NFA reorganization a bane to food security

May 25, 2011

by superadmin

IBON FEATURES | For a country with rice as staple, the government’s neglect towards the current dismal state of Philippine agriculture and food producers is put on the spotlight, while the goals of “rice self-sufficiency” and food secu

IBON Features– As Congress deliberates pending bills on the National Food Authority (NFA), farmers and consumers groups have called on lawmakers to increase government subsidy to the agency instead of going through its reorganization. This, they say, will help ease spending difficulties experienced by millions of families amid rising prices of commodities.

Bantay Bigas, a rice price monitoring group of which IBON is a member, also reiterates the need for government to pursue a more active role in the NFA instead of privatizing the state’s food agency and its mandated functions.

The plan to privatize the NFA almost led to zero-budget for its local palay procurement in 2011. But strong public opposition compelled government to pool together the Department of Agriculture’s Php2.5 billion public-private partnerships fund and the agency’s remaining Php6 billion 2010 budget to come up with a so-called NFA subsidy. The amount totaled Php8.5 billion.

Meanwhile, the price of rice distributed by the NFA has gone up from Php25 per kilo to Php27 per kilo in December 2010. The price of regular milled rice, which has risen steadily for the past two decades, increased by 75% from 2001-2009.

The increase in the price of the cheapest rice available in the market is a burden to Filipino families in face of higher oil prices, utility rates, and transportation costs especially amid a grossly insufficient daily minimum wage. Not only does the currently mandated daily minimum wage of Php426 fall short for the expenses of a family of five for basic needs such as food, fuel, water, electricity, house rent, transportation, etc., it also makes spending for equally-important needs such as education and health impossible.

Thus, for Filipino families which, according to the Family Income and Expenditure Survey, spend 21% of their food budget on rice, a bigger subsidy for the NFA is crucial. Bantay Bigas asserts that the NFA needs Php21.9 billion more than the Php8.5-billion pooled subsidy to fulfill the agency’s mandate. This will translate to the procurement of 10% of the total local palay production, which the NFA is expected to sell at a lower price and influence the price of commercial rice in the market.

The group added that by fulfilling the NFA’s mandate, government would be able to help around 4.9 to 6.1 million farmers and their families for at least one cropping season onto the next.

Privatizing the NFA

The NFA’s mandate to ensure food security by making rice affordable to the public, especially poor Filipinos, has been threatened by the ongoing programmed privatization of the food agency. The drive to scrap NFA subsidy, as well as raising the price of rice, is part of fulfilling conditions to privatize the agency as imposed by international financial institutions (IFIs) in exchange of loans for the Philippine government’s agricultural development programs.

Government cites the need to plug indebtedness, leakages and corruption in the NFA – not to mention recent reports of “legalized” smuggling of rice –as reasons for privatizing the NFA. However, it must be noted that it was in the course of reducing government support for the agency that the NFA incurred huge debts. The NFA’s domestic borrowings reached Php39.9 billion in 2009, its accumulated foreign loans stood at Php125 billion and loans from private banks at Php37.7 billion.

There were indeed cases of corruption and leakages in the agency these were not without the participation of government officials and private traders, as in the alleged involvement of former Department of Agriculture (DA) Secretary and now Bohol representative Arthur Yap in the premature bidding of 600,000MT of Indian rice as feeds while it was still being shipped into the country in 2004.

Government has decisive role

State control over the production and distribution of a country’s primary staple has been practiced in the country’s neighboring Asian countries such as China, Thailand, Vietnam and Malaysia. Measures taken by these countries to achieve rice self-sufficiency include providing subsidies and subsidized credits to rice producers, tasking state-run agencies to ensure supply, and regulating prices. Agriculture and the grains sector are priorities in terms of budget and funding in these countries: improvement in technology and infrastructure for increased rice production as well as ensuring that state-run agencies are sufficiently funded and performing their tasks. Developed countries including the US also allocate ample subsidy and protection for their agriculture sectors.

For a country with rice as staple, the government’s neglect towards the current dismal state of Philippine agriculture and food producers is put on the spotlight, while the supposed goals of “rice self-sufficiency” and food security become more and more unattainable. IBON Features