Former NFA chiefs push policy reforms

MANILA, Philippines - While national attention is focused on the hunt for illegal rice importers, two former chiefs of the National Food Authority (NFA) say that flawed government policy, not smuggling, poses the biggest threat to the nation’s rice industry.

Anthony Abad, who served as NFA administrator from 2000 to 2002, explained yesterday that smuggling is just one of the many symptoms of a flawed system of rice regulation.

Lito Banayo, who headed the
agency from 2010 to 2012, warned that government’s continued monopoly
of rice importation could cause NFA’s debt to balloon to as much as P190 billion.

“Rice smuggling occurs because there is an unmet demand of a hungry population. Smuggling and the illicit importation of rice simply reflect a deficit in supply,” Abad said.

At the Senate hearings, so-called “illegal importations” were attributed to the absence of a definitive policy on the World Trade Organization (WTO)-granted “special privilege” of quantitative restrictions (QR) on the importation of rice that had expired in June 2012.

The Department of Agriculture (DA) maintained that despite its expiration, importation quotas on rice will remain in place until 2017, even as the Philippines has yet to succeed in negotiating an extension with fellow WTO member countries.

But Abad believes otherwise. “When you have an agreement that is time-bound, the ‘special treatment clause’ expires upon the deadline. The Philippines is the only country left that maintains a QR,” he said.

The DA and attached agency NFA have been criticized by some sectors for supposedly using QR and the issuance of import permits to maintain a “monopoly” over rice trade.

Abad agreed on what he called “outdated QR system and government rice monopoly,” only led to high prices, inefficiency, corruption, and smuggling.

In a television interview, Banayo, said he was astonished at how the NFA has come to monopolize rice trade over the last year.

“In the third year of this Aquino administration, 2013, I was surprised to read in the papers that it was only the NFA doing the importing, without participation from the private sector,” he said in the vernacular.

Supposedly, under the 2010 Food Staples Self-sufficiency Program (FSSP), the country’s rice self-sufficiency roadmap, importation should primarily be the role of the private sector.

“The private sector should be the one to import. The NFA should, little by little, remove itself from rice importation and concentrate on local procurement, which we followed for two years,” said Banayo, who was NFA administrator during the first two years of the Aquino presidency, describing the agency’s thrust under his watch.

Banayo warned the NFA’s continued monopoly over rice importation, through government-to-government transactions, is a virtual “white elephant,” which would cost the country billions in public funds.

“We are going to be deep in debt. I think, at the rate it’s going, mostly from government-to-government imports, we will reach P190 billion by the time PNoy (President Aquino’s term) ends,” Banayo said.

Amid increasing prices, and if it were to be true to its mandate, Banayo reminded the NFA to concentrate on making sure there is available rice in the market and make the grain affordable.

According to the Bureau of Agricultural Statistics (BAS), as of February 4, well-milled rice retails for P39.94 per kilogram, 13.33 percent higher than last year. Regular milled rice retails for P36.73 per kilogram, 14.64 percent higher than the previous year.

And in order to help lower rice prices, the 2010 FSSP recommends “to allow the expiration of QR by 2012.”