DOF eyes hike in NFA subsidy

MANILA, Philippines – The Department of Finance (DOF) is planning to increase the tax expenditure subsidy to the National Food Authority (NFA).

Finance Secretary Margarito Teves said the move is among the measures the government is considering to avert a rice shortage in the country.

Teves said the subsidy will give the grains agency more funds for its import requirements, adding that this is the more favored mitigating measure, instead of reducing the tariffs on rice.

Earlier, the NFA said it would apply for tax expenditure subsidy to fulfill its mandate of ensuring the country’s rice sufficiency through importation.

The price of rice has almost doubled from $295 per metric ton last year to $500 per metric ton this year. 

The government said it is spending at least P3.35 billion for emergency measures to mitigate the effects of the shortage of rice and other food commodities in the world market.

President Arroyo ordered the release of P2.85 billion last week to fund a cross-commodity program wherein planting would be diversified to reduce dependence on rice.

The Department of Agriculture (DA) will add P1.5 billion to the program to jumpstart related infrastructure projects such as improvement of farm-to-market roads.

A significant portion of the funding would also be used for the planting of certified rice seeds in an additional 600,000 hectares of rice land during the wet season.

The Bangko Sentral ng Pilipinas (BSP) said the tightening rice supply is a major concern, especially since the problem is not local but global and can trigger inflationary pressures.

The BSP said it is optimistic that the importation and the upcoming harvest season would alleviate the short-term supply pressure, but officials said the issue needs a long-term solution.

BSP Deputy Governor Diwa Guinigundo said that the NFA had a standing lobby to increase subsidies on the price of rice at the farm gate and the retail market, but this was a question of policy that would have to be made.

“It’s a big concern, no doubt about that,” he said. “Some remedial measures are being put in place to mitigate the pressure and keep prices stable. We are trying to do it in a timely manner but it may or may not be enough.”

In the short term, Guinigundo said the NFA will increase rice importation this year from 1.6 million metric tons to 2.1 million metric tons to bridge the supply gap.

He said the NFA plans to source rice from Vietnam, Cambodia and Thailand and access Southeast Asia’s emergency reserves should it become necessary.

Guinigundo said timely decisions are needed since rice accounted for a significant portion of the consumer price index which measures the inflation rate.

He said the NFA has had to resort to unusual tactics to limit corruption in the sale and distribution of government-subsidized rice.

Commercial rice currently sells for P27 per kilo, while NFA rice is sold at P16 to P17 per kilo.

He said some traders get NFA rice and sell them at commercial prices, which defeats the purpose of subsidizing the retail price.

“But this problem is much bigger than us. Globally, rice production is being affected by climate change and vast tracks of ricelands are being converted because of urbanization and even the demand for biofuels,” Guinigundo said.

Press Secretary Ignacio Bunye said President Arroyo is taking “prudent and humanitarian steps” to alleviate the plight of the poor, hardest hit by the runaway prices of oil and rice in the world market.

She brought her Serbisyo Muna Caravan to remote municipalities in Northern Luzon during the Holy Week, he said.

The Serbisyo Muna Caravan is a goods and service-laden government assistance program which seeks to provide livelihood and financial assistance to families belonging to the country’s poorest of the poor, Bunye said.

Sen. Loren Legarda warned yesterday that the impending rice crisis would be “politically explosive” if the government fails to address the problem in the next 24 to 36 months.

Legarda proposed that over the next 24 to 36 months, the government should use two multi-billion-peso funds entirely, if not almost exclusively, for projects that would immediately advance rice production.

She was referring to the Agriculture and Fisheries Modernization Program, which has an annual allotment of P17 billion, and the Agricultural Competitiveness Enhancement Fund, which had a cash balance of P6 billion as of December 2007.

“These funds can be tapped to enable rice farmers to achieve greater productivity via exceptionally potent seeds, greatly improved irrigation, or with adequate water-impounding structures and other drought-mitigating measures,” she said.

Sen. Manuel Roxas II told the President to “be real.”

“It’s better to tell the people that we have a problem and solution, rather than say we don’t have a problem but prices of rice and other commodities will increase,” Roxas, chairman of the Senate Committee on Trade and Commerce, said.

Roxas, Liberal Party president, said such contradictory statements cut the government’s credibility and reduce its ability to marshal resources, including voluntary civic action, to combat the shortage.

Senate Minority Leader Aquilino Pimentel Jr. cautioned Agriculture Secretary Arthur Yap against insisting on cutting down the rice consumption of the people “because this is the kind of reckless statement by administration officials that can incite public anger or uprising.”

He said such advice seems to betray his unfamiliarity with the eating habits of typical, poor Filipinos who will not mind having no viands on the dining table as long as there is enough rice and some salt. – with Des Ferriols, Christina Mendez