NFA should focus on prices, not consumers

What is the ideal role of a national authority for food-related matters, such as the National Food Authority? Stated differently, what is the role that an NFA-type institution ought to play in circumstances such as those that prevail in this country?

From all the media stories about the current surge in rice prices following the claimed shortage of “NFA rice” one gets the impression that the NFA is expected to play a number of roles, all at the same time. For one, the NFA, as the source of “NFA rice,” is expected to be a subsidizer of rice prices. Then, as the phrase “NFA warehouses” suggests, it is expected to be a major player—if not the leading—player in the national rice trade. Additionally, in pursuance of government policy on rice imports the NFA is expected to make recommendations to the Cabinet, through the NFA Council, relating to the necessity of importing rice when the national rice-supply level is perceived to be precarious. Finally, it is expected to provide assistance to its mother institution, the Department of Agriculture, in the latter’s rice production enhancement program.

Like most institutions, government institutions, however well-intentioned and efficient, should not and cannot be all things to all men. The Executive Department and the legislature should identify a specific national need—in this case a food need—empower an institution with a mandate to fill that need and give it all the tools that it needs to be able to comply with its mandate.

The NFA is no exception to the rule; it cannot be all things to all men. It cannot, and should not, cater to the needs of every Filipino. Through the decades, the NFA and its predecessors since 1946—National Rice and Corn Administration, Rice and and Corn Administration and National Grains Authority—have tried to be all things to all men, and the result is the ineffective, confused and deficit-ridden institution that was created to manage the nation’s food situation efficiently. Payment of the principal of and interest on NFA’s debt has long been one of the biggest drags on the General Appropriations Act.

The NFA continues to be in an operational mess essentially because of a flawed perception of its mission. It has long tried to please both the consumers and the producers. Assuming that it makes sense, that is one of the most difficult balancing acts in the world. The NFA and interests of both groups are essentially antithetical. Yet successive national administrations have allowed the NFA to try and perform that balancing act; the result, as the nation can see, has been a travesty of sound economic policymaking and good fiscal administration.

The time has come—actually, it came a long time ago—to put an end to what I am compelled to call rice-sector madness. The government has to decide what NFA ought to be doing and to be not doing.

Rice is the most political natural commodity in this country, and high rice prices at election time have been known to wreak havoc on the victory prospects of political parties. But NFA —and the government of which it is a part—must stop being obsessed with the word “consumers” and learn to be obsessed with prices, i.e., maintaining affordable rice prices for the nation’s low-income families. Focusing on the faces of consumers—read, voters—has caused NFA to make spending and trading decisions that have plunged it deeper into debt, confused the markets and allowed the Philippines to maintain its unwanted status as the world’s No. 1 rice importer.

In furtherance of its obsession with the consumers, the NFA has over the decades evolved into this country’s No. 1 subsidy provider. It was not the intent of the numerous rice industry laws that NFA should be a dispenser of subsidies; that intent was that NFA should operate in a way that would assure Filipinos a supply of affordably priced rice. Surely a case of “lost in translation.”

NFA should achieve its statutory mandate through trading operations—especially buying operations—that will enable it to compete with commercial traders for the farmers’ output. The speculative buying, profiteering and market manipulation that commercial traders resort to are bound to be greatly minimized if the NFA managed its funds so as to be able to compete effectively with the commercial traders. Apart from its annual GAA allotment, NFA has abundant warehousing and other facilities, plus ample personnel, to achieve such a level of competitive activity.

It is not the job, either, of the NFA to enhance farmer output. That is the mandate of the DA. Needless to say, in this regard NFA should work closely with its mother organization.

Summing up, the NFA should switch its policy outlook to focus more—nay, be obsessed with—prices and less on consumers. Prices are economic; consumers are political.

An economically oriented role is the ideal role for the NFA.

Topics: National Food Authority , National Grains Authority , National Rice and Corn Administration
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