National Food Authority to get P8-billion subsidy next year

MANILA, Philippines - The National Food Authority (NFA) will get P8 billion in subsidies next year to sustain its money-losing operations, Budget Secretary Florencio Abad said during the weekend.

The P8-billion programmed subsidy for 2011 is the same as the amount programmed for this year, Abad also said.

He said this was the program endorsed by the previous government to the Aquino administration.

Despite adopting the recommendation of the previous government regarding the level of subsidies that NFA would be getting next year, Abad assured that the Aquino administration would review the operations of the grains agency and come up with long-term solutions to address the problem.

In fact, Abad said the government has now created an interagency task force to look into NFA, its operations in the past, the reasons why its debts ballooned through the years and how to overhaul it.

Abad said the idea is to “unbundle” the operations of NFA and to leave the importation mostly to the private sector.

Data from the Finance department showed that the liabilities of NFA rose to P171 billion as of end-May 2010 from only P28 billion in 2003.

Subsidies given to NFA amounted to P2.85 billion as of end-June from only P2.025 billion as of end-May. The government grants subsidies to NFA to allow the grains agency to fulfill its mandate of selling price at affordable rates even if these were bought at high prices.

Abad said that while changing the mandate of NFA would require legislative amendments in the charter of the agency, rechanneling rice subsidies directly to the poor would not need legislation and thus, may be implemented immediately.

The department is looking at expanding the government’s Conditional Cash Transfer (CCT) program so that it would target those who cannot afford to buy rice at prevailing market prices.

The idea is to give rice subsidy through CCT to certain recipients or sectors of society so that the target is more specific.

Once this is implemented, the NFA does not need to sell rice at a price affordable to the poor even if this was bought at a high price.

Abad said the government is targeting more than one billion recipients under the planned expanded CCT program from 700 million recipients programmed under the original program implemented by the Macapagal-Arroyo administration.

The CCT scheme, implemented in 2008, meanwhile, is a poverty alleviation and social assistance strategy similar to those adopted in some Latin American and South East Asian countries.

Under the current program, the Department of Social Welfare and Development provides money to the poor on the condition that they make investments in human capital like sending their children to school or bringing them to health centers regularly.

The first CCT program was developed in Mexico nearly 10 years ago. Other countries implementing the program are Columbia, Brazil, Jamaica, Ecuador, Chile, Honduras, and Bolivia.