UPON his arrival from Singapore where he attended the 32nd Asean Summit, President Duterte again reminded the chief of the National Food Authority (NFA) of his order to fill the food agency’s warehouses with rice. The Chief Executive told NFA Administrator Jason L.Y. Aquino that he can do this by stepping up the agency’s purchase of unmilled rice from farmers and by allowing all private traders to import. These measures are aimed at ensuring that the NFA will never run out of cheap rice and to stabilize domestic rice prices.
Unfortunately for the NFA, it still could not compete with traders who have been buying palay from farmers at a higher price. Currently, the government’s support price for palay is at P17 per kilogram (kg) but based on the latest data from the Philippine Statistics Authority (PSA), the average farm-gate price of palay has already breached P20 per kg. Even with the incentives amounting to some P1 per kg, selling palay to the NFA is a losing proposition for farmers. Farmers will soon stop harvesting rice, but from the looks of it, the NFA will not be able to hit its procurement target for the current harvest season.
Why the President’s men chose to ignore the warnings of the food agency about its difficulties in beefing up its stockpile is anybody’s guess. They hemmed and hawed about raising the NFA’s buying price. Some had argued against it because it would increase commercial prices, while some wanted to allow the buying price to go up by P3 per kg so the NFA could compete with private traders. After Duterte himself stepped in to solve the rice mess, Presidential Spokesman Harry L. Roque Jr. said the government is considering increasing the NFA’s buying price.
The President’s decision to prioritize the purchase of local palay in favor of imports would certainly boost the government’s bid to make the Philippines self-sufficient in rice. With good prices, more farmers would be encouraged to plant more palay. How long will this benefit farmers, however, is another story because economic managers want to remove the commercial and marketing functions of the NFA. If this pushes through and Congress enacts a law removing such functions, then the NFA may no longer buy palay from farmers and sell cheap rice.
The mandate of the NFA is to ensure that those who plant rice and corn won’t incur losses. The agency was put up at a time when traders took advantage of rice farmers and bought their crop dirt-cheap. As the Philippines moves toward converting its rice-import caps into tariffs, the government expects retail prices to fall simply because the local market will be flooded with cheap imports. This will cause farm-gate prices to decline drastically, especially if traders find that importing milled rice would be much cheaper than buying local palay. If this happens, farmers would be discouraged from planting palay and traders would hold consumers hostage.
We hope that the government’s response to the NFA’s stockpile issues is not a preview of how it intends to handle problems that will arise from the removal of rice-import caps. The President cannot micromanage all the time. His men must step up and help Duterte make crucial decisions that will make the transition of the Philippines to a QR-less rice market less painful.