Cabinet execs eye stop to NFA rice-trading activities

29.08.2016

CABINET officials are set to recommend to President Rodrigo Duterte the abolition of the grains buying and selling functions of the National Food Authority (NFA), where reports of corruption date back to its creation in 1972 during the Marcos administration.

This was the decision of an interagency body composed of the heads of the Departments of Finance, Agriculture, Budget and Management, and the National Economic and Development Authority (NEDA), said Socioeconomic Planning Secretary Ernesto Pernia.

“The decision that is going to be proposed to the President, which I am sure he will like, is to remove the proprietary and commercial activity of NFA, and [allow it to]focus on its core function of regulation,” Pernia told reporters.

Under the Office of the President, the NFA is responsible for ensuring food security and the stability of supply and price of rice, the Philippines’ staple grain.

The NFA has the monopoly of rice importation and buys rice at above market prices supposedly to support rice farmers. At the same time it sells rice at below market prices to keep the cost of the staple low, resulting in billions of losses.

Pernia, the NEDA director general, said the removal of the agency’s commercial functions means the agency would no longer be engaged in buying and selling of rice, a source of corruption.

“[Instead] they will just focus on regulation and ensure adequate buffer stock. They should have a buffer stock. Buffer stock is really reserved, it should always be there, in case of contingencies,” he said.

Once approved, the selling of cheap NFA rice in accredited stores will also stop, Pernia said.

“Rice will be mainly imported by private sector. The imported rice is always cheaper than homegrown rice. It is very expensive to grow rice in our country. It also removes the smuggling problem,” he explained.

This measure will also control the ballooning debt of the agency, Pernia said.

“The problem with NFA is it buys high and sells low so it incurred a lot of loss. The accumulated debt of NFA is already at P165 billion,” he said.

To pay for the debt, the NFA can sell certain assets such as real estate, Pernia said.

The interagency body will still determine if the abolition of the NFA’s commercial functions can be implemented by an executive order or through legislation.

“There will be a lot of objections. Many people would want to maintain the commercial function of the NFA, because it’s a milking cow,” Pernia said.

“It is a good time to do it now, because President Duterte has strong support in Congress. We are trying to push it now because it has to be done, otherwise the bleeding will continue,” he added.

 


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