Rice racketeering in any NFA setup

The National Food Authority is back to its old setup. President Duterte reverted it last week to the Dept. of Agriculture. That, he thinks, would enable the agency to bring down rice prices and stabilize supply. The governing NFA Council was revamped. The agriculture secretary is now the NFA chairman, while the NFA administrator remains as vice chair. Council members will come from economic agencies and state banks.

That’s how the NFA was before 2014. But then-President Noynoy Aquino transferred it from the DA to a newly minted Office of the Presidential Assistant for Food Security and Agricultural Modernization. That was because the NFA was running wild – importing smelly rice at overprice two years in a row. It also was abetting one of two factions of rice smugglers.

Before the OPAFSAM took over, the agriculture secretary-chairman and NFA administrator-vice chair allegedly were in cahoots. They hailed from the same provincial district. The latter was political aide to the former as congressmen. When the NFA came under the new OPAFSAM, the favored smuggling faction fell from influence – but not before implicating the OPAFSAM in an extortion scam.

Duterte had no OPAFSAM when he came in 2016. Still he initially retained NFA under Malacañang, through the Office of the Cabinet Secretary. Duterte’s NFA administrator-vice chair never saw eye-to-eye with the CabSec-chairman. They accused each other of corruption. One of the latter’s undersecretaries was sacked. The NFA continued to run wild. Rice buffer stocks suddenly ran out last January within a month of delivery. A third smuggling ring allegedly became dominant.

During Gloria Arroyo’s Presidency, 2001-2010, the NFA was moved around too, first from the DA to Malacañang, then back to the DA. NFA rice imports then, bought at commissionable overprice, reached nearly two million tons a year. The kickbacks were used for election campaigns. The first two smuggling rings rose or fell depending on who headed the NFA. Contraband frequently were sneaked in to Cebu and Davao.

Smuggling went on right from the start of Aquino’s tenure, 2010-2016. His first NFA chief remarked that the agency’s warehouses were brimming with excess imports by the previous admin. Thus they slowed down on imports. But then a huge volume was smuggled into Subic. The Senate inquiry showed that the contraband was from the first smuggling faction. The other gang jealously had tipped off the authorities.

Rackets occur in rice trading and imports under any NFA setup. The powers of the agency breed corruption. It alone is authorized to import grains tax- and duty-free. That tempts the bosses to pad the import price during closed-door negotiations with foreign suppliers.

The NFA can delegate its tax- and duty-free importing to rice traders. That too spurs corruption. It grants the import permits and quotas to the highest bribers. Rice farmers naturally complain that the imports are killing them off. The NFA devises supposed solutions – letting so-called farmers’ cooperatives do the importing. That spawns yet more bribery – from big traders disguising as farmers.

The true solution is to remove from NFA the power to import and retain only the duty to keep an emergency national buffer. Let all big rice and grains users – chain restaurateurs, hoteliers, feed millers – import on their own. A standard duty is to be paid in advance to Customs. Any excess import volume shall be confiscated like any other contraband.

The multibillion-peso duties collected from rice imports can then be used to improve domestic harvests. Irrigation, harvesting, threshing, drying, and storage facilities can be built. Transport and trading networks can be formed. High-yield rice varieties can be researched and disseminated. Safe fertilizers and pesticides can be distributed cheap to farmers. Agriculturists can be trained and fielded to farming communities. Alternate seasonal crops can be introduced with subsidies.

That way, rice farming can become lucrative in the Philippines, like it is in Thailand and Vietnam, India and Pakistan. Farmers can even specialize in certain varieties, as do Japanese millionaire-planters.

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