Time to abolish irrelevant NFA

The National Food Authority got the governments of Vietnam and Thailand to please supply it some rice. But not after two panicky months. The agency had run out of buffer stocks last March, the first time it happened in 39 years. Luckily it wasn’t the typhoon season, Mayon’s volcanic rumblings had subsided, and no major earthquake struck to necessitate massive rice rationing. Still there was no NFA-subsidized rice left for sale to the poor at only P27 a kilo. Taking advantage of the NFA shortage, traders jacked up retail rates of commercial varieties to P44 a kilo from only P34. Consumers groaned.

Eager to live down the fiasco, the NFA tried to wheedle 250,000 tons of rice from Thailand and Vietnam at a bargain. In emergency tender the other Friday, it set a ceiling of $483.63 per ton of 15-percent broken, and $474.18 for 25-percent broken – way below world prices. Delivery should be in two weeks, but payment is three months (instead of the NFA’s usual 15 days). No go, the two governments sniffed. Other ASEAN states were buying from them at higher rates, payable on delivery. Shaken to its senses, the NFA set another bidding last Friday. It raised the ceiling to $531 per ton for 15-percent broken, and $520.50 for 25-percent broken – the rates that Thai and Vietnamese officials quoted in the first place. Deals finally were sealed at slightly lower those prices. Terms were softened: deliveries in three to six weeks; payment within 30 days. The first arrivals would be at month’s end.

Now that he can breathe easy, President Duterte can resume the NFA audit that Secretary to the Cabinet Leoncio Evasco had initiated. As then-NFA Council chairman, Evasco last March ordered a records review, to get to the bottom of the buffer stock depletion. The 2017 imports from Thailand had just arrived in October-December, enough till the dry-season harvest starting March. But stocks began to thin out in late January, and were gone by early March. Reports reaching the Council and the Senate were that the buffers in NFA warehouses falsely were reclassified as “aging,” then sold cheap to favored traders in Bulacan. Kickbacks allegedly changed hands. By continuing the audit, Duterte will know how to prevent a repeat of the crisis.

Duterte can also consider abolishing the NFA. The National Economic and Development Authority, which he chairs, has long been advocating that. NFA only piles up debts year after year. It buys palay at high rates from farmers supposedly as price protector, but its buying is so limited, only three percent of the harvest, to matter. It also imports high, oftentimes with kickbacks from foreign counterparts and traders. It then stores a buffer of 15 days, and sells the excess to poor consumers at a loss. The agency is P265-billion in hock.

NFA must import the 900,000-ton yearly domestic rice shortfall. But with its sparse budget, it can buy only 250,000 tons. The balance it assigns to supposed farmers cooperatives. Most are fronts of smugglers. Bribes are paid for NFA duty-free import permits, which the smugglers use to sneak in more than their allocations, multiple times.

Last month Duterte declared that anyone may henceforth import rice, provided the duty (presently 35 percent) is paid. That’s overdue. Member-states of the World Trade Organization were supposed to have left grains trading to the private sector 15 years ago. The two special delays that Manila sought had come with sanctions on Philippine agricultural exports, notably fruits. The WTO also requires the slashing of tariffs on grains imports by nearly half. When that happens, cheap foreign rice will flood the Philippines. Consumers will be pleased, but farmers will suffer.

What to do? Boost domestic production, using the duties from rice imports. Build irrigations-cum-flood controls, cheapen fertilizers and pesticides, mechanize farms, shift farmers to special varieties preferred by restaurant chains, and more.

Those must be done right away. The next WTO deadline is coming to further cut duties on agricultural imports. Too, the ASEAN Free Trade Agreement that began in 2015 requires members to remove tariffs on grains.

The NFA is irrelevant in all that.

* * *

Imagine not only banks or malls but even small shops hiring and arming their own security guards. Wouldn’t that create hundreds of thousands of private armies all over the country? That will happen if militant labor federations had their way, which is to illegalize all types of labor contracting – like security, janitorial, or caregiving services – and allow only direct company hiring.

The militants want a one-size-fits-all solution to any employment issue. Expectedly they trashed President Duterte’s Labor Day executive order (EO) against “endo,” the untimely ending of contracts of probationary hires. Victims of endo are mostly unskilled servers and busboys in fast-food chains. Cruel bosses lay them off on the fifth month, to avoid costly regularization by the sixth, then rehire them for another five months, over and over again. Labor-only contractors do it, to insulate the main companies. So the militants demand a ban not only on endo but all labor contracting.

The EO is pointless, to begin with. It “bans” what the Labor Code already forbids. Its main section is titled, “Prohibiting Illegal Contracting.” Even Duterte admits it has no teeth. The Executive simply must enforce the long-existing ban on endo. Still the Malacañang spokesman remarked that the militants wouldn’t have been satisfied with any EO.

Lost in the exchange is the real issue: full employment. All citizens of working age must have jobs. Outlawing labor contracting would only worsen joblessness, as employers shift to automatons. Wholesale bans on worker deployments to certain countries or closures of islands won’t work either. Over-taxation is burdening workingmen. The rise in consumer prices due to higher fuel taxes has gnawed deep into wages. Farmers dependent on diesel-fired irrigation pumps are hurting too. Industries like car assemblies have slumped and may lay off employees.

* * *

Catch Sapol radio show, Saturdays, 8-10 a.m., DWIZ (882-AM).

Gotcha archives on Facebook: https://www.facebook.com/pages/Jarius-Bondoc/1376602159218459, or The STAR website https://www.philstar.com/columns/134276/gotcha