THE Department of Agriculture (DA) is pressing Congress to restore the National Food Authority’s (NFA) regulatory powers over the grain market.
In a statement, the DA said the NFA needs to have sufficient powers to effectively influence the rice market, instead of its current role as maintainer of the national rice reserve.
“We need to restore some of NFA’s powers to help it manage the country’s rice situation more effectively,” according to Agriculture Secretary Francisco Tiu Laurel, Jr., who also chairs the policymaking NFA Council.
The Rice Tariffication Law of 2019 stripped the NFA of its power to import, allowing private traders to bring in rice with no restrictions, though they were made to pay import tariffs initially set at 35% on Southeast Asian grain.
The DA said the law severely weakened the NFA’s ability to stabilize rice prices and supply, even removing its power to intervene in the market by selling rice directly to the public.
“Once a crucial player in controlling market prices through timely imports and public sales, the NFA is now reduced to a buffer-stocking agency, limited to buying rice from farmers for emergency use,” it added.
A House of Representatives version of the now revised Rice Tariffication Law had sought to restore that power, but “unfortunately, the Senate Committee on Agriculture rejected it.”
The revised law increased the annual tariff collection going into a rice industry modernization fund to P30 billion from P10 billion originally.
Farmer groups have raised concerns that P30-billion funding requirement will not be met following the reduction of rice import tariff to 15% from 35% in June 2024.
Earlier this year they asked the Tariff Commission to restore rice import tariffs to 35% for Southeast Asian grain and to 50% for all other countries of origin.
The revised law also authorized the DA to declare an emergency that would trigger the release of rice from government warehouses.
NFA Administrator Larry Lacson said the NFA may only dispose of rice stocks through auction during a food security emergency declaration, or in the event of a calamity.
The risk of failed auctions is ageing stocks, the DA said. In palay form, ageing takes twice as long — about six months.
In a first-in first-out system of inventory management, it takes at least nine months from palay purchase before rice needs to be auctioned, Mr. Lacson said.
“That means, inferior quality stocks and higher cost due to stock maintenance just to keep it from being infested by insects. Allowing the NFA to directly release stocks to the market ensures better quality rice at more affordable prices,” he said.
“Before the law took effect in 2019, the NFA could import rice to augment supply, allowing it to maintain a healthier buffer stock and intervene when prices surged,” the DA said.
Mr. Laurel said the NFA’s inability to directly sell rice to the public has hindered its ability to optimize financial resources — “funds that could have been allocated to increase rice procurement and strategic market interventions benefiting both farmers and consumers.”
The NFA currently holds the equivalent of over 7.7 million 50-kilo bags of rice, sufficient for 10 days’ consumption.
With warehouses nearing capacity, the NFA must soon unload stock to make room for more palay (unmilled rice), which it buys at P18-P19 per kilo for fresh grain and P23-P24 for dry, the DA said.
“Without reforms, however, the NFA’s hands remain tied, unable to act swiftly in a volatile market that directly affects millions.” — Kyle Aristophere T. Atienza