DA plans to create P5 billion buffer fund

MANILA, Philippines —  The Department of Agriculture (DA) may start implementing a P5-billion buffer fund next year that will allow it to stockpile basic commodities, such as rice and meat, and sell these at more affordable prices during extreme situations such as supply shortages and price manipulation in the market.

Agriculture Secretary Francisco Tiu Laurel Jr. said the budget has been approved in principle by President Marcos, with possible funding sources already identified.

Tiu Laurel said he cannot yet disclose the funding source, but he emphasized that there are currently “several” options on the table.

“But for next year, we are almost sure that we can get that P5 billion buffer fund or fund to be able to use in case we have to trigger the price action,” he said.

The agriculture chief emphasized that the buffer fund is critical in ensuring stable prices of goods in the market. He said the mechanism has been legally existing since 1992 but has not been operationalized.

The buffer fund was created through Republic Act 7581 or the Price Act to serve as a mechanism for the government to intervene in the market in times of shortages and when prevailing market prices have been unreasonably high due to various factors such as calamities and illegal manipulation.

The DA issued Department Circular 7 earlier this year, which outlined the implementing rules of the buffer fund pursuant to Section 9 of the Price Act.

In the circular, Tiu Laurel said it is the concern of the state to protect consumers against hoarding, profiteering and cartels of primary goods during times of calamity, emergency, illegal price manipulation and similar situations.

Under the rules, the DA shall allocate a buffer fund in its annual appropriation subject to the evaluation of the Department of Budget and Management.

The amount of funds should be ample enough to allow the DA to protect consumers from shortage of supply or be able to influence prevailing market prices during extreme situations such as calamities and price manipulation, according to the DA.

The basic necessities and prime commodities bought and stored using the buffer fund will be sold by the government at a reasonable price in areas where there is a shortage of supply to temper prevailing market prices, based on the circular.

The sale of the commodities will be determined by the agriculture secretary upon the recommendation of the concerned local price coordinating council.

The sale of commodities bought through the buffer fund would be channeled through authorized government agencies and private entities such as retail outlets, cooperatives, consumer group-led outlets and Kadiwa stores.

The proceeds from the sale of the commodities will be remitted to the national treasury as income of the general fund, according to the DA.