A recurring problem

The challenges now confronting the Duterte administration in ensuring the availability of affordable government rice reflects the failure of some bureaucrats to heed the lessons of the past. The problem that the National Food Authority (NFA) is currently grappling with is nothing new, especially for the Duterte administration. The NFA was also in a bind last year, when the food agency warned that it could not beef up its stockpile because average farm-gate prices breached the P17 per kilogram (kg) support price of the government. The food agency failed to hit its procurement target for the summer harvest because traders offered higher prices for local palay.

There were calls to raise the support price of the NFA so it could buy more unmilled rice from local farmers. But the NFA Council, the highest policy-making body of the NFA, rejected the proposal of the Department of Agriculture (DA), as it could cause the retail price of rice to go up. The council had also reasoned out that more rice imported via the minimum access volume would arrive in the third and fourth quarters of 2017.

Despite this announcement, the farm-gate price of rice remained high, and again made it difficult for the NFA to increase its purchases of local palay, especially during the palagad (main harvest) in the fourth quarter. The inability of the NFA to replenish its stockpile from imports and from domestic procurement last year has eventually resulted in the depletion of its stockpile. As of this writing, the NFA’s buffer stock is nearly wiped out and the President’s order to import 250,000 metric tons is a tad too late. The volume will arrive sometime next month, so low-income consumers would have to wait until then before they could buy cheap government rice. For now, they would have to make do with rice sold at P38 to P39 per kg by the DA and other retailers who have pledged to sell more rice to stabilize retail prices.

It is no secret that the Duterte administration wants the NFA to get out of rice trade and to just allow the private sector to import and sell the staple. But before this could happen, the government must craft a plan that would make the transition easier and prevent squabbles between and among agencies concerned with the rice supply situation. That the problem hounding the food agency was again seen this year reflects the lack of foresight among bureaucrats to prevent it from recurring.

Also, discussions must now center on how to ensure that cheap rice would reach consumers after the quantitative restriction (QR) on rice is lifted. Lawmakers are now rushing the passage of the rice tariff bill as the Philippines has committed that the QR would be converted into tariffs by June. The country’s economic managers are pinning their hopes on the passage of this measure to cut rice prices. Part of the bill includes a provision calling for the “reengineering” of the NFA, which sold cheap rice for many years. The NFA has a system in place that allows cheaper rice to reach even far-flung areas in the country. The government must now find ways to ensure that this can still be done if the NFA would be taken out of the domestic rice market.

 

 

 

Suntrust banner2
Turning Points 2018