IT has come to this: an agency mandated to ensure food security and stabilize rice prices is practically begging farmers to sell their paddy to the government. In a statement dated February 22, the National Food Authority (NFA) exhorted farmers to let the food agency buy their produce. The appeal is NFA’s last-ditch effort to shore up its procurement program, which has managed to add only 7,469 50-kilogram bags equivalent to 373.45 metric tons (MT) to its stockpile since January. In milled terms, this translates to only 261.45 MT, which is not even enough to meet the country’s average daily rice requirement, pegged at 31,000 MT.
Harvest in major palay-producing areas, such as Nueva Ecija, would begin soon. Sans an increase in its buying price, the NFA could forget its goal of cornering a bigger chunk of farmers’ dry season crop. The NFA again requested the NFA Council (NFAC) to raise the government’s palay-buying price to P22 per kilogram (kg), but the council has yet to decide on the matter. The NFAC said it decided to reject the proposal in January because the National Economic and Development Authority had warned about its effect on inflation. Raising the palay-buying price would also encourage private traders to do the same and cause commercial rice to become more expensive.
But rice could still become more expensive even if the government decides not to increase the NFA’s buying price. The poor—the primary customers of the NFA—would be forced to purchase commercial rice. The increase in demand for the commercial variety could cause prices to go up as traders know that the NFA’s stockpile has been depleted and that Filipinos would be willing to pay for rice. Unfortunately for the government, the NFA no longer has stocks that could counter the spikes in rice prices.
While the government can invoke Republic Act (RA) 7581, or The Price Act, it is often difficult to prove price manipulation, hoarding and collusion among rice retailers and traders. As for price controls allowed under RA 7581, the government can only implement it if an area is declared under a state of calamity; the privilege of the writ of habeas corpus was suspended; it is under martial law; or a state of rebellion or a state of war is declared in that area. But the law permits the President, upon the recommendation of the implementing agency or the Price Coordinating Council, to impose a price ceiling on any basic necessity or prime commodity, such as rice. Section 7 of RA 7581 states that the President may impose a price ceiling “whenever the prevailing price of any basic necessity or prime commodity has risen to unreasonable levels.”
Congress is currently working on a bill that would amend Republic Act (RA) 8178 to convert rice import caps into tariff. Lawmakers are fast-tracking the measure to lift the quantitative restriction (QR) on rice so the Philippines could meet its commitment to the World Trade Organization and avoid trade sanctions. With the removal of the import caps, Dr. Flordeliza H. Bordey of the Philippine Rice Research Institute said more cheap imported rice could enter the country. And even with a 35-percent tariff, the landed cost of imported rice from Vietnam with 25-percent broken grains is only around P27 per kg.
Given this scenario, the Duterte administration must now seriously think about what it intends to do with the NFA. After the QR on rice is removed, the next order of business should be to pass a measure that would define the role of the NFA. If the idea is to let the market dictate the price of rice, then it is time for the food agency to get out of buying and trading rice. It could still continue to monitor rice sellers to prevent prices from skyrocketing whenever supply is thin.
For now, the President must help the food agency beef up its rice stockpile again. Until and unless the food agency attached to the Office of the President gets out of buying and trading the staple, the Duterte administration will continue to be saddled with the problem of volatile rice prices, especially when the NFA runs out of buffer stock.
Image credits: Jimbo Albano