Expect a major policy shift in the National Food Authority’s buffer stocking scheme next year as the state-run grains agency looks to reduce its reliance on cheaper imported rice while increasing local procurement.
With the impending influx of cheaper rice from abroad, NFA Administrator Jason Laureano Aquino said the NFA would be increasing local palay procurement to 1.2 million metric tons next year, a massive increase from the 225,000 MT projected for this year.
“The NFA targets to procure locally 1.2 million MT of paddy. This is higher than the NFA 2017 target of 225,000 MT,” Aquino told Congress during a budget hearing last week.
“This would also ensure government support to marginalized rice farmers to be affected by cheaper farmgate prices as a result of higher importation of cheaper rice from abroad,” he said, citing President Rodrigo Duterte’s order to source buffer stocks from local farmers.
For this year, the NFA plans to buy 43 million bags of rice from farmers nationwide in a bid to replenish its dwindling rice stocks, which have remained critically low despite the expected arrival of imports in the next two months.
NFA Spokesperson Marietta Ablaza has said the grains agency would buy the bulk of the target volume during the main harvest season from October to December.
“So far, we have procured about 230,000 bags during the dry season harvest, and we plan to have a massive buying of palay during our main harvest to beef up our stocks,” Ablaza told The Manila Times in a telephone interview.
The lower buying price of P17 per kilo, however, is making it difficult for the agency to compete with private traders.
The NFA was created with the intention of protecting the interests of both rice producers and consumers. As such, its two primary mandates are to stabilize the price of rice and to ensure food security.
The price stabilization mandate means that the NFA tries to influence prices on two fronts. It must support the palay farmgate price at a level that is enough to ensure a reasonable return for farmers. At the same time, it must also ensure that the price of rice is low enough for consumers.
Over the past decade, the NFA has relied massively on cheaper imported rice to replenish its buffer stocks since it could not compete with private millers and traders in buying locally grown palay.
Buying rice from abroad cuts the agency’s spending and it can earn more and slash losses by selling to consumers at higher prices.
Aquino also told members of Congress that they were also looking to import 580,050 MT of rice in 2018, more than double that imported by the government this year. But the volume is significantly lower than the average state-led importation over the last decade.
Sought for comment, Rachel Miguel, special assistant to the NFA chief, said the importation would help augment local palay procurement.
Miguel did not disclose the target arrival for the imported rice, saying the proposal was still subject to the approval of the multi-sectoral NFA Council.
The NFA Council has not been keen on exercising the importation option as it pushes institutional reforms within the debt-ridden grains agency.
Under a recent NFA restructuring proposal, rice for buffer stocking will be accumulated via higher domestic procurement, while import volumes would be reduced via encouraging the private sector to undertake the purchases.
The NFA’s policy of “buy high-store long-sell low” will now shift to a policy where the agency’s selling prices are gradually increased to approach market levels, with social welfare agencies handling subsidized rice if needed but buying stocks from NFA at market prices.