Change is also coming to the state-owned National Food Authority. It is about to be stripped of its major functions, decades after accumulating P165 billion worth of debt.
President Rodrigo Duterte is set to finally decide on NFA’s fate, after the Cabinet recommended the abolition of the agency’s commercial functions, including rice importation. Cabinet secretaries reached a consensus to split up the regulatory and commercial functions of the grains body.
As recommended by Duterte’s economic team, NFA would no longer be engaged in buying and selling of rice, meaning it should focus, instead, on regulation to ensure an adequate buffer stock of the commodity and other grains.
Shaking up the NFA, however, is not an easy task. NFA principally deals with rice—a vital commodity with political undertones. Filipino farmers have long been used to selling their produce to NFA at comparatively higher prices. Removing the subsidy granted by the NFA in buying rice may not sit well with the farmers.
Economic Planning Secretary Ernesto Pernia has assured that low-priced rice will remain available to the public through cheap rice imports. Imported rice, he says, is always cheaper than homegrown rice. He adds splitting NFA’s commercial and regulatory functions will also resolve the rice smuggling problem.
The problem with the NFA, Pernia says, is that it buys high and sells low. This has resulted in losses and has caused NFA huge debts.
The NFA as a corporate entity has failed because of its inability to sustain its operations without government assistance. It may have stabilized supply and rice prices but it has also cost the government billions of pesos just to maintain it, given its inefficiency. Through subsidies, the NFA also has not made rice farming a productive sector. The Philippines still relies on cheaper imported rice from more successful neighboring countries to augment the shortfall.
The Cabinet should revisit rice farming in the Philippines to make it more productive and efficient. With no commercial functions, the NFA, along with the Department of Agriculture should now take the initiative to introduce modern farming methods to raise the productivity of Filipino farmers.
