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Aquino asked: Probe NFA debt, raise subsidy for small farmers

First Posted 13:13:00 07/15/2010

Filed Under: Food, Agriculture

MANILA, Philippines?President Benigno Aquino III should investigate first the source of surge in debt of the National Food Authority under the Arroyo administration before considering any proposal that may only worsen the problem, according to a network of food security advocates.

In a news release, the Task Force Food Sovereignty on Thursday warned that Finance Secretary Cesar Purisima?s proposed solution to stop the NFA rice subsidy and to sell the staple at prices determined by the market may only increase hunger and poverty incidence in the country.

According to reports, NFA debt surged from P28 billion in 2003 to P150 billion in 2010.

?President Aquino should reject this proposal of Secretary Purisima right away. Instead, the President should study the negative effects of the country?s import dependence that undermines food sovereignty, and look deeper into the operations of NFA, its palay procurement and rice distribution, and plug unnecessary losses and possible areas of graft and corruption,? said Arze Glipo, TFFS lead convenor.

?Removing the rice subsidy will only result in more Filipino families going hungry, as even the current subsidy is not enough to guarantee access to affordable rice of the poor.?

TFFS noted that NFA started withdrawing its P18.25/kg rice subsidy early this year. Purisima?s recent pronouncement would mean the removal of NFA?s P25/kg rice subsidy.

The group doubted Secretary Purisima?s statement that ?a big part of NFA?s deficit could be traced to its policy of buying rice at a high price and selling it low to subsidize consumers.?

?Much of the losses can be traced to NFA?s opaque transactions and its increasing reliance on rice imports that were tainted with questionable deals such as the imports from Vietnam last March 2009 which revealed a huge price differential between the contracted price and the actual price paid by the government,? Glipo said.

?Data shows that local rice procured from farmers would be much cheaper than bringing imported rice to NFA?s outlets. In 2009 for example, a kilogram of rice in North Cotabato cost only P27.80, but the cost of importing and bringing Thai rice to the province reached as much as P44.30 and Vietnamese rice cost much the same as local rice. NFA?s skewed strategy of importing rice has harmed not only the farmers? livelihoods, but depleted government?s coffers,? TFFS said.

?For the past several years, NFA has practically abandoned its mandate of providing price support to farmers and procuring palay when the farm-gate price reached bottoms, in favor of sourcing rice from the international market. NFA?s palay procurement is negligible, absorbing only 1 percent of the total national palay production,? Glipo said, adding that ?government should increase the volume it buys from small farmers.?

She added that government?s policy of rice importation, approved by its multilateral donors like the World Bank and the Asian Development Bank, has diminished the country?s capacity to achieve rice self-sufficiency.

The group also hit Purisima for treating NFA as a business operation, explaining that the primary role of the agency should be to provide price subsidy for palay and rice, benefitting both the small farmers and consumers.

?If food self-sufficiency is a priority of the Aquino administration, then the government should stop thinking of and running NFA as a business entity, but more of a service institution. The agency?s role in domestic trade and price stabilization must be strengthened rather than passing on its functions to such agencies as Department of Social Welfare and Development,? TFFS said.

The group added that if the government is bent on plugging its losses in the NFA, then it should review its importation policy, including the basis for the quantity of rice imports and look into reports of corruption and shady transactions both in rice importation and distribution in the domestic market. It also called for a speedy investigation of all these questionable transactions, including the use of emergency rice stocks for the political patronage of legislators.

TFFS also cautioned the government against falling into the trap of deregulating the rice industry and decoupling NFA?s functions which the international financial institutions or IFIs, like ADB, have been pushing, merely on the basis of corruption issues, because decoupling or separating NFA?s regulatory and subsidy functions would eventually lead to the privatization of the NFA and may result in far worse rice price increases in the future as what happened to other sectors like oil, when the government deregulated the oil industry and privatized Petron.

TFFS said that addressing poverty, which affects a large section of the Philippine population, cannot be done through a selective subsidy program such as DSWD?s conditional cash transfer. It added that support services should be generalized and must be implemented not by a single agency like the DSWD but by as many government agencies as possible.

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