The National Food Authority (NFA), which is currently under the Office of the President, is vested with the functions of ensuring food security and the stability of rice supply and price. The NFA resorts to importing rice from neighboring Southeast Asian countries and procures paddy from farmers to beef up its stockpile. When supply is tight, usually after a strong typhoon, the food agency distributes rice to areas devastated by natural disasters. NFA rice sold in these areas serve as a warning to unscrupulous traders that the government is ready to intervene and help keep prices in check.
This function has undoubtedly kept rice prices stable, which is probably why Agriculture Secretary Emmanuel F. Piñol wants President Duterte to expand the role of the NFA. Piñol had proposed to the President that the NFA serve as a “consolidator,” to buy other farm goods in bulk and sell these in areas in need of these products. To do this, the Department of Agriculture chief made a pitch for the set up of regional food terminals (RFTs) where farmers could sell their produce at a “fair price.” Piñol said the President could do this by merely issuing an executive order (EO). Anyway, NFA’s nongrain marketing activities were stopped by a mere EO issued in May 1985.
The NFA was created through Presidential Decree (PD) 4 dated September 26, 1972, under the name National Grains Authority, with the mission of promoting the integrated growth and development of the grains industry covering rice, corn, feed grains and others like sorghum, mongo and peanut. PD 4 abolished the Rice and Corn Board (Ricob) and the Rice and Corn Administration (RCA) but absorbed their respective functions. The Ricob regulated the rice and corn-retail trade and was tasked to nationalize it within a target date. The RCA was in charge of marketing or distribution of low-priced rice, especially during the lean months.
The NGA was vested additional functions aimed at developing the grains postharvest systems and processes. It also supported the paddy-production program of the government, dubbed as the “Masagana ‘99 Program,” which aimed for self-sufficiency. It engaged in massive paddy procurement at government-support prices. Under this program, the Philippines was able to export rice at a limited volume from 1977 to 1981.
The NGA was reconstituted into what is now the NFA, after PD 1770 was issued in January 1981. This decree widened the agency’s social responsibilities and commodity coverage to include, in addition to grains, other food items like raw or fresh fruits and vegetables and fish and marine, manufactured, processed, or packaged food products, and these were collectively referred to as non-grains commodities. PD 1770 served as the basis of the Kadiwa chain of stores or government retail stores, which sold low-priced basic food and household items in the National Capital Region and in all provinces of the country.
EO 1028, which was issued in May 1985, provided for the deregulation of the NFA’s non-grains marketing activities. This decree resulted in the termination of the NFA’s non-grains trading activities and allowed the return of feed grains and wheat importation to the private sector, as well as the lifting of price controls/ceilings on rice and corn. It also caused Kadiwa stores to be shuttered or devolved to the private sector.
Allowing the NFA again to engage in the trade of other farm products would drastically reduce the influence of middlemen and unscrupulous traders in setting prices. But government must consider where it would source the funds required to procure farm products directly from farmers and fishermen. The palay-procurement program of the NFA alone costs billions of pesos as the food agency buys paddy from farmers at P17 per kilogram. Should the President give his go signal to the setup of RFTs, the national government must see to it that this would not fall under the control of local politicians.
Given the gravity of failure of the country’s agricultural supply chain, economist Pablito M. Villegas said there is justification for expanding the powers of the NFA. To ensure transparency and to curb corruption, Villegas said the private sector must be involved in operating schemes that are similar to the Kadiwa. Also, the University of the Philippines economist said the government must ensure that they would deal directly with farmers and fishermen.