Think tank to Duterte: Allow rice importation, end NFA monopoly

MANILA, Philippines – A think tank on economic policy urged President Rodrigo Duterte to reconsider his plan to stop rice importation and called on him to end the National Food Authority's "monopoly" on rice importation.

Doing so would be in the best interest of both Filipino farmers and rice consumers, it said.

In its statement sent to media on Tuesday, April 11, the Foundation for Economic Freedom (FEF) called on Duterte "to rescind his decision to stop all rice importation, which led to the firing of Undersecretary Maia Chiara Halmen Reina A. Valdez."

"We believe that neither allowing the National Food Authority (NFA) to solely import rice, nor stopping all rice imports, is good for the Filipino consumer or the Filipino rice farmer," it added.

FEF, founded in 1996, is an institution that promotes free market economy and economic policies "against populist tendencies and political patronage," according to its website.

It counts as fellows and board members some of the brightest economic experts of the country, including former prime minister Cesar Virata, former finance secretary Roberto de Ocampo, and former socioeconomic planning secretary Gerardo Sicat.

The FEF statement was issued a day after Duterte ordered NFA Administrator Jason Aquino to prioritize buying palay from Filipino farmers and only import rice if there is a shortfall.

But FEF said that stopping all forms of rice importation "is a dangerous policy that could lead to significant shortages and increased rice prices."

This is because the country is not able to produce enough rice locally to meet the demand of consumers, said the organization.

If the government stops importing rice altogether, even during a time of good rice harvest, rice prices will spike, making the food staple unaffordable for the country's poor.

Duterte had previously mentioned reports of a good harvest from Agriculture Secretary Manny Piñol to justify his order to stop importing rice.

End NFA monopoly

Though it supports rice importation, FEF believes forms of rice importation that allow an NFA monopoly should be put to an end.

"On the other hand, allowing only the NFA to import rice is also the wrong policy," it said.

It described the NFA and the government in general as a "poor judge" of when to import rice.

"Typhoons can hit the country at anytime and destroy rice crops. Neither is the government equipped to respond quickly to a rice shortage given its bureaucratic procedures," it said.

Delayed rice importation due to bureaucratic procedures will lead to big spikes in rice prices which would be most felt by poor households.

Specifically, FEF urged Duterte to put an end to government-to-government (G2G) transactions, the type of rice importation NFA Administrator Aquino is pushing for. (READ: Dismissed USec Valdez to Duterte: Probe 'NFA syndicate')

G2G importation, said the think tank, is prone to corruption and buries the government even deeper in debt.

"If the NFA will go on a government-to-government purchase of rice, then there will be no transparent and competitive bidding, which could lead to rampant graft and overprice. Moreover, the government, through the NFA, will incur more debt to finance the importation," it said.

Specifically, the 1-million metric ton rice importation through G2G being pushed by Aquino will require the government to get a P24-billion loan from the Landbank, adding to its P211-billion "legacy debt."

Allowing the NFA to enter into G2G rice importation deals also goes against the Philippines' commitment to the World Trade Organization (WTO) to liberalize the rice trade.

Liberalizing the rice trade by allowing the private sector to lead in rice importation has benefits other than avoiding sanctions from the WTO and tariffs from other countries on other agricultural products.

"We believe that rice import liberalization will lead to lower rice prices, lower consumer inflation, and higher disposable income for the working class. It will make our manufacturing more competitive since rice, which is the single biggest source of calories for our workers, will become more affordable," said FEF.

FEF's position mirrors that of the NFA Council which sought to extend the deadline of permits given to private rice importers who were given quotas under the minimum access volume (MAV) scheme. The MAV is part of the country's commitment to the WTO to liberalize the rice trade.

Aquino disregarded the NFA Council's decision to approve the extension for all private-led rice importation. Only he and Cabinet Secretary Leoncio Evasco Jr, the council's chairman, are authoritized to sign permits for extension.

Aquino also disregarded the council's refusal to activate the NFA's standby authority to import rice through G2G and continued to lobby in Malacañang for G2G.

The dismissed Palace undersecretary, Halmen Valdez, sought to ensure the council's decision to grant the extension was complied with, despite Aquino's protests. For this, she was fired by Duterte.

Evasco, as council chairman, wants to impose sanctions on Aquino for refusing to implement the NFA Council's decisions and thus delaying private-led importation.

Rice self-sufficiency

FEF also spoke against the goal of achieving rice self-sufficiency, one of the targets of Agriculture Secretary Piñol. One-hundred percent rice-self sufficiency was also the goal of the Department of Agriculture during the Aquino administration.

"Rice self-sufficiency is neither a desirable nor a practical objective for our country.  The Philippines is an archipelagic country. It does not have vast lands and the giant river systems in our neighboring countries, like Vietnam and Thailand, that enable them to plant and harvest rice several times a year," said FEF.

This is the position also taken by other experts, including Duterte's own Socioeconomic Planning Secretary Ernesto Pernia and Ateneo School of Government dean Ronald Mendoza.

Rather than spend government resources to attain rice self-sufficiency, FEF thinks the country should rely on international trade to ensure food security.

This is the track taken by countries like Malaysia and Singapore.

The Philippines can also work towards a rice security pact with the major rice-producing countries of the region, like Vietnam and Thailand. – Rappler.com

Pia Ranada

Pia Ranada covers the Office of the President and Bangsamoro regional issues for Rappler. While helping out with desk duties, she also watches the environment sector and the local government of Quezon City. For tips or story suggestions, you can reach her at pia.ranada@rappler.com.

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