The latest data on the government’s palay procurement program is, to say the least, discouraging. The National Food Authority (NFA) planned to buy at least 100,000 metric tons of unmilled rice from farmers. However, the food agency’s purchases only reached 3,806 MT as of end-June. This is only about 4 percent of the official target procurement volume for the year.
The lean season for rice in the Philippines kicked off on July 1 and will last until the end of September. During this period, the rice harvest of farmers significantly declines. It is also during the lean season when devastating storms visit the country, making it imperative for the government to stock up on rice. Part of the so-called buffer stock of the NFA is distributed to victims of natural calamities.
Ideally, the entire stockpile of the NFA should consist of locally grown paddy because the food agency attached to the Department of Agriculture customarily buys rice from farmers. Given the NFA’s mandate to ensure the availability of rice at any given time, the agency also imports the staple from neighboring Southeast Asian countries, such as Vietnam and Thailand. While Presidential Decree 4 mandated the NFA to ensure the stability of rice prices and supply in the domestic market, it did not specify the volume of stockpile that it should keep. This has been addressed by the Legislative-Executive Development Advisory Council, which required the NFA to have a stockpile equivalent to 30 days of national consumption during the lean season and a minimum of 15 days at any given time.
When the Duterte administration came into power two years ago, there were already clear signs that the NFA would encounter stock difficulties. Data from the Philippine Statistics Authority showed that rice inventory as of December 1, 2016, declined by 3 percent to 3.33 million metric tons, from the previous year’s 3.44 MMT. The food agency’s stockpile dropped by more than 250,000 MT during the main harvest season in 2016, meaning, it encountered difficulties in buying rice from farmers.
The NFA’s problem became more pronounced the following year when its inventory as of December 1, 2017, fell by 72.24 percent to 156,620 MT, from the previous year’s 564,180 MT. This means the NFA’s stockpile declined by more than 400,000 MT. But unlike in 2016, the NFA this time alarmed the public about its buffer stock problems. As its rice purchases fell below target, the NFA sought Presidential imprimatur to import the staple before the end of 2017. Unfortunately, the food agency’s warning was only taken seriously when it disclosed in January that its stockpile would be good for only three days and that it would have to withdraw the cheap rice it distributes in local markets.
Some politicians chided the NFA for going public about its dwindling stockpile, not knowing the NFA’s hands were tied—the food agency would still be crucified whether or not it warned the public about the imminent depletion of its stockpile. This is because the absence of NFA rice in local markets would drive commercial rice prices through the roof.
The release of NFA’s rice procurement data should prompt the national government to expeditiously explore possible strategies to help the food agency shore up its stockpile. Despite apprehensions that raising the support price of NFA rice would accelerate inflation, the national government must still look for other remedies. For example, the proposal to increase the buying price of palay during the harvest season should be considered. This would make the NFA competitive against traders at a time when the agency needs to beef up its stockpile. The NFA should also be allowed to hike its incentives if the national government is averse to the idea of increasing the support price. The President himself said that it is taxpayers’ money that subsidizes cheap rice. Other countries give this money to farmers; it’s about time the government give priority to Filipino rice planters.