NFAC, after stormy session, acts to avert shortage
AFTER a heated exchange over the government’s failure to hit its rice self-sufficiency target last year, the National Food Authority Council has decided to import one million metric tons of long white rice, the biggest authorized under the Aquino administration so far.
“There was a heated and stormy discussion because of so many questions from the Council members,” said a source who was privy to the meeting. “The Bangko Sentral ng Pilipinas is worried about food inflation. They were afraid of a continuing price spiral for rice, which has increased by 13.6 percent year-on-year, the highest since 2008.”
The meeting was held Feb. 17 at the National Food Authority office and was presided over by Agriculture Secretary Proceso Alcala and NFA Administrator Orlan Calayag, chairman and vice chairman of the Council, respectively.
The other Council members include the Office of the President, the Trade and Industry and Finance departments, the central bank, the Development Bank of the Philippines, Land Bank of the Philippines, Philippine National Bank and the Philippine Farmers’ Association.
The source, who spoke to the Manila Standard Today on condition of anonymity, said Alcala and Calayag issued a gag order because they have yet to make an official report to President Benigno Aquino III, who has continually promised that the country will become self-sufficient in rice under his watch.
“The Council members came in full force. They are worried about the impact of food inflation,” the source said.
Alcala and Calayag did not return phone calls and text messages from the MST.
House Senior Deputy Minority Leader and Bayan Muna Rep. Neri Colmenares said the new imports authorized by the Council could result in losses of as much as P1.42 billion, after the country lost P521 million as a result of overpriced rice imports from Vietnam.
In the Feb. 17 meeting, a heated debate ensured after a Council member proposed that the private sector be tapped to do the importing to save the government from shelling out billions in taxpayers’ money.
“The economic managers in 2010 decided that rice imports should be given to the private sector to handle. While this was implemented in 2011 and 2012, it was reversed in 2013, when 705,700 metric tons (MT) were bought through a government-to-government deal with Vietnam,” one of the Council members pointed out.
In the last year of the Arroyo administration, the NFA imported 2.25 million MT, while the private sector brought in only 220,000 MT.
In 2011, the NFA imported only 200,000 MT or 9 percent of the previous year’s volume, leaving the bulk of imports —about 660,000 MT—to the private sector.
In 2012, the NFA further reduced its imports to only 120,000 MT, and allowed private traders to bring in 380,000 MT.
The declining trend in government imports stopped with the arrival of Calayag as NFA administrator during the third year of the Aquino administration, the source said
“In short, in the third year of the Aquino government, the NFA went back to the Arroyo government practice of using public funds to import rice. From a low of 120,000 metric tons in 2012, to an almost 600 percent increase in 2013, of 705,700 tons of rice, all from Vietnam,” the source said.
Rice prices spiked to P44 to P50 a kilo in 2008 but stabilized at P30 to P34 a kilo toward the end of the year and were maintained at that level until June 2013, the source said. Now rice averages P40 to P42 a kilo.
The source also said Alcala and Calayag found it difficult to explain why the price for the 205,5700 MT in imports differed from the 500,000 MT also imported from Vietnam in 2013.
“If the 2013 purchases were overpriced by about P800 million, imagine what it would be for 1 million metric tons. At a mere $20 or $25 overprice per ton, that’s $20 million to $25 million or a cool P1 billion at present exchange rates,” the source said.
Citing the US Department of Agriculture’s Grains Report, Colmenares said the prevailing market price from Nov. 16-22, 2013 was $377.86 per metric ton, or $84.39 cheaper than the rate at which the Philippines bought the grain from Vietnam. The NFA also did not take charge of delivery and could have bought at $365 instead of $462.25 per metric ton, for a difference is $97.25.
Bayan Muna Rep. Carlos Zarate said that “with the perpetual overpricing of imported rice,” local prices are bound to shoot up because traders and retailers will simply pass the higher costs to consumers.
“Our sources in the NFA Council even said that this round of rice imports may cause an overwhelming food inflation that may rival the 2008 rice price hikes,” Zarate warned.
Aside from the overpricing, the imports will also flood the market and compete with rice produced by Filipino farmers, said Anakpawis Rep. Fernando Hicap.
“Still the best rice policy is to implement a genuine agrarian reform program and help our local farmers to produce all the rice needed by our country instead of depending on rice importation which is highly susceptible to corruption,” Hicap said.
Colmenares added: “At the very least, Congress should investigate this and I think that it would be more prudent to hold the importation of the 1 million MT of rice until all has been done to ensure that the Filipino people are not being duped.”
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