Expanding the market and distribution activities of the National Food Authority (NFA) by including nongrain commodities could cause the government to incur losses, according to local economists.
Rolando T. Dy, executive director of the University of Asia and the Pacific’s Center for Food and Agri Business, said the proposal to allow the NFA to procure and distribute nongrain commodities, such as fruit and fish, should be scrutinized.
“This proposal [expanding NFA’s role] needs multisectoral review by the public sector and business groups. The government should not be in business,” Dy told the BusinessMirror via e-mail.
“In the past, the NFA incurred losses with Kadiwa. It will also compete with the private sector, which can do a better job,” he said, adding the food agency “should just stick to rice-buffer stock management.” Dy said the Philippines should emulate its neighbors in Southeast Asia whose governments did not intervene in their food market. “We must learn from the Asean experience. The private sector and well-organized producers can do better.”
“The best things the government can do are build good rural infrastructure, make communication infrastructure efficient and cost-competitive and establish a very good market information system accessible to all producers,” he added.
Dy said the government should also support the setup of stronger farmers and fishermen organizations and provide training to them.
“If government invests well on [these things], then there will be less market imperfections. There will be efficient value chains,” he added.
Economist Pablito M. Villegas, vice president of Confederation Filipino Consulting Organizations, echoed Dy’s remark that the government should not intervene in the market.
However, Villegas said reviving the NFA’s old Kadiwa scheme could be a “viable” option to address current market failures, particularly the proliferation of middlemen and traders who tend to inflate the prices of goods.
“Given the gravity of supply- chain market failure, there is scope or justification for expanding the powers of the NFA and reverting to the Kadiwa scheme,” he said.
“At present, traders are the only ones benefitting. There is an oligopolistic influence at the current value chain, resulting in lower farm-gate price but higher retail price of goods,” he added.
Villegas, who has sat before in the NFA Council as vice president of the Land Bank of the Philippines, said the government should ensure that its procurement system is transparent if it is really serious about expanding the NFA’s role.
He urged the NFA to hire private managers, such as brokers, who will oversee the procurement and distribution of agricultural commodities across the country. These managers will be paid and shall be accountable to the Commission on Audit.
NFA Assistant Administrator for Marketing Operations Maria Mercedes G. Yacapin told the BusinessMirror that the agency has started reviewing the proposal of President Duterte to expand the food agency’s role. Yacapin agreed with Agriculture Secretary Emmanuel F. Piñol who said expanding NFA’s role would assure farmers of a ready market and a decent income.
However, she said the NFA would be needing a bigger annual budget if the food agency would be tasked to buy other agricultural products. “Right now, the NFA has very limited capability in terms of logistics. This [expansion] is a big requirement that entails a higher budget.”
“The NFA also has to consider Republic Act 9184, or the procurement law, which we had to follow when importing rice. We have to consider the requirements of the law if the NFA would expand its procurement program,” Yacapin added.
Earlier Piñol said he is requesting Duterte to issue an executive order that would restore the powers of the NFA to stabilize the price and supply of nongrain commodities.
He added the NFA “should function as a real food agency” by including other agricultural products, such as fruits and fish, in its marketing and distribution activities.