The Cabinet recommended to President Rodrigo Duterte the abolition of National Food Authority’s commercial functions, including rice importation, the National Economic and Development Authority said.
Economic Planning Secretary and Neda director-general Ernesto Pernia cited a consensus among Cabinet secretaries to split up the regulatory and commercial functions of NFA, the state-run grains agency.
Pernia said, however, the recommendation was still subject to the approval of Duterte and the amendment of the NFA charter.
“We had a meeting with the NFA, and it’s not official yet, but our collective decision was going to be proposed to the president and I’m sure he will like it. It is to remove the proprietary and commercial activity of NFA and focus on its core function of regulation,” Pernia said.
He said the heads of the Finance, Budget and Agriculture Departments and National Economic and Development Authority met to arrive at the decision.
He said NFA would no longer be engaged in buying and selling, meaning it would focus on regulation to ensure adequate buffer stock of rice and other grains.
“They should have a buffer stock. Buffer stock is really reserved. It should always be there, in case of contingencies,” said Pernia.
He said the NFA rice commercially sold to accredited store owners in public markets would be gone, once the proposal was approved.
Pernia, however, assured that low-priced rice would remain available to the public such as NFA rice through the importation by the private sector.
“The imported rice is always cheaper than homegrown rice. It’s very expensive to grow rice in our country,” he said.
Pernia said the splitting of NFA’s commercial and regulatory functions would also resolve the rice smuggling problem.
“It also removes the smuggling problem. The problem with NFA is that it buys high and sells low, which results in losses. The accumulated debt of NFA is already P165 billion,” Pernia said.
Pernia said while the government was required to settle the debt of NFA, the grains agency could liquidate some of its assets to pay for the losses.
“That’s a government debt, but NFA has certain assets that can be sold, assets all over the country, land and building. So those can be liquidated or sold to partly pay for the debt,” he said.
Pernia said while the proposal was expected to raise a lot of objections, the Cabinet secretaries were firmly pushing for the proposal, “There’ll be a lot of objections, as there a lot of individuals who would like to maintain NFA, because it’s a milking cow,” Pernia said.
“It’s a good time to do it now, because President Duterte has strong support in Congress. Like the tax reform, it will also benefit from his strong support in congress, with super majority. So many things have to be done now that he still has that large political capital,” he said.
Cabinet Secretary Leoncio Evasco Jr. earlier said he would suggest to Duterte the abolition of NFA, the National Irrigation Administration and National Electrification Administration.
Evasco said in a speech NFA would be turned into pure regulatory body.