COA: NFA failure to meet 2018 buffer stock targets brought supply, price problems nationwide

MANILA, Philippines—Low stocks of rice at many National Food Authority (NFA) warehouses in 2018 made towns vulnerable to supply shortage and high commercial rice prices aside from putting at risk the capability of provinces or regions to respond to calamities.

The Commission on Audit (COA), in a report released on Friday (Aug. 8), said the low buffer stock of NFA rice was caused by either low allocation or arrival of imported rice.

The NFA had attributed this to procedural delays in purchasing rice.

The COA report said rice stocks in the NFA warehouse in National Capital Region (NCR), including Metro Manila, were replenished only when the first batch of 250,000 metric tons of imported rice, made through a government-to-government contract, arrived in June and when the second batch arrived in September 2018.

In NCR, all five NFA district offices failed to maintain the required 15-day buffer stock for the entire 2018. COA data showed the NFA central district office had supply good only for less than 10 days. The north district office had supply good for a little more than nine days, the south district office had supply good for at least 12 days, the east district office had rice stock for a little more than 12 days and the NFA’s Cavite provincial office had supply good for a little less than 12 days.

The lack of buffer stock persisted even during the lean months of 2018, when buffer stocks were supposed to be released to the market to stabilize prices and supply. In July, the COA report said, the buffer stock should be good for 30 days but the NFA central district had supply good only for 28 days; north district, nearly 29 days; south district, a little over 27 days; east district, a little over 29 days and the NFA Cavite office, a little less than 29 days.

Four district offices of the NFA in NCR and 16 provincial offices “showed deficit stock levels” the whole of 2018 while 17 provincial offices had supply deficits of six to 11 months, according to the COA report.

Buffer stocks are kept in NFA warehouses for so-called lean months, or the period during which there’s no rice harvest and local rice supply would normally be low, and also for distribution to areas hit by calamities.

In a chart embedded in the COA report, the NFA provincial office with the lowest buffer stock was Occidental Mindoro in the Mimaropa region. It had only six months’ worth of rice stocks the entire 2018.

Central Luzon followed with only seven months’ worth of supply. Other regions had stocks good for just nine to 12 months of 2018.

The COA report said following the passage of the Rice Liberalization law, the NFA’s role had been reduced to just stockpiling rice for emergencies and calamities.

The COA advised the NFA to strengthen its procurement processes to maintain buffer stocks. In its reply, the NFA Council, the NFA’s policy-making body, vowed to study its processes. The council said the NFA is still heeding the 15-day and 30-day buffer stock requirement set by law.

President Rodrigo Duterte had suggested that the period of NFA’s buffer stock be extended to 60 days, but then Agriculture Secretary Emmanuel Pinol said it was not possible until 2020.

“The President directly authorized NFA to sell rice in the market,” the COA report said. It added that the NFA has no function to stabilize supply or prices and should instead “focus on distribution to priority areas.”

“So, for the current situation, NFA is continuously monitoring procurement in the regions,” the COA said. /tsb