Remove the chaff from the grains

Other than the questioned selling of the buffer stock of rice to traders, what’s happening at the National Food Authority (NFA)? With 132 of around 2,000 NFA officials and employees all around the country suspended for six months without pay, this agency attached to the Department of Agriculture (DA) is struggling to stay relevant in the over-all schemes of the government on food security.

Under Republic Act (RA) 11203, better known as the Rice Tariffication Law (RTL), the NFA was mandated to keep the country’s rice buffer stock at the optimal level of 15 to 30 days of the national rice consumption. Included in this estimation the rice buffer stocks needed in case of man-made or natural disasters and other emergency situations.

Prior to the implementation of the RTL, the required inventory of rice was at 90 days – 60 days for the private sector and 30 days inventory for the NFA. Under the RTL, the private sector needs at least 81 days inventory and nine days stocks for NFA. The RTL also removed the various regulatory powers of the NFA from import licensing to warehouse inspection.

The Philippines has been dependent on rice importation due to the country’s poor annual production of the Filipino staple food. Worsened by rampant smuggling, the implementation of the RTL has been seen to have stabilized the supply and prices of rice. Thus, the RTL was hailed as a landmark reform law that supposedly cut much into the nefarious trading of smuggled rice in the Philippines through these years.

It was former President Rodrigo Duterte who signed RTL as RA No. 11203 on February 14, 2019. The RTL amended RA 8178, or Agricultural Tariffication Act of 1996 and replaced the system of quantitative restriction (QR) such as import quota on rice procured from other countries with tariffs of 35 to 40 percent.

Former Finance Secretary Benjamin Diokno, in fact, maintains it was the RTL that actually tamed the galloping inflation in our country. The rice inflation averaged to a high of 1.4 percent in the first quarter of 2022. From rice being a major inflation-driver in the past, Diokno noted with great satisfaction, the RTL enabled rice traders to contribute to the welfare of Filipino rice farmers and helped them modernize and improve their palay production.

This was largely attributed to the benefits of the Rice Competitiveness Enhancement Fund (RCEF) out of tariff collections from imported rice that RTL mandated. The RCEF consists of an annual appropriation of P10 billion in six years to fund programs for farm mechanization, seed development, propagation and promotion, credit assistance, and extension services. These programs were specifically identified to improve the productivity of rice farmers, reduce production costs, and link them to the value chain.

The implementation of RTL reportedly benefits two million farmers, 110 million consumers, and tens of thousands of retailers, wholesalers, millers, and those in the warehousing and transport businesses.

As much as P30 billion in tariff collections are projected this year from importers of rice under RTL.

The excess from the P10 billion tariff revenue collection as provided for by RTL is appropriated by Congress the following years for the direct financial assistance to rice farmers, titling of agricultural rice lands, expanded crop insurance program, and crop diversification program.

The six-year period for the annual P10 billion allocation for RCEF lapses later this year, DA assistant secretary and official spokesman, Arnel de Mesa told us at the Kapihan sa Manila Bay news forum last week. This is why, De Mesa noted, a number of bills have been filed before the 19th Congress to extend the RCEF, among other proposed amendments.

Several bills seek to review the RTL such as House Bill (HB) 1920 filed and authored by Agri party list representative Wilbert Lee. Speaking at the same Kapihan sa Manila Bay news forum, Lee explained HB 1920 seeks to return to the NFA its rice retail function to buy palay from the farmers at the highest price possible and sell the most affordable rice to the consumers.

De Mesa concurred that the NFA needs “to intervene in the market and enable it to appropriately respond to emergency needs” to stave off a rice crisis. Under the RTL, he cited, “the government’s hands are tied” because the NFA is allowed only to sell rice stocks to government agencies such as the Department of Social Welfare (DSWD). “All rice are now in the hands of the private sector. The State no longer has the power to intervene in the market,” De Mesa pointed out.

Because of the rigidity of the RTL, he recalled, the government was forced to impose last year at one time a temporary, short-period price cap when the price of rice shot up to more than P50 per kilo.

While he was the concurrent Agriculture Secretary, President Ferdinand “Bongbong” Marcos Jr. (PBBM) backed the review of the RTL and to return the powers of the NFA at the height of spike in rice prices early last year. In one of the meetings at Malacañang with the country’s various agriculture stakeholders, Agriculture assistant secretary and deputy spokesman Rex Estoperez disclosed: “President Marcos said, ‘review what needs to be reviewed necessary to empower the NFA.’ Its (previous functions) should be returned. You cannot totally remove its powers.”

The bills to review RTL are not among, though, the 57 priority bills in the list jointly agreed by the Legislative-Executive Development Advisory Council (LEDAC). De Mesa, however, clarified Agriculture Secretary Francisco Tiu-Laurel is supportive of the proposed review of the RTL, especially on extending the RCEF.

But for now, De Mesa conceded, the priority of Secretary Tiu-Laurel is to re-open at the soonest possible time the 99 NFA warehouses that were closed down after the warehouse supervisors, or bodegeros were suspended by the Ombudsman. The DA chief designated last week former Bureau of Plant Industry director Larry Lacson as the NFA officer-in-charge Administrator to get these things done quickly.

Other than gaslighting these bureaucrats, the NFA needs to clean up the agency like winnowing the palay to remove the chaff from the grains.