NFA earns P1.14 billion from rice import bidding

MANILA, Philippines – The National Food Authority said last Monday’s bidding for 190,000 metric tons of imported rice under private sector financed (PSF) resulted in a record-high P1.14-billion income for the NFA coming from the winning bidders’ service fee.

A total of 109 bidders participated in the open portion of the PSF importation through the NFA’s tax expenditure subsidy, which is a program whereby private importers are able to import rice using the NFA’s tax subsidy.

Of the total participants, only 19 bidders with the highest bids will each be given the permit to import a maximum of 10,000 metric tons of rice. The average service fee for this year’s PSF (open category) was at P6.28 per kilo or P614 per bag, which is a record high despite the lower volume this year of PSF importation pegged at 380,000 metric tons.

Another bidding for the remaining 190,000 metric tons is set on March 26 for farmers’ cooperatives, which is expected to have hundreds of participants considering that the maximum allocation per cooperative is only 2,000 metric tons.

Last year, the NFA earned 1.53 billion for a much larger volume of 660,000 metric tons with the average bid pegged at P2.31, or P115.50 per 50-kg. bag while last year’s PSF bidding earned significantly more, this year’s PSF bidding could earn for the NFA about P2.1 billion although the volume to be imported is only about one-half of last year’s.

In terms of participants, the 2012 PSF bidding had 109 participants in the open category while the 2011 PSF bidding had only 66 participants.

“The open and transparent bidding process showed that government will earn more as compared to the cartelized and monopolistic practice of allocating through a first-come, first-served method, where service fees are low and fixed, and the participants are virtually pre-selected,” said NFA administrator Angelito Banayo.

This year’s bidding was witnessed by representatives from the Commission on Audit and observed by a specially designated team from the Department of Agriculture headed by consultant Gregorio Tan, a former NFA administrator under the Arroyo administration.

As to the concern raised by some quarters that higher PSF service fees will cause prices to rise, Banayo said “the fact that participants bid much higher than the floor price of P100 per bag means that they know they can still make a reasonable profit, and observed that prices in the international market are fairly stable, with lower demand from previous big buyers like the Philippines and Indonesia.”

For the past two years under the administration of President Aquino, the allocation for the PSF was done via an open bid on the service fees as compared to the PSF allocation in 2010 wherein the same was done via a first come-first served basis at a pegged service fee of P25 per bag, or the equivalent of P0.50 per kilogram of rice imported.

Under this practice, government earned a measly P110 million for the 2010 PSF imports of 220,000 metric tons. Meanwhile the government, through NFA, bought 2.25 million metric tons of imported rice.

In 2011, the practice was reversed in keeping with good governance and transparency objectives of the present Aquino administration.

The volume imported under the PSF program was at 660,000 MT (600,000 MT for the open portion and 60,000 MT for farmer’s cooperatives), with NFA buying only 200,000 metric tons for a total of tax-subsidized importation of 860,000 metric tons, or about a third of the 2010 volumes.

For 2012 the PSF volume was reduced to 380,000 MT (190,000 MT for the open and 190,000 MT for the farmers’ cooperatives), while NFA will procure 120,000 metric tons more, for a total of 500,000 metric tons, which is equivalent to only a fifth of the record 2010 high volumes.