The National Economic and Development Authority (Neda) believes the heavily indebted National Food Authority (NFA) no longer has a place in the buying and trading of rice.
Socioeconomic Planning Secretary Ernesto M. Pernia said this is actually the aim of the rightsizing of the national government bill, which is included in the list of the Duterte administration’s legislative agenda.
“Support price? No, the NFA should really just focus on ensuring adequate buffer and regulation [of the market]. They should no longer be involved in buying [and] trading,” Pernia told the BusinessMirror on Tuesday. Neda Undersecretary for Planning and Policy Rosemarie G. Edillon explained that apart from the indebtedness of the NFA, any increase in the support price of the agency will be inflationary.
Also, every time the NFA imports rice and then “floods” the market with cheaper rice, it causes high volatility in markets by causing rice prices to severely decline.
While the Neda has yet to run the estimates of how much a P1 or a P3 increase in support price will cause on inflation, Edillon said it is likely that the agency will vote against any increases.
“The NFA is creating too much volatility in the market,” Edillon said. “Yes, we will run the numbers, but we already know what our position will be.”
Edillon said increasing the buying price is also unfair, as 2 million Filipino families depend on rice farming. She said they are also rice consumers, so any hikes in prices will also affect them. The Neda official said the farmers must be assisted in diversifying to other crops that are more suitable to their location.
“Any increases in buying price will fuel inflation and increase poverty,” Edillon said. “You only have 2 million rice farmers in the Philippines, so 2 million households dependent on rice farming. But you have a total of 22 million Filipino families. [Helping only 2 million families] is not logical.”
The reaction of Pernia and Edillon came on the heels of the senators’ call to raise the support price of the NFA. The increase in its buying price aims to encourage farmers to sell paddy to them.
Senators’ appeal
Senators on Tuesday called on the NFA Council (NFAC) to increase the buying price of NFA for palay by at least P1 per kilogram (kg) so that the state-run grains agency could procure more paddy from local farmers.
Sen. Nancy S. Binay proposed to increase the NFA’s current buying price for palay to P20 per kg, from the current P17 per kg.
“Couldn’t there be a compromise this time? Maybe the NFAC could allow the NFA to buy palay at a price higher than P17 per kg,” Binay said during the Senate Committee on Agriculture and Food’s hearing on the status of the NFA’s stockpile on February 27.
“Even just this harvest season, because their imports will only arrive by June. They cannot buy at P17 per kg, so maybe you could consider increasing it to P20 per kg,” she added. Binay emphasized that there is a “sense of urgency” to increase the NFA’s palay-buying price, as the food agency’s stockpile is almost depleted.
NFA Administrator Jason L.Y. Aquino disclosed during the committee hearing that the agency’s current bufferstock is equivalent to just 1.7 days of the daily rice requirement of the country.
However, committee chairman Sen. Cynthia A. Villar was quick to point out that the proposal of Binay to hike the palay-buying price of the NFA by P3 per kg is “too much” and “inflationary.”
“We cannot recommend such increase because all the products will be affected. If it affects inflation, then it’s not only rice that will be affected but also all the products,” Villar said.
The lawmaker said, however, that she is amenable to hiking the buying price by P1 per kg. “We can consider increasing it to P18 per kg.”
But, Agriculture Secretary Emmmanuel F. Piñol supported Binay’s proposal, saying that P20 per kg is a “fair” price for local paddy. “You have to understand that if you go beyond that, prices of rice will increase in the market.”
Neda Assistant Secretary Mercedita Sombilla, who is a part of the NFAC and was present during the hearing, said they would take note of the committee’s appeal and raise the matter before the NFAC.
“I think we will take that to the council. The suggestion of this body to increase the buying price [of NFA] by P1 per kg and encourage NFA to procure more locally as abundant harvest is expected,” Sombilla said.
With Jasper Emmanuel Y. Arcalas
Image credits: Nonie Reyes
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A corrupt Binay figuring in the NFA rice price