Agriculture chief says gov’t ‘cannot afford subsidized rice anymore’
The National Food Authority (NFA) will stop the sale of its subsidized rice once all its approved imports are depleted next year, according to the agriculture chief.
During a year-end press conference of the Department of Agriculture, Secretary Emmanuel Piñol said the rice variant being sold by the government at P27 a kilo would have to be discontinued, adding that the NFA “cannot afford subsidized rice anymore.”
“The moment that all of NFA’s rice imports are sold in the market, there will be no more rice priced at P27 [a kilo],” he said.
“NFA will turn into a welfare agency and it will be in huge debt. The P27 rice variant is not realistic and should have been removed a long time ago,” he added.
The development comes as President Duterte is set to sign the rice tariffication bill, which will liberalize the rice industry by removing the quota on rice imports.
Under the bill, NFA’s role will be limited to keeping the country’s buffer stock for emergency purposes and buying palay (unmilled rice) from local farmers.
The last tranche of the agency’s imports is expected to arrive next month, but NFA grains marketing operations chief Rex Estoperez said it was hard to pinpoint when the stocks would be depleted.
“It will depend on the agency’s market participation. If there will be an influx of commercial rice, subsidized rice will be distributed to a minimum,” he said.
Most of the agency’s rice stocks, priced at P27 and P32 a kilo depending on the quality, are mostly sourced overseas due to their lower price. By removing the NFA’s power to import, it can only buy local produce that are more expensive. The NFA buys palay from farmers at P17 a kilo with an additional incentive of P3.
Asked how removing the P27 a kilo rice variant in the market will affect consumers, Piñol said that “given the fact that there will be free entry of imported rice, I don’t think the issue of rice prices will still be an issue.”
Economic managers pitched the idea of deregulating rice imports by saying that it will lower rice prices by as much as P6 a kilo, but for industry group Samahang Industriya ng Agrikultura (Sinag), the claim holds false promise.
“We’ve been importing agricultural products for such a long time, but it did not help in lowering the prices,” Sinag chair Rosendo So said.
“Economic managers are saying that opening the market to more imports will lower rice prices but most of the commercial rice in the market right now are already imported, but prices remain the same,” he added.
The function of the NFA under the tariff regime remains blurry and preparations for its new role are still underway.
Aside from limiting its power to buying local palay and buffer stocking, Piñol said he wanted to know who would supply the rice requirements for agencies such as the Department of Social Welfare and Development that rely on NFA for their rice requirements.
It also remains to be seen whether the NFA will still be selling rice in the market as the country enters the rice tariff regime.
As of September, NFA’s outstanding loans stood at P136.9 billion—the bulk of which was incurred during the time of the Arroyo administration.
During that time, in an effort to satisfy both farmers and consumers, the agency subsidized both the farm-gate and the market price of rice, which proved unsustainable.