Council turns down anew NFA proposals to hike palay buying price

The policymaking body of the National Food Authority (NFA) has rejected for the third time this year the proposal to increase the agency’s buying price for palay (unhusked rice), claiming it was “inflationary.”

The NFA Council’s decision runs counter to calls by lawmakers for a massive purchase of palay by the NFA from local farmers to help ease soaring rice prices and tame inflation that hit 6.4 percent in August.

Inflation was highest in the Bicol region, hitting 9 percent, according to the Philippine Statistics Authority (PSA).

The NFA’s buying price for palay has remained unchanged at P17 per kilogram over the past 10 years.

Farm-gate price up

Due to the tight supply of affordable rice, farm-gate price for palay rose to P22.44 a kilo—up 15.2 percent from prices last year.

The NFA had recommended a P5 increase in January and March, and an increase of P8 this September for its palay buying price.

The council rejected the proposals, but it approved the agency’s recommendation to import an additional 250,000 metric tons of rice this year.

Since last year, rice prices have risen every month. These reached record highs in the third week of August amid depleted NFA rice stock.

In areas such as Zamboanga City and Tawi-Tawi province, prices of commercial rice rose to as high as P70 to P80 per kilo, respectively.

Difficulty in procurement

NFA spokesperson Rex Estoperez said the low buying price made it difficult for the agency to procure palay despite ample funds.

It could not compete with prices being offered by traders, which sometimes could go up to P25 a kilo, he said.

This was Estoperez’s response to a Department of Finance letter to NFA Administrator Jason Aquino on Wednesday demanding an immediate explanation for the agency’s failure to buy enough palay.

For 2017, the NFA bought 29,441 MT of palay, about 13 percent of its procurement target.

The agency has relied heavily on imported rice to augment its stock. While its projected buying mix was to fill 68 percent of its inventory through imports and 32 percent through palay procurement, 94 percent of actual stock was imported rice.

When the PSA announced the nine-year high inflation on Wednesday, the administration’s economic managers scrambled to ease inflation pressures.

Monitoring team

At a meeting of the Economic Development Cluster (EDC), they approved “immediate” reforms to temper food prices, including a tighter watch on rice imported by the NFA.

The EDC recommended forming a team for the surveillance of rice from ports to NFA warehouses and retail outlets.

At a press conference, on Wednesday, Deputy Governor Diwa Guinigundo of the Bangko Sentral ng Pilipinas said there were reports of diversion of rice from NFA warehouses to other end users.

Guinigundo, who sits on the NFA Council, said NFA rice was being passed off as commercial rice.

He said the NFA had received 17 cases of alleged overpricing of NFA rice, 15 cases of rebagging of NFA rice into commercial rice, six cases of switching NFA rice into commercial rice and 47 cases of nonavailability of NFA rice.

Growing economy?

Vice President Leni Robredo on Thursday appealed to the government not to underestimate the effect of inflation by saying that it was a sign of a growing economy.

“The growth of the economy is insignificant if those on the fringes of society cannot reap its fruits,” she said.

Bicolanos called on President Duterte to do something in order to cushion the negative effects of inflation.

In Naga City, Gin Orejo, an eatery owner, said her business could not increase the prices of its dishes. “Our fear is that if we increase the price [our customers] may no longer dine in our restaurant.”

Angelo Ortile, the principal of Libas Elementary School, said his family’s daily budget was ruined because of rising prices. “If this continues, we’d suffer more.”

Mercy Putial, the principal of Binogsacan Elementary School, said that “if there is an increase in prices of commodities, there should also be an increase in salary.” —WITH REPORTS FROM STEPHANIE FLORIDA AND MICHAEL JAUCIAN