Raise NFA’s palay buying price for now

The National Food Authority had warned on Tuesday that, from now until June, government-subsidized rice would be missing from local stores. After sounding the alarm about its dwindling stockpile, the NFA was allowed to import rice, but only after the harvest season. Thus, low-income consumers would have no choice but to buy more expensive commercial rice varieties for four months, which is the time it would take to ship the rice imports to the Philippines.

The food agency attached to the Office of the President buys local and imported rice to beef up its buffer stock. This is in keeping with its mandate of stabilizing rice prices and ensuring national food security. To prevent unscrupulous traders from hoarding the staple, particularly after natural calamities hit the country, the NFA distributes rice to government agencies and accredited retailers. The agency sells regular-milled and well-milled rice at P27 per kilogram and P32 per kg, respectively.

With the decision to defer rice importation until June, the NFA has no choice but to rely on locally produced palay to replenish its stockpile. Unfortunately, for the food agency, private traders are edging them out by offering higher prices to farmers. It also does not help that farmers still do not have access to production loans carrying low interest rates. Growing rice is not cheap, particularly at this time when many businessmen have used the tax-reform program as an excuse to increase the prices of their goods and services.

The NFA Council (NFAC) could consider Agriculture Secretary Emmanuel F. Piñol’s suggestion to raise the government’s palay-buying price by P3 per kg, at least until after the harvest season in May. Farmers in top rice-growing areas, such as Nueva Ecija, would begin harvesting their dry-season crop next month. It would at least give the food agency a fighting chance to buy more locally produced paddy.

In 2008 when the global food price crisis reached the Philippines, the NFA raised its support price to P17 per kg, from P11.50 per kg. This allowed the food agency, then attached to the Department of Agriculture, to buy some 600,000 metric tons of paddy from farmers. The government spent around P12 billion to buy rice from farmers after exporters refused to sell stocks to the Philippines. Because Manila desperately needed rice, it was forced to cough up more money for imports. That year people had to line up for government-subsidized rice, which was sold for only P18 per kg.

Raising the buying price for palay is something that the government can implement immediately, while it continues to grapple with the hard question of how it would fix the country’s rice sector. The NFAC can consider allowing the food agency to buy rice at a higher price during harvest season. It may also want to increase incentives to entice more farmers to sell to the NFA. Foot-dragging is no longer an option, unless the Duterte administration really does not mind being faced with the same problem year after year.





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Turning Points 2018