NFA: Decades of studies and indecisions
MANILA, Philippines—The National Food Authority (NFA) is in the limelight again. Pointed questions have been raised on the manner of its rice importation.
Its “buy high, sell low” mandate has caused a massive debt of some P170 billion, most of that spent during the GMA years.
According to the Philippine Institute of Development Studies (PIDS), NFA’s net worth was positive in the mid-1990s and turned negative since 2001, and massively deteriorated thereafter.
Nowhere in its mandate is NFA mandated to lose money.
What are the strategic roles of NFA? There are too many and they are conflicting. Its primary role is to maintain adequate buffer stock, especially during the lean season of July to September. In the process, NFA buys palay from farmers and imports to build its buffer stock.
By buying high, it aims to increase farmers’ incomes; by selling low, it makes rice affordable for poor families.
NFA also heavily regulates the rice industry. It licenses traders, millers and retailers. One needs an NFA permit to export specialty rice. NFA is also the sole authorized importer.
With all these control levers, why is NFA bleeding? It is because its mandate is confused. Experts know the problem all along.
Since the advent of the Cory Aquino administration, studies upon studies to reform NFA have been done: USAID, ADB, AusAid, World Bank, PIDS, UP Los Baños, etc.
Little has been done.
In fact, an ADB loan called Grains Sector Development project, which was approved in April 2000, was terminated in 2004 as the government backtracked on its reform commitments.
“Policy and institutional reforms focused on (a) liberalized, more cost-effective grains pricing and import policies; (b) improved administration of grain buffer stocks; (c) restructuring of the NFA from a grains marketing monopoly into a public regulatory agency and separate private sector marketing corporations; and (d) a more targeted and effective food subsidy program for the poor.”
Scholars (such as Drs. Fermin Adriano, Lourdes Adriano, Roehl Briones, Ramon Clarete, Cristina David, Cielito Habito, Flordeliza Lantican and Bruce Tolentino) have long pushed for reforms of NFA.
Why is reform so difficult? Who are the stakeholders?
The politicians and legislators. At the local level, they have their own vested interests to protect. At the national level, rice subsidy is popular. Some believe that the NFA is key to food security.
The farmers groups. They feel that by reforming NFA, they will be at the mercy of the traders. NFA monopoly protects them from private imports which will pull down palay prices. But how many farmers and co-ops really benefit? More traders probably gain from the transactions as they have cash to pay and volume delivery to NFA.
Consumers. Everybody wants cheap rice, never mind the cost to the taxpayers. The problem with this is that even the rich and middle class gain access to cheap rice.
NFA employees. They feel that they play a vital role in food security and in raising farmers’ incomes. They are also concerned with job security.
Administration officials and allies believe in the strategic role of NFA. Some, however, are engaged in rent-seeking and fund-raising.
Is there hope for the NFA to be a sustainable and effective body and a great place to work?
We in the Management Association of the Philippines (MAP) agribusiness and countryside development committee feel that the NFA strategy and structure are muddled and unsound. They violate management principles. Its string of losses could have led to its closure long ago.
How do we restructure NFA and make it an effective agency and a good potential for public listing?
Here are some suggestions I gathered from many past reports and conversations.
Farmers and the Poor. Conduct a farmers’ registry, identify the poor, and direct support to them via income transfer a la Conditional Cash Transfer (CCT).
Poor consumers. Expand CCT to the poor, and intervene in some geographic areas with imperfect food markets such as Batanes.
NFA. Make it a fee-based logistics agency responsible for buffer stock.
The Department of Social Welfare and Development (DSWD). Make the agency own the buffer stock and hire independent monitors of the quantity and quality of said stocks.
The Department of Trade and Industry (DTI). Allow it to handle industry registration and regulations.
Employees. A financially viable and professionally managed agency with little political interference will be a great place to work!
It is said that no decision is a bad decision. NFA is such an unfortunate example. There is a wide array of past analytics and experts opinions, but little action. This is reflective of Filipino procrastination and fear. Doing what is right for the nation is sacrificed for political and economic imperatives.
(This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or MAP. The author is chair of the MAP agribusiness and countryside development committee, and executive director of the Center for Food and AgriBusiness of the University of Asia & the Pacific. Feedback at <[email protected]> and < [email protected]>. For previous articles, visit <map.org.ph>.)
