A difficult balance

"Let’s wait for the Implementing Rules and Regulations."


After the signing of RA 11203 or the Rice Import and Export Liberalization Law which took effect yesterday, March 5, the National Food Authority, through its current officer-in-charge, Deputy Administrator Tom Escarez, announced that the agency would cease to be a regulator of the distribution and marketing of rice, our staple food grain.

I saw on television how Admin Tom could not contain his emotions when he spoke at the Monday flag ceremony of his agency. It was the week after Malacañang confirmed that the President had signed the bill that would end NFA’s regulatory functions as well the quantitative restrictions that ceased last June 30, 2017 but could not be implemented until after a passage of remedial legislation on tariffication.

Tom, who started with NFA 40 years or so ago as a laborer in his native Mindoro Oriental, and who all along believed in the importance of NFA was in ensuring the availability and affordability of rice at all times, as mandated by law and the requirements of food security, was crying over the fate of an agency he served exceedingly well and with utmost integrity throughout his career.

Indeed, it is to the credit of the Duterte administration that it decided to backstop the previous NFA Administrator, Jason Aquino, with two of the most trustworthy and experienced directors it promoted to deputies, Judy Layus Dansal and Tomas Escarez.

Since NFA under the new law would yet have to ensure buffer stocking for food security, using locally-produced rice instead of imports, President Duterte would do well to choose someone with experience, an “insider” to run the agency after RA 11203, instead of yet another military or police retiree who would need months to study the difficult terrain of the rice industry and strategize how to maintain a delicate balance between consumer needs and farmer welfare, most difficult especially during the last three years of his administration.

Much of the law’s impact will be influenced by the implementing rules and regulations or IRR, which I understand NEDA in coordination with the NFA Council and DA, will craft and promulgate soon enough.

It is equally sad that the one undersecretary with real institutional memory of the Department of Agriculture, Fred Serrano, is retiring at the end of this month.  Fred, with whom I have attended several international food security conferences in 2010-2012, will be sorely missed by the department he served with utmost integrity and competence.

He will devote his time now to care for an ailing mother and pursue his passion of bird-watching and phtographing them in their natural habitat, a passion he shares with Liling Briones’ undersecretary, another good friend, Alain del Pascua.

In another article I would want to write after the IRR on RA 11203 are released, I would want to share my thoughts with readers on so vital a matter as ensuring food security, short-term and long-term.  For now, some thoughts come to mind:

First, if NFA were to procure locally-produced rice at P20 per kilo of dry palay which is the NFA Council’s newly-set buying price, it will need a P10-billion budgetary subsidy to do so.  That coincides with a 15-day buffer, the absolute minimum.  In cases of bad weather (El Niño or strong typhoons), the Ledac in 1995 required NFA to stock up a 30-day buffer, which means standby resources must be provided for another 10 billion pesos annually.

The El Niño this year has hit the Mindoro provinces, which affects the NFA’s ability to procure palay because Occidental Mindoro is its biggest supplier of the staple.  Some Visayas and Mindanao provinces have already been likewise affected by El Nino, and normally during El Nino years, typhoons are stronger.  Watch how this may affect our rice granaries in Central and Northern Luzon this year.

“Stormy weather…” the song goes, up ahead this year.

Second, to just break-even, and I am not too sure if this would cover administrative expenses in a thinner NFA personnel component, the agency will have to release its locally-procured rice at P40 per kilo, already above its current subsidized 25 percent broken rice at P27 to P35. If it would opt to keep consumer prices flat, the national government will have to absorb the loss in buying and selling.

If it sells only for emergency purposes (calamity-stricken provinces with DSWD and LGUs as buyers), what happens to the left-over stock? They will have to auction these out to the highest bidders in each region to prevent spoilage and carryng costs. And likely, with imported rice available, NFA would have to sell at a loss.

This is not to include the gargantuan sovereign-guaranteed debt that the NFA has incurred.  When I took over in 2010, a “legacy” debt of P178 billion was inherited.  By limiting government imports and charging private importers thorugh bidding for their license to import, we pared this down to P143 billion, but soon enough, under the Alcala leadership in DA, it went back to the P160-billion territory.  I do not know how much NFA’s debts are now, after two and a half years of the current administration.

These observations are just for starters. Let’s wait for the IRR. 

However it is writ, government will have to manage a most difficult balancing act from these days onwards, while the “free” market takes over the role of importing rice which theoretically at this point, is without limit.

The balance between the desire of consumers for cheap rice and the need to keep farmers planting rice and earning a decent living therefrom so they would want to continue producing requires a fine and delicate balancing act.

It won’t be easy.

* * *

As we write this, we learn that DBM Secretary Ben Diokno has been appointed by the President as Bangko Sentral Governor, to serve the remainder of the late Nesting Espenilla’s term cut short by cancer.

Two Cabinet members texted the appointment was announced during their regular monthly meeting, but I was asleep at the time, down with a cold. I read the text messages only yesterday morning, and proceeded to write this article.

This, I recall now, has been Ben Diokno’s long-held desire, in pectore.

Years back, we asked him to give an “elementary” briefing on the economy for then-presidential candidate Joseph Estrada.  It was held at the Marbella resort in Ternate, Cavite, owned by our friend Buboy Virata, with a very select group other than the vice-president.

After the four-hour session with Ben, VP Erap sidled up to him as he left, saying, “Thank you, and I will need you more when we win.”

Escorting Ben to his car, I asked curiously, “mukhang balik-DBM ka” (Ben was DBM undersecretary in Cory’s time.)

Ben quietly whispered, “galing na ako dun…sana sa Central Bank.”

But as things happened, Erap asked him after his victory to be his DBM secretary.  And who can say no to an overwhemingly elected president?

Congratulations, Ben!

Topics: Lito Banayo , A difficult balance , RA 11203 , Rice Import and Export Liberalization Law , National Food Authority
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