Grains mafia must fall

The inflation villain, rice prices, has again reared its ugly head as it was the primary culprit in the 3.7 percent rise in the price indicator in March.

Rice reported an inflation of 24.4 percent from last year, the fastest pace since 2009, accounting for 2.2 percentage points to overall headline inflation.

The local dynamics in rice prices are the most complicated in the region. The market is dominated by a cartel that everyone in the industry is familiar with, but that high officials continuously deny.

Crucial to keeping the cost of rice within reach of the majority of the population is the National Food Authority (NFA), which was given a mandate similar to the Bangko Sentral ng Pilipinas in the financial sector: to intervene whenever the market veers off normal.

The NFA, however, has been emasculated by the cartel, which has a stranglehold on the agency as it controls officials who hold key policy posts.

Agriculture Secretary Francisco Tiu-Laurel Jr. has indicated his knowledge of the rot that built up over the years in the NFA as it transitioned to its new role of being a price stabilizer from its former lucrative role of an importing monopoly of the staple grain.

Laurel had set the parameters of the NFA audit to 2019 when the Rice Tariffication Law took effect after some officials tried to slip the sale of NFA stocks to favored traders at ridiculously discounted prices.

While the public remains hopeful of benefiting from the realization of President Ferdinand “Bongbong” Marcos’ vow of rice at P20 per kilo, the cartel’s tentacles in the agency have made the price possible for members of the mafia.

Thus, the NFA had lost its ability to keep prices low due to the irregularities that fester in the agency. The perennial excuse that the agency lacked resources to drive down prices contradicted its recent actions.

The sale of the expiring rice to traders means that the agency has huge surpluses.

The NFA intervention should be visible now since supply is affected by the dry spell that puts pressure on prices.

Key NFA officials are under suspension, and two parallel investigations from the Ombudsman and the Department of Agriculture have kept the agency busy in matters unrelated to its crucial function.

The country is particularly vulnerable to surges in grain prices because of its dependence on imports, mainly due to the increasingly unpredictable weather.

The situation is exploited by the mafia, which then practically dictates global prices through the manipulation of imports since the cost paid by local traders is considered a bellwether.

The cartel then colludes with other big traders in the region to keep the prices high.

An efficient NFA can break the stranglehold of traders since it directly deals with farmers. The excuse that it does not have the resources does not work since, in practice, it already has the network to act as a grain middleman.

NFA crooks who are under the control of the mafia will not move to hurt the interest of the hands that feed them.

The recent figures mirrored the failure of the NFA with the surge in rice inflation.

Prices stay high, and poor Filipinos do not have access to subsidized rice, while NFA rice is bought cheaply by favored traders, showing the interest that the agency currently serves.