Group of former finance secretaries, economists support NFA abolition

MANILA, Philippines – A group of former finance secretaries and economists has supported calls to abolish the National Food Authority (NFA) after its failure to address dwindling rice supply which increased market prices and hit the poor.

"The NFA has only caused and aggravated the rice inflation and rice shortage in several regions...," the Foundation for Economic Freedom (FEF) said in a statement on Thursday.

Some of the members of FEF are former finance secretaries Romeo Bernardo, Roberto de Ocampo and Cesar E.A. Virata. Monetary Board member Felipe Medalla and economist Raul Fabella are also members of the group.

Senators Sherwin Gatchalian and Cynthia Villar have both called for the NFA's dissolution after rice prices continue to spike months after it reported that its buffer rice stock has been depleted.

In January, NFA reported that its buffer rice, which it sells to low-income households at below market price, would only last for 2 days, way below the 15-day minimum requirement.

Rice prices rose as a result after the poor shifted to buy more expensive commercial rice. As a solution, President Rodrigo Duterte approved a plan to import 500,000 metric tons of rice, but FEF said imports came too little, too late.

"The NFA has been inefficient and clueless in the right timing in the importation of rice and its distribution," it said.

To date, only a small portion of the approved shipment has arrived, some of which was even found infested with weevil. NFA had said the shipment is safe to eat after fumigation.

Locally, rice production have also gone down. Farm data showed palay output declined 1.44 percent year-on-year to 4.09 million MT in the second quarter. The combination of lower local supply and insufficient imports have contributed to supply constraints that pushed Zamboanga City to declare a state of calamity.

Rice is the Filipino's main staple, thus, its low supply has contributed to accelerating inflation, which hit a nine-year high of 5.7 percent in July.

In its statement, FEF said the country's food security should not depend on the Marcos-era agency.

NFA was established in 1972 originally to promote not only rice, but also other grains like corn and mongo. In 1985, the NFA was reconstituted to manage rice supply alone.  

"Food security does not depend on the existence of the National Food Authority as recent events have shown," FEF said.

FEF said it supports the passage of the rice tariffication bill, which Duterte certified as urgent, to solve the country's rice woes.

The bill, which was already approved the House of Representatives, will replace existing decades-old rice import quotas with tariffs to allow free entry of the staple, while protecting local farmers by spending tariff revenues on agricultural facilities.

"The private sector should be free to import rice from any source in whatever quantities the market needs. This is the only solution to the current rice shortage crisis and to the pervasive malnutrition caused by high food prices," FEF said.

"To maintain and manage buffer stocks, a new and much smaller agency can be created," it added.