Redefining NFA’s role

A few days before the Department of Agriculture (DA) announced that paddy production rose to 19.27 million metric tons (MMT) in 2017, from the previous year’s 17.62 MMT, the National Food Authority (NFA) sounded the alarm

that its stockpile must be augmented soon, as it was only good for three days. This prompted the food agency to request the permission of the NFA Council (NFAC) to green light the importation of 250,000 metric tons (MT) of rice.

Despite the increase in paddy production, the NFA was unable to buy rice from farmers to boost its buffer stock. It was in 2008 when the NFA, then under the DA, had targeted to purchase around 1 MMT of paddy from farmers. That year, when the global food price crisis reached its peak, the Philippines learned the hard way that even if the government had the money to buy imported rice, traditional suppliers would prioritize their citizens’ needs. This prompted the government to roll out interventions to significantly increase rice output and to step up the procurement of local paddy. To encourage more farmers to plant rice and sell their crop to the NFA, the government raised the agency’s buying price to P17 per kilogram (kg), from P11.50 per kg, in April 2008.

Despite the hike in its buying price, the NFA would never be able to meet its annual palay procurement target. In recent years, the justification given by the food agency is that private traders also raised their prices. Farmers also complained earlier that the stringent procurement standards set by the NFA discouraged them from selling their crop to the government. Rice bought from farmers and imports make up the NFA’s stockpile. Part of this rice inventory is sold to the poor at P27 per kg (regular milled) and P32 per kg (well-milled).

This year it appears that the NFA would not be able to meet its procurement target again. It also remains to be seen if hiking its buying price would boost its chances of buying more locally produced rice. This is a cause for concern since the NFA would have no other recourse but to rely on local procurement to beef up its stockpile from now until the first week of June. The food agency’s inability to compete with private traders was the primary reason behind its request to import rice last year.

The debacle faced by the NFA last year should have prompted the Duterte administration to act immediately and ensure that it would not happen again. But as it is, the NFA found itself grappling with the same dilemma this year. Following the government’s announcement that it had permitted the importation of rice, Cabinet Secretary Leoncio B. Evasco Jr. said that the council wants to start evaluating the procurement and distribution strategies of the NFA. This should have been done last year, especially if the administration has plans of restructuring the NFA.

Currently, there are efforts in Congress to amend Republic Act 8178, or the Agricultural Tariffication Act, to convert rice import caps into tariffs as part of the Philippines’s commitment to the World Trade Organization. The conversion of the quantitative restriction (QR) on rice is of paramount concern, but the Duterte administration should not stop there. It must now launch efforts to seriously look at the role of the NFA and to determine whether there is a need for it to continue selling rice to the public. Once the QR is converted into tariff, more rice imports are expected to enter the country. The NFA’s role must be redefined based on this scenario.

 

 

Turning Points 2018
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