Going in circles

DEMAND AND SUPPLY - Boo Chanco - The Philippine Star

To progress, one must move forward. The problem with our government is its propensity to make decisions that merely goes around in endless circles. Take the school calendar. They decided to slowly move it to open in September over a number of years. Now that we are more or less there, they are moving it back to June.

Then, our government wants to amend the law that bans NFA from importing and selling rice. The objective is supposedly to bring prices down. NFA was doing that before and it didn’t work. Why will it be different this time?

Sen. Cynthia Villar who chairs the agriculture committee doesn’t like it either. Villar recalled how she and other senators tried buying rice from the NFA for calamity victims in Mindanao, and they were told the NFA has no stocks, only to find out the agency sold the rice stocks to traders at a loss to the taxpayers.

“I’m worried about giving the mandate back to the NFA. I’ve not seen its sincerity. It has not proven itself to be taking care of the welfare of the rice farmers and the consumers,” Villar said.

The BBM administration is in panic over the very high price of rice in the market and its inability to do anything about it. It has become a hot political issue. Their knee jerk solution is to go back to a failed system.

To the credit of Agriculture Secretary Francisco Tiu Laurel, he acknowledged that the solutions to our perennial rice problem are long term in nature and will take at least three years. But in the long term, BBM risks being deposed by Duterte, taking advantage of the masa’s anger over the unaffordable cost of their staple food.

Tiu Laurel told congressmen during a hearing last week that there are a lot of factors at play to lower rice prices, with logistics being a critical component. He mentioned possible action points such as distributing more fertilizers to farmers, decreasing post-harvest losses and improving the country’s ports.

“In essence, if we can get all of these in place, I think we can bring down prices of rice by at least 20 percent after three years,” said Tiu Laurel. “Mag-target pa tayong libreng tubig, lalo na sa solar irrigation, all of that, pwedeng maging 30 percent less. But of course, depende sa magkano ‘yung inputs at that time.”

Tiu Laurel claims that there had been no major investment in agriculture for the last 27 years. The agriculture secretary said they would need P1.2 trillion for irrigation, P93 billion for post-harvest facilities and P24 billion for ports.

Agriculture experts say the BBM plan to make NFA buy rice at a high price from farmers and then sell low to consumers is a sure formula for bankruptcy. During the heyday of its operation, NFA incurred a debt of around P190 billion. No one has said anything about how much tax money will be lost in this new subsidy scheme.

Dr. Fermin Adriano, a former DA usec, wrote that “NFA’s rice importation activities were attended by graft and corruption. It was an open secret before that import licenses could be obtained for a fee. Hefty commissions were gained by officials involved in the procurement of rice from international wholesalers. Commissions could also be earned when acting as an agent of companies handling their logistics, from shipping, stevedoring and hauling to trucking, bagging, warehousing and fumigation of their stocks.

“The RTL did away with all those nefarious activities. It consigned the function of NFA to building a ‘buffer stock’ that is intended to respond to emergency situations… The first three years of RTL implementation saw rice prices stabilize. Hardly did the rice price contribute to total food inflation.”

But the Ukraine-Russian conflict caused fuel and fertilizer prices to soar. The rice export ban of India also contributed to rising food inflation in the Philippines. RTL is not to blame.

Dr. Adriano doubts restoring NFA’s price stabilization function – by allowing it to import rice, engage in rice trading once more and closely regulate operations of rice warehouses and retail outlets – will do much. He noted that the old NFA did all these functions but was largely ineffective and generated a lot of rent-seeking activities.

“We treat our agriculture programs and activities as a social welfare program. Thus, the predominance of dole outs instead of focusing on implementing measures that will increase the total factor productivity of our agricultural sector.”

Former Senator Kiko Pangilinan, who handled the rice situation under PNoy, called for farmer empowerment instead.

“Unless rice farmers become credit worthy, organized to achieve economies of scale and provided with a slew of support services to include mechanization, crop insurance, farm inputs, timely disaster/calamity relief assistance, warehousing/logistics and infrastructure funding among others, our rice farmers’ productivity will remain low and supply of food in the market insufficient and expensive.

“In this scenario NFA importing and selling inexpensive rice will be a subsidy that is a sure-fire formula for drowning the agency in crippling debt. Worse, if left unchecked it will be an opportunity for massive corruption and technical smuggling for high-ranking government officials, the NFA and the rice importers in the private sector. The public funds used to purchase imported rice and sell them cheap is better channeled directly to the farmers in intervention programs meant to increase farmers productivity.”

Actually, the DA should have been doing all those but didn’t. Small as DA’s budget had been, DA has only managed to spend at most 75 percent of it. What little budget they spent, was lost in corruption. Remember the fertilizer scam during the watch of former President Macapagal Arroyo?

Going around in circles makes sense for our officials. It provides the illusion that something is being done, kahit wala naman. We, Filipinos, fall for it all the time. Stupidity – plain and simple.



Boo Chanco’s email address is [email protected]. Follow him on X @boochanco

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