The National Food Authority is mired in debt and had to use the funds set aside for the purchase of palay last year and the first half of 2018 to pay some of its maturing obligations, Administrator Jason Aquino told congressmen Monday.
Aquino made the revelation when members of the House committee on appropriations asked him why he was using the agency’s billions of pesos intended for the purchase of rice or palay from farmers in 2017 and this year.
“I want to clarify that since 2008, we have acquired huge obligations. The NFA is living on debts,” he told the committee chaired by Davao City Rep. Karlo Nograles.
“The rice subsidy then, and even now, is not really enough both for the procurement of rice and importation. So we advance the funds, and we pay for it later when the subsidy is released,” Aquino said.
NFA officials led by Aquino, along with members of the NFA Council, attended budget deliberations Monday, under fire over recent rice price spikes caused by the shortage of cheap NFA rice in the market.
Nograles demanded an explanation on NFA’s diversion of the funds provided to the agency under the General Appropriations Act.
“The budget passes through us. We’re the ones who approve the budget every year. When we approve the budget, we approve it line by line, item by item, purpose by purpose,” Nograles said at start of the hearing.
Pointing to a report by the Commission on Audit, Nograles said NFA used P2.09 billion out of its P5.1-billion Price and Supply Stabilization of Rice Fund to pay the principal and interest on loans it obtained from the Land Bank of the Philippines worth P1.046 billion and the Development Bank of the Philippines worth P1.044 billion.
Because of this, the NFA–which is under the Department of Agriculture–missed its 2017 palay procurement target by 124,969 metric tons and was only able to purchase 28,514 MT.
For 2018, the NFA reportedly diverted P5 billion from its P7-billion Buffer Stocking Program Fund to pay its existing debts to the LBP and DBP.
Aquino bared during the hearing that the actual diverted figure this year was P6.12 billion and not P5 billion.
Nograles expressed concerns that this bad habit could get picked up by other departments.
“[If the NFA does that], nothing will stop other other agencies and departments from also diverting their funds elsewhere in complete disregard of the law that was passed by this Congress called the General Appropriations Act,” Nograles said.
Nograles said that for 2019, the House of Representatives is again eyeing a P7-billion buffer stock subsidy for the NFA.
In the Senate, Senator Francis Pangilinan urged President Rodrigo Duterte to fire Aquino and put Finance Secretary Sonny Dominguez, Trade Secretary Ramon Lopez and Economic Planning Secretary Ernesto Pernia in charge of the rice problem.
As members of the NFA council, he said, Domingues, Lopez, and Pernia understood the problems.
The solution to the rice crisis, Pangilinan said, is more than just going after traders when the NFA itself through corruption and incompetence caused the problem in the first place.
“We do not see how high prices can be addressed by the end of the year. Until new imports come in and harvest season in October provides respite and the rice both local and imported are effectively distributed to stem the tide of unending rice price increases, these raids, unfortunately, will just be for show,” he said.
He said the problem is the NFA leadership. Having the corrupt and the inept take charge of raiding these warehouses will only mean more corruption and incompetence.
“The President has been misinformed and misled by the NFA,” Pangilinan said. “He should have listened to Cabinet Secretary Leoncio Evasco Jr., who was trying to solve the problem. Instead, he chose to side with the NFA chief, who created the problem. By doing so, the problem worsened and so we are where we are today.”
He said inspecting rice warehouses and raiding them will not be enough to bring down rice prices.
Senate Minority Leader Franklin Drilon urged the government to provide long-term solutions to insufficient rice supply
“It all boils down to the law of supply and demand,” Drilon said.
“Today, we talk about rice smuggling, high prices of rice, and the President threatening to raid the warehouses. You know, if there is one thing that we cannot repeal is the law of supply and demand,”
Drilon said. “When the supply is low and the demand is not addressed effectively, then the results are, inevitably, rice shortage and high prices of rice.”
Drilon said that the raiding of warehouses is a band-aid solution. What the country needs is long-term solutions that will build up the agriculture sector.
“The long-term solution, therefore, is to provide support to our farmers,” said Drilon as he urged the administration to prioritize the construction of agricultural infrastructure in its Build-Build-Build program.
If you look at rice exporting countries, Drilon said, they have critical ingredient in their agricultural production, particularly irrigation, citing Vietnam’s Mekong River.
“In the Philippines, why is there rice shortage? Because we don’t have sufficient production. Why is the production side not enough? Simply because we lack the critical ingredient to agricultural productivity, which is agricultural infrastructure that can support our farmers,” Drilon said.
The Palace said Monday that the President has already ordered the authorities to raid cartel warehouses and seize hoarded rice.
“I really don’t want to say this, but we already have an order. I won’t mention the names [whom we’re after]. I call on the unconscionable hoarders, we already know who you are, and the authorities will open your doors,” said Presidential Spokesman Harry Roque in a radio interview upon his arrival in Israel.
Roque said the President ordered the Department of the Interior and Local Government and the Philippine National Police to start raiding the warehouses.
“Even in the airport, the police authorities were expressing concern that these warehouses need to be opened. We should do one as sample to show that the government is serious in fighting the hoarding of rice,” Roque said, insisting that the country does not have a crisis in the rice, but merely a problem with rice hoarders.
“I reiterate, we do not have a scarcity of rice. We have an abundance of supply and more will come... So, the President said he would make sure to open the warehouses,” Roque said.
“They hide the supply, so the price will go up. The President has said he would import rice as much as the country can to badly affect the rice hoarders,” he added.
In his departure speech yesterday, Duterte stressed he would not hesitate to exercise the powers of the President to raid the warehouses and bodegas of the rice hoarders.
On Monday, more than 4,000 employees of the NFA nationwide wore red today to protest calls to abolish the agency and abandon the government’s responsibility of providing food security.
“The NFA has been effective in its mandate for more than four decades. The problem of rising rice prices and low supply is not NFA’s fault, but the result of short-sighted decisions and wrong assumptions by people who work in the boardrooms unaware of what is happening in the rural areas, island provinces, highly populated urban areas and remote places across the country,” the NFA employees said.
NFA employees, who have worked with the agency since the 1970s, are particularly hurt by accusations of inefficiency, corruption and incompetence. Some sectors have collectively blamed NFA for the high inflation rates and rising rice prices.
“It is unfair for our employees who are working 24/7 in areas hit by calamities just to ensure that there will be rice ready for the victims. It is unfair for NFA management that has consistently been proposing measures to avert this current problem but whose proposals are consistently thumbed down by those who have the power to approve or disapprove these proposals,” NFA management and union officers said.
The NFA said Monday the rice crisis in Zamboanga has been resolved after it beefed up its food security stocks, increasing its market injection from 2,000 to 4,000 bags a day or about 80 percent of the region’s 5,340 bags daily rice requirement.
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