Kiko sees true cause of rice price surge

Acting grains chief Francis Pangilinan is to import 200,000 tons more rice this year. This is on top of 800,000 tons that the National Food Authority ordered from Vietnam last Apr., for delivery in May-Aug.

Pangilinan also is to stop the NFA’s imposing on foreign suppliers its sole favored cargo handler. He told The STAR this yesterday in reply to exposés that the imposition was for P1.08-billion kickback to the NFA brass (Gotcha, 21 and 23 May 2014).

Flooding the market with a million tons is Pangilinan’s solution to recent price surges of the Filipino staple. In effect the NFA’s rice supply projections and consequent import orders were short.

Ending the NFA’s favoring of a monopolistic cargo handler is seen as his intolerance of the agency’s entrenched grafters. How far he will go in cleaning it up has yet to be seen.

Pangilinan couches his moves tactfully. He calls the added imports and the end to favored-cargo-handler status “renegotiation.” That is, new terms are to be worked out with Vietnam’s two state grains suppliers, Vinafood-1 and -2.

Talks are ongoing for the two to add 25 percent, or 200,000 tons, to the original 800,000-ton indent, which Pangilinan says is allowed in the contract. His weeklong new NFA administrator Arthur Juan is to find legal ways to rescind the NFA’s anomalous imposition of a Makati-based cargo handler on the Vinafood contract.

Pangilinan is barely two months in the job of Presidential Adviser on Food Security and Agricultural Modernization. The person in whose turf he is treading, Agriculture Sec. Proceso Alcala, is his and President Noynoy Aquino’s Liberal Party mate. Interviewed soon after his presidential appointment, Pangilinan had told The STAR he would be replacing Alcala as chairman of the NFA and three other key agri-agencies transferred to him.

Alcala and political sidekick Orlan Calayag, erstwhile NFA head, have been criticized for messing up the country’s rice supply and food security. Their much-ballyhooed rice self-sufficiency by 2013 had flopped.

Worse, in June that year retail prices of NFA subsidized rice spiked from P26 a kilo to an unprecedented P38, and has since stayed at P36. The dry-season harvest of Apr. had just been dried in mills, a big bulk bought up by the NFA. Too, the first 205,200 tons of the total 705,200 that NFA ordered from Vietnam had just arrived in May.

Alcala and Calayag blamed the NFA rice price surge on “price manipulating smugglers-hoarders.” How outsiders supposedly got control of NFA stocks and selling prices, they didn’t explain. In the confusion, they managed to make senators subpoena the NFA’s erstwhile accredited rice importers and shamed as smugglers. One of them was Davidson Bangayan, alias David Tan, who in 2010-2012 had cornered via alleged bribery the bulk of NFA imports, using farmers’ cooperatives as fronts.

Last May the state think tank Philippine Institute for Developmental Studies (PIDS) said that blaming smugglers was only a ruse. In truth, Alcala and Calayag blindly had over-estimated the domestic harvest and so under-estimated the imports, due to their self-sufficiency daydream. And that import was overpriced by P3.4 billion, for which militant groups have charged the duo with plunder.

Alcala repeatedly claims to already have achieved 96 percent targeted sufficiency then, but fell short by a mere four percent due to one early typhoon. It only goes to show, however, that his calculations were frazzled, given that 16 or so typhoons strike the Philippines each year.

 High officials don’t believed Alcala’s self-sufficiency this year either. Pangilinan’s one-million-ton import from Vietnam is proof of it.

Compounding the supply problem are onerous insertions by NFA crooks in the Vinafood contracts. Aside from the single cargo handler, for which P1.08 billion in kickbacks will come, there is also a redefinition of the indented “well-milled long grain white rice, 15 percent broken.” By international standards, this means grains 6.1-6.9 mm long. But during the bidding the NFA said it would accept only 6.5-6.9 mm. The stringent requirement turned off the Thai and Cambodian bidders, leaving only Vinafood, which is accustomed to the “commissions” that NFA crooks expect.

The redefinition has made it difficult for Vinafood to consolidate the 800,000 tons from Vietnamese farmers. Websites that track global rice trading, like oryza.com, have reported that the farmers cannot meet Vinafood’s quality demand, and the latter has threatened sanctions.

Complicating the issue for Pangilinan are conflicting statistics. He says the figures of rice consumption and harvests from Alcala’s Dept. of Agriculture are much lower than those of PIDS and the National Economic and Development Authority (NEDA) that consists of cabinet members.

Going by DA figures, the country’s rice consumption per capita (per person per year) is 114 kg. With a population of 100 million, that means a need for 1.14 million tons. Yet the country produces only 1.2 million tons of palay, milled into 600,000 tons of rice, thus necessitating imports to cover the shortfall, plus some as buffer during lean months leading to the wet-season harvest (Sept.) and against disasters.

PIDS and NEDA estimate the annual harvests at 1.85 million. Yet both say this is still not enough to feed the population.

Pangilinan needs to reconcile the conflicting numbers. He says the Bureau of Agricultural Statistics, once under the DA, has been moved to a new Philippine Statistics Authority, under the NEDA.

Pangilinan says the administration will continue the ban on private rice imports that Alcala and Calayag began in 2013. This is against the recommendation of PIDS and NEDA.

The two agencies have been saying that the government should let the private sector do the importing. The DA-NFA can then use the 50-percent import duty to improve rice varieties, irrigation, fertilizers, harvests, and post-harvest facilities and techniques – eventually to achieve self-sufficiency.

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