COA flags NFA over P7-B rice fund diversion

MANILA, Philippines — The National Food Authority (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, according to a report by the Commission on Audit (COA).

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.

The COA said the NFA diverted the amount even if Republic Act 10964 or the General Appropriations Act of 2018 specifically stated that the P7-billion subsidy must be exclusively used for rice buffer stocking through buying directly from farmers “except in case of calamities or shortfall in production where the NFA is authorized to import rice and corn upon the recommendation of the NFA Council and approval of the President.”

State auditors said the NFA procured only 61,784 metric tons of palay from individual farmers and organizations, an accomplishment of only 15.89 percent from its target of 388,889 MT for 2018.

The audit body noted that for 2018, the NFA incurred loans totaling P6.366 billion to finance rice imports, higher by P403.872 million loans it incurred in 2017 for the same purpose. 

The COA said the NFA also failed to meet its stock target for the year, with Strategic Rice Reserve (SRR) only good for 0.1 day as against its target of 15 days and Government Rice Buffer Stock (GRBS) ony good for three days as against its target of 30 days.

The COA said the agency’s failure to meet its target SRR caused the unavailability of affordable NFA rice in the market, particularly during the first and second quarters of 2018 that resulted in higher prices of commercial rice at P38.88 per kilo for wholesale regular milled-rice and P41.53 per kilo for retail regular-milled rice, an increase of P4.26 per kilo and P4.04 per kilo, respectively, for the same rice produce in 2017.

The prices of wholesale well-milled rice and retail well-milled rice was P42.16 and P45.18 per kilo in 2018, an increase of P3.34 and P2.63 per kilo, respectively, from the previous year.

The COA said the NFA was able to distribute a total of 590,379 MT of NFA rice in the market, short by 243,192 MT of its target 833,571 MT for 2018.

The NFA’s fund diversion came even if the audit body had called out the agency last year over the same practice.

In its 2017 audit report, COA said the NFA used P5.1-billion fund it received from the government for the implementation of its food security program.

In its reply, the NFA reasoned out that it found it “more prudent” to pay its outstanding loans to save on interest and documentary stamp tax expenses.