850 to P880 per bag.

“Even before the implementation of the community quarantine in March, the average retail prices of urea during the period was P850. Dealers of fertilizers and retail outlets attested that they sold urea fertilizer between P850 to P880 per bag. We have official receipts from the retailers showing that the urea fertilizers were being sold at P850 to P880 per bag,” he said.