ADB wants NFA to give up grains trading

The Asian Development Bank (ADB) said the National Food Authority (NFA) should give up its grains trading function and turn this over to the private sector.

Tom Crouch, ADB country director said allowing the private sector to conduct grains procurement, including rice importation, will encourage transparency and eliminate corruption that often results in a government monopoly.

"This activity is better carried out by the private sector as market forces dictate the way these things are done. Competition will increase, and this will enhance transparency," he said.

Crouch noted that ADB thumbed down the Philippine government’s petition to separate the Grains Sector Development Program’s (GSDP) $100 million policy and $75-million investment loan.

He said separating the GSDP loan from the investment loan will not yield the expected results.

"Policy reforms are needed. Investments need to be placed in an appropriate policy environment," said Crouch.

Just recently, the Philippine government asked ADB to cancel GSDP’s policy loan since it will not be able to comply with specific conditions calling for policy reforms in the local grains sector.

These conditions include the privatization of the trading functions of NFA, rice tariffication and lifting of quantitative restrictions on rice imports.

Traders agree that the private sector would be in a better position to take over rice procurement functions, especially rice importations which often comes under heavy scrutiny and criticism because of perceived corruption in the NFA.

On the other hand, competition from free trading is expected to result in lower rice import costs.

In another development, a top official of the NFA said the food agency had launched several programs giving opportunities to farmers to increase their farm income.

Secretary Angelito M. Sarmiento, Presidential Adviser for Agricultural Modernization and NFA council chairman, said that willing and capable farmer organizations and cooperatives are given business possibilities by NFA where their organization can earn income.

In a speech delivered during the recent Mindanao Productivity Competitiveness Forum in Davao City, Sarmiento said that NFA had implemented the three related programs aimed at making palay farmers learn the agribusiness side of the rice industry.

The first program is the farmer as rice distributor (FAD) where they learn the rudiments of rice retailing and wholesaling.

The second was in compliance with President Arroyo’s SONA commitment of allowing farmers to import rice.

The third program is the free warehousing for six months where the deposited stock is covered by a warehouse receipt that can be used as collateral for loans from banks and other financial institutions.

Sarmiento said the NFA will act as primary motivator for farmers to produce more and that NFA shall focus its resources and personnel energies toward this direction.

"The role of NFA is to reduce uncertainties in areas where it can. NFA has a nationwide presence with its offices and warehouses and many postharvest facilities in key trading towns and cities," he said.