Cut in NFA powers urged
Angara warns of P111B in losses by 2010
By Gil C. Cabacungan Jr., TJ Burgonio
Philippine Daily Inquirer
First Posted 01:32:00 04/22/2008
MANILA, Philippines—Sen. Edgardo Angara Monday sought to emasculate the National Food Authority (NFA) by transferring its trading operations to the private sector to stave off its financial hemorrhaging and rechanneling subsidies to a separate food aid program for the most needy.
“I am for keeping the NFA but only for its limited but important role of implementing the rice and corn support policy which serves the country’s buffer stock in case of emergency and calamity,” said Angara in a privilege speech.
“The NFA should give up its trade functions to the private sector which can do a much better job. If private rice traders are allowed to import and sell rice without any restrictions, the supply and price of rice will likely stabilize. More importantly, smuggling, corruption and hoarding will be eliminated.”
The NFA is on pace to hit losses of P111 billion and incur loans of P136 billion by 2010, or more than double the P48-billion loss and P69-billion outstanding loan in 2007, Angara said.
Angara, agriculture secretary in the short-lived Joseph Estrada administration, concurred with some critics that failure to contain “quickly and firmly” the surge in rice prices could lead to “social unrest throughout the land.”
He said the Philippines, the world’s biggest rice importer accounting for 7 percent of global trade, was the most vulnerable among rice importers in the current global shortage.
Angara, however, admitted that with the liberalization of the rice trade, rice would be sold at “market levels generally not affordable to the poorest of the poor.”
Passbook for poorest
This is why he proposed that the government establish a food aid program where the “poorest of the poor will be given a passbook (to be held by wives and mothers) which they can buy rice at a fixed price at designated levels with the difference between the fixed and market prices to be subsidized.”
He suggested that the Department of Social Welfare and Development supervise the registry to monitor the rice rationing with distributors and retailers to get rebates.
“Can we afford the cost of subsidy of our poorest people? Certainly by revamping the NFA, significant savings can be realized that can be rechanneled to this food assistance program,” said Angara who also proposed a reduction in the rice tariff pegged at 50 percent along with rice trade liberalization to lower rice prices.
Angara blamed the country’s weak agriculture sector on “underinvestment” by the government. “We did not invest enough in agriculture. We have had a long standing policy bias against them in favor of urban consumers and we have not given the appropriate levels of investment and policy support,” said Angara.
Underinvestment
The government has only spent an average of P13.3 billion for the farm sector since the Agriculture Fisheries Modernization Act began 10 years ago or substantially below the legislated P17-billion allocation or a total of P39.2 billion less than prescribed by law.
“This underinvestment is unjustified when one considers that agriculture accounts for about a fifth of the country’s gross domestic product and about a third of total employment,” said Angara.
In his recommendations, Angara urged the government to focus its support (P500-million fertilizer subsidy, high yield seeds and post harvest facilities) on 700,000 hectares of irrigated rice land mostly in Cagayan Valley, Central Luzon, Bicol and Iloilo by the start of the wet season in November.
In this dry season (April, May and June), Angara said the government should focus on rehabilitating the 400,00 hectares of non-functioning irrigated lands (at a cost of 60,000 per hectare) which should boost production by 2 million tons a year or the total import requirement of the country.
On top of these moves, Angara said the government should also step up the distribution of flat bed dryers to cut losses; stock up on high-yielding seeds; provide more credit to farmers; and grant incentives to mayors and governors to exceed their rice production targets.
“This is the most practical solution to the current rice food shortage,” said Angara.
P42.6-billion deficit
In the House, Akbayan party-list Rep. Risa Hontiveros said that the Commission on Audit had reported that the NFA had accumulated a deficit of P42.6 billion in 2006, up from P34.46 billion in 2005.
“The rice shortage here in the Philippines could also be triggered and accelerated by NFA’s bad financial standing and the lack of resources to import rice to augment our own rice stock,” she said in a statement.
She said that while government subsidy for NFA had grown over the years, it had been rendered “insufficient” by rising prices of commodities.
Quoting the Freedom from Debt Coalition, she said that subsidy for the agency for 2008 amounted to some P2 billion, up by 100 percent from P900 million in 2003.
“But with the cost of rice importation rising to almost P58.7 billion for this year alone, NFA needs to find other sources of funds to procure and distribute grains,” she said.
Loan facility
The NFA is importing 1.2 million metric tons of milled rice this year to meet increasing demand and the required buffer stock by July 1, and prepare for the tight rice situation worldwide.
“Last year, the Bangko Sentral allowed NFA to raise P35 billion through a loan facility which was publicly auctioned. This year, with sovereign guarantees from the government, NFA auctioned P8 billion worth of 10-year bonds,” she said.
“This vicious cycle has to stop. Behind the looming rice shortage is a monstrous debt policy that is not only eating away resources to strengthen our food security, but will in the long-term take away food in our tables,” she added.
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