NFA creates separate account for procurement

MANILA, Philippines — The National Food Authority (NFA) has clarified that it has set up a separate account for its procurement subsidy, which is dedicated to palay buying from local farmers, amid fund diversion issue.

This after the Commission on Audit (COA) reported that NFA has again diverted billions of pesos in assistance it received from the national government intended to stabilize the supply and prices of rice in the market.

“The issue had been addressed way back in 2018,” NFA administrator Judy Dansal said.

“It can be recalled that NFA had a hard time accomplishing its procurement targets for 2018 because farmgate prices surged to very high levels, reaching as much as P25 per kilogram in many areas, as against NFA’s buying price of P17 per kilo for clean and dry palay,” she said.

Based on the COA’s annual audit report, the NFA received from the government a total of P7 billion in subsidy for the implementation of its food security program for 2018.

The audit body said the fund was instead used by the NFA to pay its maturing loans with Land Bank of the Philippines and Development Bank of the Philippines.

Dansal explained that part of NFA’s procurement subsidy in 2018, lumped under the agency’s corporate funds, was used to pay for the agency’s maturing loans early in the year, but the full amount of P7 billion was eventually spent for the year’s food security buffer stock–both from local procurement and rice importation that arrived starting June 2018.

COA noted that for 2018, NFA borrowed P6.36 billion to finance rice imports, up by P403.8 million from P5.96 billion in 2017.

The NFA Council approved the use of NFA’s procurement subsidy for local and international procurement of its buffer stock in 2018.

The NFA Council also approved an additional P3 per kilo buffer stocking incentive effective October 2018, buoying up NFA’s procurement operations towards the end of the year’s main harvest.

The Rice Tariffication Law, passed in February this year, removed NFA’s rice importation function and mandated the agency to source its buffer stock for calamities and emergencies solely from local farmers.

“That’s why we are conducting year-round palay procurement, and with our higher incentives, we have been surpassing our targets this year,” Dansal said.

From January to July 2019, the NFA had been able to buy 286,805 metric tons or 5.7 million bags of palay worth P5.9 billion.

“Out of the P7 billion subsidy allotted to NFA for 2019, we have so far received P3.7 billion. To be able to pay for our higher volume of procurement, we secured additional funds from borrowings and corporate receipts. The balance of our subsidy will be released based on our monthly program requirements,” Dansal said.

This early, the NFA said it is gearing up for a much higher volume of procurement during the main harvest from October to December that yields 70 percent of the annual national rice production.