After ditching a proposal to buy more locally grown palay from Filipino farmers, state-run National Food Authority (NFA) now wants to import higher-priced commercial grade rice varieties from Vietnam and Thailand.
A document obtained by The Manila Times showed that NFA Administrator Jason Laureano Aquino had asked President Rodrigo Duterte’s approval for the importation of some 1.3 million metric tons (MT) of rice for this year.
The proposal includes the immediate utilization of a 250,000 MT standby authority before the onset of the lean season, and another 1 million MT for the remainder of the year.
The rice to be imported are 5 percent and 15 percent broken varieties, which are more expensive compared with the 25 percent broken rice varieties previously imported by the NFA.
“In line with our concerted effort to improve the NFA’s fiscal position, we have come up with a comparative cost estimates on importing higher grade rice varieties to include the 5 percent brokens,” Aquino told President Rodrigo Duterte in a letter.
Aquino also told the President that the importation of the 5 percent broken rice variety would have a positive impact on the NFA’s financial condition, considering that it could be sold at a higher price.
A source privy to the matter said that 5 percent and 15 percent brokens would directly compete with commercial rice, making NFA buffer stocks too expensive for poor Filipinos.
“This proposal went straight to the President. It bypassed the NFA Council, which gives recommendation for the timing and volume of rice to be imported,” the source said.
With less than three months before the start of the lean season, Aquino in an earlier statement said the government needed to secure an additional 490,800 MT or 9.8 million bags of rice as part of its food security program in preparation for calamities.
Aquino had stressed that the only way the NFA could fill the deficit in its rice buffer stock requirement was through importation, preferably a government-to-government (G2G) deal. The NFA administrator’s order was directly against President Duterte’s order to prioritize local palay procurement.
“Much as we would want this additional stock to come from local produce, we cannot compete with the private traders who are offering prices much higher than the government’s P17/kilogram support price,” Aquino said in a statement.
NFA’s field monitoring shows that traders are buying palay from the dry season harvest at an average of P18-P20/kg across the country.
The proposed purchase of 5 percent and 15 percent brokens, however, will cost the government P26.27/kg and P25.47/kg, respectively.
The NFA was formed in 1972 with the goal of protecting the interests of both rice producers and consumers. Its two primary mandates are to stabilize the price of rice and to ensure food security.
The price stabilization mandate means that the NFA tries to influence prices on two fronts. At one front, it must support palay farmers. At the same time, it must also ensure that the price of rice is low enough for consumers.
Over the past two years, the NFA has relied massively on cheaper imported rice to replenish its buffer stocks since it could not compete with private millers and traders in buying locally grown palay.
Buying rice from abroad cuts the agency’s spending on buying and milling locally grown palay, and it can earn more and slash losses by selling to consumers at higher prices.
Under the new proposal, however, buying higher-priced rice from abroad for buffer stocking while limiting local palay procurement will effectively contradict the grains agency’s mandate.