Huge NFA debt due to rice price, supply stabilization mandate, officials claim

The National Food Authority’s (NFA) P140-billion debt was caused by unsustainable policies of the government and not due to the agency’s inefficiency, its officials said in a statement.

The statement was issued in reaction to claims of the country’s economic managers that NFA was “a losing agency due to inefficiency and incompetence of its management, which prompted lawmakers to limit its functions under the Rice Import Liberalization Law.

The NFA said its losses were “the cost of the government’s commitment and policy to make rice available, affordable and accessible to the poor and marginalized sectors,” and to stabilize rice supply and prices.

Financial records from the agency showed that from the 1970s until 1998, its debt amounted to P5.7 billion.

However, from 2001 to 2010, it swelled to P165.6 billion following the Arroyo administration’s mandate to the agency to buy palay at a high price and sell rice at a low price, in a bid to keep both producers and consumers happy.

It was also at that time when the country imported a record 2.35 million metric tons of rice.

“The agency did not incur any debt during the terms of President Estrada (1998-2001); President Benigno Aquino III (2010-2016) and President Duterte (2016-present),” NFA said in the statement.

NFA added that it had been spending an average of P6 billion yearly—200 percent more than its operational expenses.

“The NFA had been receiving low subsidy from the government, averaging P4.25 billion a year. There were years when it had zero subsidy and it had to resort to bank borrowings to finance its operations. It was only in 2018 and 2019 that NFA was given a higher subsidy at P7 billion solely for palay buying,” it said.

Consultations held by the Department of Agriculture across the country revealed that most farmers wanted NFA’s functions retained to help farmers cope with the adverse effects of unimpeded rice importation.

Under the tariff regime, the agency would be limited to maintaining the country’s emergency stocks.