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Business

P20/kilo rice reality bites

BIZLINKS - Rey Gamboa - The Philippine Star

It’s a dangerous idea for the President to seriously think about restoring the National Food Authority (NFA) as a central buying agent for rice and other produce reminiscent of the agency’s expanded role during the 1970s when his father was president.

Time and again, the current President has been quoted as extolling the need to expand the role of the NFA, along with the idea of giving more purpose to a food terminal concept and Kadiwa centers, both of which also were ideas that first came to fruition during his father’s term, but eventually ran into many problems.

The President has been talking again about a P20-per-kilo rice, more than six months since he first mentioned this, then as presidential candidate wooing Filipinos to vote for him in the last May elections.

Over the course of his presidency, he has intermittently referred to this aspiration, although without providing for a clear plan on how this can and will be achieved. Instead, he stirs up the hopes with statements that a P20-a-kilo of rice is achievable or something to that effect.

Two weeks ago, the Department of Agriculture (DA) launched the Kadiwa ng Pasko project with the help of several other government offices. The DA is concurrently headed by the President, purportedly to emphasize the all-important task of ensuring the country’s food security during a period of global crisis marked by disrupted supply chains of grains, fertilizers, and many other essential commodities.

During the nationwide Kadiwa launch held in Mandaluyong City, the NFA kiosk prominently displayed signs tagging rice at P25 per kilo. This was the cue for the President to explain that the rice came from the NFA’s buffer stock, which had been bought directly from farmers and was being sold at cost to consumers.

At this point, the President was able to say that the goal of reducing rice prices to P20 per kilo, as he had promised while campaigning, was already in sight. “Palapit na tayo dun sa aking pangarap na mag P20 pero dahan dahan lang.”

NFA’s buffer stocks

During this period of high inflation, consumers can be thankful for the cheap NFA buffer stock rice, priced at least P10 lower than the cheapest available in wet markets. Stocks will only be available on paydays until Dec. 31 this year, although the President has expressed hope that the Kadiwa concept could be extended even after the Christmas holiday.

Supply during the next three paydays will be limited and sold in the 11 Metro Manila Kadiwa stores and one each in Tacloban, Davao de Oro, and South Cotabato. The first day sale is today, and the next ones presumably will be on Dec. 15 and 29.

The DA is supposedly studying the cost of keeping the Kadiwa stores open daily, and while it cites administrative costs as a concern, ensuring that NFA has the rice stocks available to be sold at cost to consumers will be a bigger challenge.

NFA’s rice buffer stocks is set for a number of days, currently at 15 to 30 days of national rice consumption. Presumably, withdrawals made for the Kadiwa project will be funded by other government agencies, primarily by the Department of Social Welfare and Development, so that it can be replenished again.

The idea of expanding Kadiwa stores to more localities is possible, but don’t expect to always see rice at P25 per kilo, unless the national government will find the money to support the subsidy needed to continue buying high and selling low, a practice in the past that led to the NFA losing most of its powers.

Reviewing the RTL

Under the old NFA charter, aside from being able to buy rice and corn directly from farmers, the agency was also responsible for establishing post-harvest facilities associated with rice and corn. It also had to ensure security of rice supplies and pricing.

Since its inception in 1972 (as the National Grains Authority), the NFA has grown an extensive nationwide network well versed in rice and corn trading. However, as a government corporation relying solely on the national government for funds, NFA became mired in controversies.

It accumulated debts in over four decades of operations, and was quickly associated with corruption and various instances of incompetence. The last controversy was in 2018 when rice stock levels significantly dropped at a time of a global rice shortage, causing a spike in domestic rice prices.

This led to the passage of the Rice Tariffication Law (RTL) of 2019, which stripped the NFA of its rice importation role. Under the current Marcos government, talks are once again percolating about expanding the NFA’s powers.

Improving rice productivity

Times have changed, and state control of rice importation and trading is no longer an option, with thousands of players from the private sector competing to buy palay (unhusked rice) from farmers, bring these to the mills, transport and store them to appropriate regions, and finally deliver them to consumers.

Even the business of importing rice already operates under an efficient system and is regulated by a host of government agencies and rules to protect local farm production, as well as ensure adequate supplies for the whole nation. The NFA can no longer match the efficiency that the private sector is demonstrating.

At face value, the Kadiwa sa Pasko is a shortsighted public relations idea, and the money spent on it could have been better used to fund programs that will further improve rice production. Only then can we believe that a P20 per kilo rice can soon be a reality.

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.

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