THE debt of the state-run National Food Authority (NFA) is seen to reach P157 billion in 2012 from the projected P150 billion this year.

NFA Administrator Angelito Banayo said the attached agency of the Department of Agriculture (DA) will continue to pay interest payments on loans previously obtained from commercial banks.

Pending the amendment of its charter, the NFA is also expected to continue with its policy of buying rice and unloading it at low prices in the domestic market, as well as buying palay from farmers at a support price of P17 per kilogram.  “The agency’s debt has already been reduced from the P176.8 billion incurred as of June 30 last year to P153 billion on June 30 this year,” Banayo said at the DA’s budget hearing at the Senate on Thursday.

The NFA chief said if the Philippines will be able to achieve rice self-sufficiency by 2013, the debt of the NFA will no longer increase since the government will not have to import rice anymore. 

“But even if we will no longer have to import rice, we will still have to pay the debt of the agency. That is why I said it will be better if the national government absorbs,” Banayo said.

Allowing the government to absorb NFA’s debt will make it less onerous for the food agency because it will no longer have to pay for high interest rates charged by commercial banks. Banayo said the NFA is charged an annual interest rate of 4.4 percent to 5 percent by commercial banks. 

Of its P153-billion debt, P99 billion was obtained from commercial banks. The rest were from the Development Bank of the Philippines and Land Bank of the Philippines.

The NFA resorts to commercial loans to fund its rice importation and palay-procurement programs. The loans carry sovereign guarantee, which means the government would pay for the loans in case of default by the agency. 

Meanwhile, Agriculture Secretary Proceso Alcala said he does not see the need to front-load the importation of rice for 2012. 

“Harvest of the wet season crop will start in a few days so we need to evaluate how much we need to import,” said Alcala in an interview after the hearing.  The government, he said, will likely schedule a tender for rice in the first quarter of 2012. 

The Philippines is not expected to import more than 500,000 metric tons (MT) of milled rice in 2012. The government based its expectations on the projection that the country will produce more than 17 million metric tons (MMT) of rice this year. 

For 2011, the Philippines imported a total of 860,000 MT of rice, which is only about one-third of the 2.3 MMT imported in 2010.