At the same time, NFA is targeting to trim its trading losses to less than P2-billion annually starting next year. Currently, the agency is incurring yearly losses of about P2.5 billion from its buying and selling operations of rice, sugar and corn.
Agriculture Secretary Edgardo J. Angara, said he has asked the NFA to form a team that will study the transfer of the importation function to the private sector.
"There is tremendous financial implication that should be favorable to the government," Angara said, adding that once the private sector takes over NFA’s importation function, "it will be a big financial burden that will be off the shoulders of government." The trading rights transfer will relieve the government of the cost to importation such as shipping, warehousing and distribution. The savings generated will allow the agency to expand its food subsidy programs.
Angara said the transfer of rice importation to the private sector will be dome in phases to ensure that the private sector is given enough lead time to prepare for its new responsibilities.
For one, the private sector will have its hands full putting in place facilities and processes before they can start importing. The preparatory phase includes negotiating for credit lines with commercial banks, establishment of infrastructure and support facilities such as warehousing, and arranging contracts with international rice traders.
While all these are being set up, Angara said the NFA will have to determine the initial volume that the private sector will be allowed to bring in.
"The volume has to be significant and meaningful to make such trading attractive to the private sector," Angara added.
Last year, the NFA allowed the private sector to undertake rice importation but limited the volume to just 20,000 metric tons.
In a related development, Angara said the NFA’s food subsidy program will be rationalized and expanded.
The first order of business, the DA chief said, is to shave NFA’s grains trading losses to below P2-billion yearly from the current annual losses of P2.5 billion. This might need separating NFA’s propriety and regulatory functions.
Angara said NFA’s price support functions for one, should be "rationalized, focused and targeted," to ensure the benefits of such program are enjoyed by the poorest sectors.
"The government does not mind losing money, but we have to clearly identify where the subsidies really go to," Angara added.
As it is, anybody can just buy and sell rice acquired from the NFA since there are no existing or rigid guidelines that identify who are qualified to buy rice from the grains trading agency.
After these reforms are in place, Angara said NFA can focus on its mandate of improving policy and operational efficiency in the domestic support program for rice, corn and other strategic food commodities.
Recently, President Estrada signed an executive order transferring back the supervision of the NFA to the DA after it was placed under the Office of the President (OP) in 1998.
Previously, Angara said one of the immediate actions would be to review some of the functions of NFA, assess a number of reforms recommended under the Grains Sector Development Program (GSDP) funded by the Asian Development Bank, and implement a food subsidy program.