The National Food Authority: What Now?

The current impasse on whether or not to "privatize" NFA has left quite a number of policy makers dumbfounded.

This paper briefly reviews NFA's mandate, performance and problems. It
also provides an overview of the spectrum of proposals coming from the
legislature, NGOs and individuals who have taken a look at NFA up
close. Finally, it draws from the menu of proposals a combination of
operational recommendations for policy makers' consideration. On a last
note, the paper cautions that it is extremely important to process
these proposals among farmer organizations and local government units
who should be the ultimate beneficiaries and implementors of these
proposals.

The current impasse on whether or not to "privatize" NFA has left quite
a number of policy makers dumbfounded. As of this writing, five bills
delving on what to do with the agency and what the agency should do,
have been heard by the Committee on Agriculture of the House of
Representatives but have yet to be reported out. Then there is
Administrator Eduardo Nonato Joson's announcement early this year that
NFA's privatization shall be phased over a ten-year period.ii In short,
it will not happen within the Estrada Administration's term.

However, with or without the ADB's Grains Sector Development Program,
serious and immediate thought must be given on the agency's future role
and operation for the following reasons:

First, under our commitments with the AFTA-CEPT, quantitative
restrictions on rice imports can only be used up to 2004. Beyond that,
and, subject to the amendment of Section 2 of RA 8178 (Agricultural
Tariffication Law) which maintains that rice shall still be covered
with quantitative restrictions, tariffs will be used to protect our
staple.

Second, contrary to the expectations of those who pushed for our
accession to the GATT-WTO, the global trading of grains has not
dramatically increased. In fact, traded volume still hovers at around 4
to 5 percent of total world production and the supply of rice in the
world market is very volatile.

Third, given government's budgetary constraints, NFA's operations
cannot remain as a losing proposition where it will buy high from
farmers and will sell low to consumers. There must be some
institutional rearrangement that can be done so that the goal of
securing our staple will not be a perennial fiscal burden.

Finally, the DA (then under Secretary William Dar) has targeted 2004 as
the year when we can achieve self-sufficiency in rice assuming that the
needed investments in rural infrastructure, specially irrigation, come
on stream. Further, NFA Administrator Joson even has a grander vision
of the Philippines exporting rice once more by that year. So, does NFA
have what it takes to be a major contributor toward this vision?

This paper briefly reviews NFA's mandate, performance and problems. It
shall then give an overview of the spectrum of proposals coming from
the legislature, NGOs and individuals who have taken a look at NFA up
close. Finally, it shall draw from the menu of proposals a combination
of operational recommendations for our policy makers' consideration.

Read full text (.pdf, 136kb, 20pp.)

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