Government looks at overhauling National Food Authority

MANILA, Philippines - The Department of Finance (DOF) is looking at overhauling the National Food Authority (NFA) as it continues to scout for ways to address NFA’s money-losing operations.

A ranking Finance official said the department is looking at expanding the government’s Conditional Cash Transfer (CCT) program so that it would target those who cannot afford to buy rice at prevailing market prices.

The idea is to give rice subsidy through CCT to certain recipients or sectors of society so that the target is more specific.

Once this is implemented, the NFA does not need to sell rice at a price affordable to the poor even if this was bought at a high price.

“The NFA is really a drain on government’s finances,” noted the Finance official.

As of 2009, NFA has total outstanding obligations of P146.87 billion, comprising of short-term and long-term loans as well as the debt papers it issued to refinance existing debts and to fund operations.

NFA also availed of P17.703 billion in tax subsidy from the government for its importation of rice and corn. The subsidy comes in the form of the so-called Tax Expenditure Fund (TEF), which is essentially non-cash.

This TEF is a subsidy released by the Department of Budget and Management (DBM) to government-owned and controlled corporations and state-run companies such as the NFA mainly to settle customs duties and other taxes arising from the importation of goods.

While there is no cash involved here, it also means revenue losses for the government. If state-owned agencies were able to pay in cash for their duties, the National Government would have earned more.

The CCT scheme, implemented in 2008, meanwhile, is a poverty alleviation and social assistance strategy similar to those adopted in some Latin American and South East Asian countries.

Under the current program, the Department of Social Welfare and Development provides money to the poor on the condition that they make investments in human capital like sending their children to school or bringing them to health centers regularly.

The first CCT program was developed in Mexico nearly 10 years ago. Other countries implementing the program are Columbia, Brazil, Jamaica, Ecuador, Chile, Honduras, and Bolivia.