Smuggled rice tasty and cheap, but…

That rice you’re eating these holidays sure is delicious. Long-grained and white, it goes well with pricey ham or lowly tuyo. Very cheap, too. But chances are that, while you’re enjoying good rice, hundreds of thousands of farmers could be going hungry while the government is being cheated. This, because, as National Food Authority administrator Anthony Abad admits, "the market has been flooded of late with smuggled rice."

Now why would anybody want to smuggle rice when farmers have had a bumper harvest this year? For easy yet dirty profit, of course.

Local rice may be in bountiful supply and affordable even for the urban-poor. But because of low-grade varieties and backward farming techniques, it’s still costlier to produce, compared to that of, say, Thailand or Vietnam. Rice from those neighbor-countries sell for at least half the price of local grains. Also, it costs only half the shipping fee to haul rice to Manila from Bangkok and Hanoi, than from Cagayan de Oro and Davao. Then, there’s the 50-percent tariff on rice imports. A quick look at such prospects would entice well-connected but criminal-minded businessmen into smuggling.

They are well-connected indeed. Smugglers openly have landed rice stocks in recent months in huge ports in Luzon and Mindanao. "From our studies on prices and volumes, only a few landings had been intercepted," says Abad, who laments that NFA has no police power to go after culprits. It’s the Customs bureau’s job to inspect cargo ships for contraband rice. But right inside the bureau are officers who facilitate the landings.

Last Sept. 13 Cebu Customs deputy collector Santiago Maravillas apprehended a cargo of 20,000 sacks aboard MV Great Faith. He had to inspect the loot himself, after receiving word that insiders may be involved. On Dec. 12 Customs chief Titus Villanueva forfeited not only the cargo in favor of the government, but also the ship, under new rules. Though under Customs guard, MV Great Faith slipped out of the Cebu harbor days later with the contraband. A STAR report yesterday estimated that government lost at least P33 million from the escape – the value of the ship and rice. And it continues to spend P1 million a day for the Navy, Air Forced and Coast Guard to scour the seas and numerous ports looking for the loot. The Zamboanga-bases ship owner denies links to the escape. The ship could already be outside Philippine waters. The rice could have long been sold, digested and transformed into fertilizer, but certainly not for more local rice production.

Since it comes in huge bulks, smuggled rice dampens market prices. That may make consumers happy, but it further impoverishes farmers and reduces government income.

Only the NFA is allowed to import rice – without paying the minimal tariff of 50 percent. But that’s not its main job. It must balance the cost at which it buys rice from farmers (to influence private trading of grains) with the need to keep consumer prices low. Too, for national security it must keep 15 days’ inventory in its warehouses, or366,000 metric tons for the 75-million population.

To hit this balance, NFA does not itself import rice but, for a fee in the form of reduced tariff, bids out the business to associations of farmers. The associations are allowed to import 310,00 metric tons per year. This way farmers can have a say in the supply and price of imported rice while the country maintains at least 30 day’s buffer stock of the staple.

Winning bidders of import permits must stick to their specific 90-day completion, quantity and even port of entry. The permits are then forwarded to the Customs bureau. Any deviation from the specifications is considered technical smuggling. For it is only through strict enforcement of the rules that NFA can keep the happy balance between farmers’ incomes and consumer welfare.

Outright smugglers obviously tip the scales against farmers while ranking profits for themselves. NFA is forced to keep rice stocks in its warehouses at huge losses. Eventually, consumers would lose too if farmers get tired of planting the staple.

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Partly in response to an item in this column (Gotcha, 12 Dec. 2001), Bangko Sentral ng Pilipinas Governor Rafael Buenaventura is investigating executives of Asiatrust Bank for possible collusion in an insurance scam. For, it turns out that not just one, as earlier reported, but three big insurance firms have been cheated of tens of millions of pesos in false claims.

A syndicate had tapped officers of the three firms to jack up dozens of monetary claims for car accidents, with the help of their accredited but unscrupulous repair shops. The insured got their cars repaired, which was all they wanted. They never saw the check payments, although all were marked "for payee account only," meaning, strictly for deposit in their respective bank accounts. The syndicate ended up with the checks, which it deposited then encashed in fictitious accounts in Asiatrust branches in Bacoor, Cavite, and Pasong Tamo, Makati.

Buenaventura believes the scam couldn’t have worked without help from branch managers, who apparently cleared the checks that were not supposed to be in their hands in the first place. The NBI also thinks so, and is looking at criminal charges against the syndicate members.

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