The National Food Authority Council (NFAC) has decided to retain the support price for palay, despite the recommendation of the Department of Agriculture (DA) and grains retailers to increase it to P20 per kilogram (kg).
A source privy to the matter said the NFAC sidelined proposals to hike the National Food Authority’s (NFA) support price, thus, retaining the threshold at P17 per kg.
“For now, yes, [then] use strategies of procurement, including incentives,” the source told the BusinessMirror when asked if the NFAC had decided to keep the current support price of the food agency.
In the NFAC meeting on Monday, the NFA was instructed to purchase more palay from farmers, especially at the early days of the harvest months. The food regulator was also directed to utilize creative strategies in the form of incentives to attract farmers to sell their rice to the government. Agriculture Secretary Emmanuel F. Piñol, in an earlier interview with the BusinessMirror, asked the NFAC to augment the buying price for palay. He said this will balance the scale and will benefit all parties—the government, farmers and consumers.
“The rule of thumb is that the commercial price of rice is double the farm-gate price. So if the buying price is P20 per kg, the retail price should only be P38 to P40 per kg,” Piñol said.
“I think the retail price is affordable to everyone. The increase in support price would also make farmers happy,” he added.
However, the source said this formulation must be translated first into a proper study to ensure it will not affect the government’s overall economic plan. The source cited the intensive study the government did before it actually enacted into law the Tax Reform for Acceleration and Inclusion—the first of the five tax-reform packages.
“If presented with new facts and data, it is possible [to increase the farm-gate price]. What is important is the effect of the decision to the Filipino people and economy as a whole,” the source said.
“To increase the farm-gate price is not an easy decision. If not studied properly, it will increase the price of rice in the market and it might skyrocket our inflation that will result to the government not attaining its target for this year of 2 percent to 4 percent,” the source added.
In a news briefing on Thursday, Cabinet Secretary Spokesman Jonas George S. Soriano said the council ordered the NFA to prioritize buying from farmers, especially at the early days of the harvest months. The food regulator was also directed to utilize creative strategies in the form of incentives to attract farmers to sell their rice to the government.
Soriano also reported the procurement for 250,000 metric tons (MT) of rice is scheduled to begin. This import was previously approved by President Duterte and was put on standby status.
“The said rice import is set to arrive May of this year. This is to allow the NFA to have enough buffer stock for the upcoming lean months of the year, in which rice harvest is at its lowest,” Soriano said.
The importation will beef up the NFA’s buffer stock, currently pegged at less than 40,000 MT, enough for just 1.15 days. The food regulator is mandated to maintain at least 15 days of stockpile at any given time to be used in case the country is hit with calamity or placed in an emergency situation.
He added the mode of the importation will still be government-to-private scheme, and will also make use of the same terms of reference (TOR) as that of the previous importation. “The reason of using the same TOR is to ensure immediate procurement of imported rice based on the guidelines of the procurement law,” the Palace official said.
Soriano also said the NFAC is urging Congress to “act with urgency” in legislating the amendment of Republic Act 8178, or the Agricultural Tarrification Act of 1996. The amendm—nt will allow the country to convert its expired quantitative restriction in the World Trade Organization into tariff.
“It is also worth noting that the proceeds of the tariff will accrue to the government’s agricultural-enhancement fund to be used for the farmers in the form of farmer-service interventions, appropriate technology and machines, among others. As such, the council is again requesting for Congress to pass this bill at the earliest possible time,” Soriano said.
The NFA Council also recommended the conduct of a special audit on the NFA, particularly with its procurement and distribution operations.
“The audit shall be administered by the Commission on Audit so as to assess the current NFA operations to determine points for improvements and streamline bottlenecks in the agency’s procurement and distribution processes with the end goal to make NFA cost effective and operationally efficient,” Soriano added.