NFA monopoly threatens rice industry

While the country’s leaders continue to be obsessed with the hunt for “illegal rice importers,” two former heads of the National Food Authority were in agreement that flawed government policy, not smuggling, poses the biggest threat to the nation’s rice industry.

Anthony Abad explained that smuggling was just one of the many symptoms of a flawed system of rice regulation while Lito Banayo warned that government’s continued monopoly of rice importation could cause NFA’s debt to balloon to as much as P190 billion.

A total of 404,000 bags of rice from Vietnam
imported by National Food Authority are being
unloaded in a private wharf in Davao City in this
file photo.  Loaded in two vessels, the rice will be
stored in NFA Davao City warehouses of which
some of the stocks will be transferred to other
provincial offices to ensure that reserves are 
within ideal level.  RENE B. LUMAWAG
“Rice smuggling occurs because there is an unmet demand of a hungry population. Smuggling and the illicit importation of rice simply reflect a deficit in supply,” said Abad, a lawyer and international trade expert.

At the Senate hearings, so-called “illegal importations” were attributed to the absence of a definitive policy on the World Trade Organization (WTO)-granted “special privilege” of quantitative restrictions (QR) on the importation of rice that had expired in June 2012.

During the hearings, the Department of Agriculture maintained that despite its expiration, importation quotas on rice will remain in place until 2017, even as the Philippines has yet to succeed in negotiating an extension with fellow WTO member countries.

But Abad believes otherwise: “When you have an agreement that is time-bound, the “special treatment clause” expires upon the deadline. The Philippines is the only country left that maintains a QR.”

The DA and attached agency NFA have been criticized by some sectors for supposedly using QR and the issuance of import permits to maintain a “monopoly” over rice trade.

Abad, who was NFA administrator from 2000 to 2002, agreed that the “outdated QR system and government rice monopoly, only lead to high prices, inefficiency, corruption, and smuggling.”

In a television interview, Banayo, for his part expressed astonishment at how the agency has come to monopolize rice trade over the last year.

“In the third year of this Aquino administration, 2013, I was surprised to read in the papers that it was only the NFA doing the importing, without participation from the private sector,” he said in the vernacular.

Supposedly, under the 2010 Food Staples Self-sufficiency Program (FSSP), the country’s rice self-sufficiency roadmap, importation should primarily be the role of the private sector.

“The private sector should be the one to import. The NFA should, little by little, remove itself from rice importation and concentrate on local procurement, which we followed for two years,” Banayo, who was administrator during the first two years of the Aquino presidency, described the agency’s thrust under his watch.

Moreover, he warned that the NFA’s continued monopoly over rice importation, through government-to-government transactions, is a virtual “white elephant,” costing the country billions in public funds.



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