The “losses” incurred by the National Food Authority (NFA) are the cost of the government’s social responsibility to make rice affordable, especially to the victims of calamities and the poor.
NFA management and employees made this pronouncement in reaction to the proposal to abolish or reduce the agency to a regulatory body due to its accumulated debts. As of August 31, the agency said its P165-billion debt has gone down to P158.9 billion.
“This debt, accumulated over the years, represents the cost that the agency incurred in fulfilling its mandate of stabilizing the price and supply of rice both at the farm gate and consumer level,” the NFA said in a statement.
“The NFA, on behalf of the national government, has to buy high from the farmers for them to get a fair return on their palay-production investment, and sell low to consumers to ensure that those who are short on funds will have a chance to buy good-quality rice at an affordable price,” it added.
“Buy high, sell low” is a policy of the government to ensure food security and stabilize the supply and price of rice, which are the mandates of the NFA. Although the NFA is a government corporation, its officials said this policy makes it impossible for the agency to profit from its mandated activities.
The NFA management also clarified that the agency does not perform commercial activities. “Buying palay at a high-support price and distributing rice at a low, uniform price across the country are not intended for profit but to operationalize the government’s basic social responsibility of food security and stabilization.”
Buying rice from farmers and importing rice are done to maintain the Legislative-Executive Development Advisory Council’s (Ledac) mandated Strategic Rice Reserve of 15 days national consumption—now at 32,000 metric tons daily—at any given time.
“In fact, the low selling price of NFA rice has been a hinge against inflation in the food sector, with rice comprising about 30 percent of the Filipino’s food basket,” the NFA said.
NFA management and employees also said the government subsidy to support its operations had been “very low,” averaging P4.25 billion a year. “There were even years when the agency had zero subsidy and it had to resort to bank borrowings to finance its operations.”
Over the years, the NFA said it had been instituting operational and financial reforms to cut down its “losses” and increase efficiencies. The agency’s annual “losses” declined to P871.88 million in 2015, from P32.2
billion in 2008.
“The proposal to abolish or reduce the NFA to merely regulatory functions hinges on the question of whether or not the government is ready to let go of its responsibility to ensure national food security,” the statement read.