Conab Demands Proof of Technical and Financial Capacity from Rice Auction Winners

Conab Demands Proof of Technical and Financial Capacity from Rice Auction Winners

Mintec Global
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Verification of Auction Winners

The National Supply Company of Brazil – Conab has issued a mandate requiring commodity exchanges to verify the technical and financial capabilities of companies that won the auction for 263,700 tons of imported rice held on Thursday, June 6. This decision follows concerns raised by deputies and senators regarding the auction’s legitimacy. Conab’s president, Edegar Pretto, emphasized the importance of transparency and legal security in this significant operation.

Controversy Surrounding the Auction

The auction faced opposition from various quarters, including former Agriculture Minister Tereza Cristina, now a senator for Mato Grosso do Sul. She questioned the participation of lesser-known companies in the auction. Among the four winning companies, only Zafira Trading is an established player in the industry. The other winners included an ice cream manufacturer, a neighborhood grocery store specializing in cheese, and a car rental company. Senator Tereza Cristina has requested the Federal Court of Accounts (TCU) to investigate the auction.

Commodity Exchanges as Intermediaries

Conab clarified that the auction process uses commodity exchanges as intermediaries, which are responsible for verifying the proposals they present on behalf of their clients. These exchanges are certified and held accountable by Conab for ensuring compliance with legal and auction rules. Any breaches attract penalties.

Company Response

Wisley A de Sousa Ltda., the largest winner with 147,300 tons, defended its reputation against allegations. The company, which has over 17 years of experience in the wholesale food trade, asserted its commitment to delivering the imported rice according to Conab’s schedule and quality standards.

Additional Measures and Next Steps

Conab has announced that by June 13, companies must deposit a guarantee, and further inspections will be conducted to ensure compliance. Any financial losses to the government are deemed unlikely due to these precautions.

Reoffering of Unsold Lots

On June 13, Conab will reoffer the remaining 36,630 tons of imported rice from the initial 300,000 tons auctioned. These auctions are part of the federal government’s efforts to stabilize rice prices following floods in Rio Grande do Sul, Brazil’s largest rice-producing state.

The recent auction of imported rice by Conab highlights the complexities and scrutiny involved in large-scale commodity transactions. Ensuring the integrity and capability of participating companies is crucial for maintaining market stability and public trust. As Conab continues its efforts to regulate the market, close monitoring and transparency will be key to addressing any further concerns.