State-run National Food Authority on Thursday said it has stopped the bidding for old rice stocks leftover from last year’s importation to avoid distorting market prices of the dry season harvest, even as the grains agency is considering new imports to ensure supply of the staple through the lean months.
In a statement, NFA Administrator Renan Dalisay said that sale through auction of the remaining rice, amounting to about three percent of last year’s imported volume, may distort farmgate prices of locally produced palay.
“It would be unfair to our farmers for the NFA to unload stocks into the commercial market at the same time that they are selling their harvest,” Dalisay said.
“Even if the [auction]volume is low, it could send wrong signals and unduly distort the price and supply situation for the staple,” he added.
The NFA was created with the intention of protecting the interests of both rice producers and consumers. As such, the agency’s 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. on one front, it must support the palay farm at a level that is enough to ensure a reasonable return for rice farmers, regardless of the reforms undertaken in the past gate price. At the same time, it must also ensure that the price of rice is low enough to remain affordable to low-income consumers.
To preserve the quality of the old rice stocks, the NFA’s Technical Research Services Department (TRSD) and the Food Development Center (FDC) recommend reprocessing the agency’s excess rice stocks to keep them fit for human consumption.
Administrator Dalisay said that the NFA has a 3-6-9 policy for corn, rice and palay. This means that the agency’s corn stocks should be stored for a maximum of 3 months only, rice for 6 months, and palay for 9 months to maintain the good quality of the agency’s stocks inventory.
Since the stocks were more than six months old, the NFA Council decided to auction them off with the strict provision that they be reprocessed by the winning bidder, either thru re-milling or reconditioning to maintain their quality and suitability for human consumption.
The stocks were part of the agency’s buffer requirements but due to the substantial presence of commercial rice in the market at competitive prices, the stocks were not able to move properly.
Dalisay said that the grains agency continues to release rice to farmers affected by El Nino through the concerned local government units (LGUs) and Department of Social Welfare and Development (DSWD).
In a related development, the government is studying a rice importation scheme for the country’s buffer stock requirements for the lean months, although current inventory at state-owned warehouses remains high.
The NFA chief earlier said that the policymakers are now eyeing the utilization of the minimum access volume (MAV) to meet the country’s rice requirement from July-September. Another option being considered is through government-led importation using the standby authority of about 500,000 MT.
MAV refers to the minimum volume of farm produce allowed to enter into the Philippines at reduced tariff of 35 percent, while shipments outside MAV pay higher rates of 50 percent and require approval by the National Food Authority.
At present, Manila limits to 805,000 metric tons the amount of rice allowed to enter the country through the scheme.
Dalisay noted that they expect to meet with the Department of Finance to present proposed reforms to the MAV that would allow private sector importation using tax-expenditure subsidies.
“Under MAV, importers will just have to pay tariff to DOF,” he said, adding that the government aims to fully use the special treatment on rice until the privilege under MAV expires in 2017.