By now nobody remembers the numerous anomalies perpetrated by the National Food Authority (NFA) when it monopolized the rice market from 1972 to 2019.
Abuses like over-importation and politicizing the staple to towns and cities closest to past administrations was rampant and there was even one incident when a vessel-load of rice was sunk in mid-sea to bolster a shortage problem to justify more importations by the NFA.
It was during this NFA monopolistic period that the country experienced severe rice crisis, long rice queues every regional offices were fully equipped with mills and driers (and staff/guest houses) which most farmers could not avail of as NFA's procurement procedures were too tedious that they would rather sell at farmgate directly to local traders and millers, which whom they owed production and subsistence loans.
Yet here we are, trying to return to those days of NFA's monopolistic myth, as if it would solve our every problem from buffer stock, stabilizing market supplies and prices and returning to the agency the monopolistic hold on imports.
Just recently, Agriculture Secretary Francisco Tiu Laurel Jr. disclosed he has asked his legal staff to craft a bill to be presented to President Marcos by Friday, to return to the “glory” days of NFA so it could intervene in the market and regulate prices.
“We plan to submit our wish list to the Office of the President by Friday… I’m already asking our legal to draft the bill,” Laurel, Jr. told reporters late Monday, December 16.
He added that the DA will also urge President Ferdinand “Bongbong” Marcos, Jr. to certify the impending bill as urgent.
Price control
At a House committee hearing on Tuesday last week, Laurel said that reinstating the NFA’s regulatory powers could help control rice prices, Business World said.
Republic Act No. 11203 or the Rice Tariffication Law of 2019 stripped the power of the NFA to import and directly sell rice. The law instead implemented tariffs on imported rice at 35% initially, and 15% currently. The collected proceeds fund the Rice Competitiveness Enhancement Fund to modernize rice farming.
“The NFA used to have the power to tell all the retailers that you must sell NFA rice at this price… we don’t plan to control (the market), we just want to provide an option to buy rice at (the government) price,” he added.
The law had also limited the NFA’s functions to procuring domestically produced rice to hold in reserve for calamities. It is required to maintain a rice inventory equivalent to about nine days’ demand.
“With just the right budget and the right policy that allows the NFA to sell its rice to intervene, that will be enough (to tame prices),” Laurel said.
DA price monitors, as of Dec. 14, a kilo of well-milled rice sold for between P40 to P52 in Metro Manila public markets, while regular-milled rice fetched between P40 and P48.
Federation of Free Farmers National Manager Raul Q. Montemayor said granting the DA or the NFA the authority to intervene by releasing cheap rice stocks could lead to a decline in farmgate prices.
“NFA intervention must be limited to situations where prices go beyond established thresholds or triggers, limited to areas where these price spikes occur, and targeted towards poor consumers only,” Mr. Montemayor said via Viber.
“Under normal circumstances, there should be no need for the NFA to intervene,” he added.
He cited the cost of intervention and the possibility of leakage, or the improper release of rice into the wrong hands, but also the risk of depressing palay prices due to the presence of cheap NFA rice on the open market.
Conflicting opinions
Former Agriculture Secretary William Dar said that the NFA must be given the responsibility to maintain a one-month rice reserve instead of nine days demand, through a higher budget.
“With that level it can sell its aging stock to its network of retailers at about P35 per kilo. Another option is to sell to KADIWAs at P35. NFA intervention can provide relief to consumers in a big way,” Dar said.
Roehlano Briones of the Philippine Institute of Development Studies (PIDS), on the other hand, argued that the private sector should be doing the importation.
He dismissed claims that the NFA can do the importation equally well as the private sector pointing out that rice procurement done by the public sector will always be “a hostage of politics,” whereas the private sector will do it purely as a commercial transaction.
“[Let the private commercial business] assess the amount of rice to import as a foresight, anticipation on their part. If they make a mistake, they get burned, if they get it right, they will gain profit,” he said. “The government doesn’t have that motivation. So that’s why I’m extremely skeptical that decisions by the NFA will be in any way superior than the market’s.”
Briones also argued that simple countermeasures in the past were able to control smuggling, even with the private sector allowed to import.
“I heard from a reputable Customs authority that smuggling used to happen in major ports, as Customs examiners just collected tariffs and allowed rice to come in even without import permits. That practice has already been stopped, and now smuggling in major ports has also stopped,” he cited.
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