Brazil annuls rice auction amid doubts over winners’ financial capability
Brazil’s national crop agency Conab annulled a recent rice auction for 263,370 metric tons worth 1.32 billion reais ($246.45 million), citing doubts about winners’ financial and technical capabilities. The auction, intended to curb price hikes after Rio Grande do Sul floods, raised market concerns as non-experienced firms won. Conab head Edegar Pretto announced a new auction structure, with Agriculture Secretary Carlos Favaro resigning amid the scandal. President Lula da Silva was involved in the annulment decision.
SAO PAULO, June 11 (Reuters) -Brazil’s national crop agency Conab has decided to annul a recent rice auction as the government had doubts about the winners’ financial capability to honor their commitments, the agency’s head Edegar Pretto said on Tuesday.
Brazil last week had purchased 263,370 metric tons of imported rice for 1.32 billion reais ($246.45 million) in a rare auction to prevent a price hike after historic floods in the top producing state of Rio Grande do Sul.
The auction, however, raised questions in the market, as the main winners were companies with no known experience in rice.
“After the winners were announced, questions emerged about whether the companies had the technical and financial ability to honor the commitments of such a significant amount of public resources,” Pretto told journalists in Brasilia.
“With all the information we gathered, we’ve decided to annul the auction”.
Pretto added the government intends to hold a new auction with a new structure, although he did not provide a timeline.
Agriculture minister Carlos Favaro also said the ministry’s secretary of agriculture policy has offered his resignation, which was accepted by the government.
Brazil’s President Luiz Inacio Lula da Silva has taken part in the decision to annul the auction, according to the minister of agrarian development and family farming, Paulo Teixeira.
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