Returning rice trade to NFA for price stability is a myth

Since Martial Law, I had been covering the Department of Agriculture and its agencies, including the National Food Authority, and I could say that back then the country went through a most embarrassing rice crisis (with long queues and no stocks), which was in a large part due to mismanagement and patronage politics by the National Food Authority. 

So returning rice trade to NFA– amid a coming midterm election– will be no different. It would still be a fallacy and a myth to think that NFA could stabilize rice prices and supply (if it were granted import monopoly and regulation of the rice market).

This after DA Secretary Francisco Tiu Laurel Jr. is pushing hard for Congress to pass a bill to return rice to the NFA, which it used to dominate in decades past, to ensure stable supply and prices. Tiu also wants the NFA to be sole importer of the grain. I would say, expect it to be worse.

I recall an NFA Administrator who claiming a shortage of the grain pushed for the immediate importation, but after a ship loaded with rice sank in the middle of the sea in Mindanao. Nothing much was heard of that story.

And then just last year, the NFA came under fire with its top officials and regional and provincial managers and staff (including warehousemen) suspended for days because it sold supposedly nearly rotting rice to select private traders at P25 per kg.— for the latter to  repack and sell at commercial rates to the market. This is why we now have a new head of NFA.

Already, NFA had a good scenario to justify its return to the rice market. Just recently, it announced that 6 million bags of rice are nearly rotting and must be disposed of at once even to the low income market.

Tiu said NFA regulating the rice market would control retail price hikes and that he sees P42 to P49 per kilogram as an appropriate price rather than current market prices of P50 to P60.

“The NFA lost its power to intervene in the market as it used to. Along with this, the DA (Department of Agriculture) also lost its power to control and stabilize rice prices,” he told legislators.

For perspective, the removal of grains imports and rice trade from NFA was a precondition of the IMF-WB for the sector as part of structural reforms, in exchange for loans and grants.

Also, the passage of the Rice Tariffication Law in 2019 officially removed the rice trade and imports from NFA and transferring them to the private sector.

“If the NFA’s power… could be restored, the DA would be more effective in curbing the abuses of rice traders and better influence rice prices,” he said.

Legislators are looking into the possibility that rice prices are being kept artificially high by a cartel, and have not been allowed to fall to their natural level even after President Ferdinand R. Marcos, Jr.’s order cutting rice tariffs.

“(Rice is still sold) at P50, up to P60. That’s not right. Unfortunately, we don’t have the authority to catch anyone in the market because we lack enforcement powers,” he lamented.

Analysts have been saying the reduction in tariffs from imported rice from 35 to 15 percent will not lead to reduced retail prices. But DA and state economists insisted it would take effect a long time. Yet, it did not make a dent.

As of December 5, the country imported more than the 3.61 MMT of rice it shipped in 2023 and total imports for 2024 is expected to hit 4.5MMT.

The US Department of Agriculture projects rice imports for 2025 to reach 5.4 MMT.

The DA said palay (unmilled rice) production will likely decline 3.63% to a four-year low of 19.3 MMT in 2024, after typhoons damaged the standing rice crop.

The BPI reported that Vietnam remained the top supplier of rice as of early December, accounting for 76.8% of all imports in the year to date, or 3.34 MMT.

Thailand supplied 556,248 MT during the period, or 12.9% of the total, followed by Pakistan with 224,629 MT, or 5.2%. Myanmar and India supplied 197,952 MT and 22,572 MT of rice, respectively.

The BPI issued 109 sanitary and phytosanitary import certificates, with approved applicants seeking to import 66,988 MT, in early December. Total permits issued in the year to date numbered 9,451 with applicants seeking to ship in 9.08 MMT.