Senate to probe billions of pesos in NFA losses

The Senate is set to look into the mounting losses incurred by the National Food Authority (NFA), which have increased by P17 billion in two years.

Sen. Manuel Villar Jr., chairman of the chamber’s committee on finance, expressed concern that the NFA, as a government-owned and -controlled corporation (GOCC), was "losing too much money" from its operations.

Based on the NFA presentation to the Senate during the hearing on its 2006 budget allocation, the agency lost P4 billion in 2003 billion — losses that increased to P7.6 billion in 2004 and P21.2 billion in 2005.

The NFA has projected that its losses will rise further, to P21.6 billion, by the end of this year.

The losses were attributed to several factors, including the cost of importation, peso depreciation and pricing policy constraints.

In 2005, tariffs for food importation accounted for P13.4 billion out of the agency’s total losses of P21.2 billion.

The requirement for the NFA to sell rice to low-income consumers at prices lower than the actual cost is the principal reason given by the NFA for operational losses.

Villar argued that GOCCs and government financial institutions (GFIs) like the NFA should strive to post profits rather than burden the government.

He said the government should not always willingly shoulder the unjustifiably huge losses incurred by these agencies.

"Year in year out they provide us with the same justification for the huge losses and it came to a point that it sounds like (an) alibi for mismanagement and inefficiency," Villar said.

Villar suggested that a limit or cap on allowable losses for GOCCs and GFIs be implemented to encourage these agencies to work towards profitability.

"If they go beyond certain loss levels, then we should consider abolishing them," he added. "We should monitor them closely and reprimand or administratively charge inefficient or erring officials or managers."

The NFA was one of 15 GOCCs reviewed by the Department of Finance (DOF) and Department of Budget and Management (DBM) over their contribution to the country’s fiscal crisis.

According to Villar, the NFA has also been reported as negligent in performing its key mandates of ensuring rice market efficiency since the country imports more rice than it exports. Most of the country’s rice imports come from Vietnam.

"We have to address this now. If we don’t address this now it could become another Napocor," Villar said, referring to the debt-saddled National Power Corp.

Villar said that the inquiry seeks to determine whether the losses incurred by the NFA are due to faulty policy direction, mismanagement or corruption.

"This is not an agency that has been known for honesty. With the loss of P21 billion then the burden of proof is clearly with the NFA," he said.

It will be recalled that the NFA recently announced that it would need to import a total of 1.85 million metric tons (MT) of rice this year and assured the public of a steady rice supply and prices at its outlets.

NFA Administrator Gregorio Tan said the total cost of the rice imports would be P28 billion, adding that the DOF has recommended to President Arroyo that the NFA be given an additional credit line of P20 billion to pay for the importation.

Since the rice imports will be staggered and the NFA would sell the staple as it comes in, the P20 billion will be more than enough to cover the importation cost.

He said that, despite the NFA’s perennial losses, it served 15 percent of the total market, particularly in Metro Manila.

Tan said the NFA has a corporate budget of P64 billion from sales and borrowings, adding that it has only P900 million in subsidies from the national government budget.

He said rice prices increased by 109 percent since 2001, yet the NFA must sell the commodity at low prices for the poor — the reason he gave for the continued losses of the NFA.