With the National Power Corp. (Napocor) regaining a semblance of control over its financial bleeding, the Department of Finance said it is the NFA’s turn to be put under intensive care.
The DOF said the NFA’s operations have been put under close scrutiny to determine ways to trim down its deficit until a final policy decision has been made about its future.
Finance Secretary Margarito B. Teves told reporters that all government corporations are being evaluated to minimize their impact on the government’s fiscal position.
"Our ultimate objective is to see what can be done while the bigger issues are being resolved," said Teves. "If these corporations are not financially stable, then what can be done to address that so fiscal impact is minimized."
The DOF has designated undersecretary Jeremias Paul to conduct a comprehensive review of all government corporations that have the biggest impact on the budget.
According to Paul, the NFA is the subject of an ongoing Australian-funded study looking into its trading operations.
"We have to find a way to give NFA some kind of support until we figure out what to do over the long term," he said. "We also want to conduct a broad-based consultation because this is not just a fiscal issue, it’s political as well."
Paul said there are concerns over how much subsidy NFA has been using up every year, with very little success in the way of influencing the prices of either palay or rice.
"We have to determine if NFA’s operations are really working the way they should and whether the subsidies are going to where they’re supposed to go," Paul said.
"NFA also keeps borrowing and it builds up," Paul said. "One option is for us to fund cheaper sources of funding for the agency."
The Australian-funded study was looking into the relevance of the NFA and the impact of its trading and regulatory operations on actual farm and consumer prices of rice, corn and other food commodities.
Data from the DOF revealed that the government losses an average of $2 billion a year in subsidies for the NFA’s trading operations with little impact on domestic prices.
NFA has long been a concern among budget planners but the executive decision has yet to be made on how to rationalize the functions of the NFA.
NFA primarily operates as a trading company that implements the government’s rice support program by buying palay from the farmgate and selling rice in strategic areas to smoothen the volatility in the prices.