At what price should NFA buy palay?

At what price should NFA buy palay? | Daily Tribune

In my column last week, I raised the question: At what price should the NFA buy freshly harvested palay for our farmers to survive, to stabilize the rice supply, and to make consumers happy.

I pointed out that for Marcos to achieve his promise to maintain the price of rice at P20/kilo, there was no other recourse but to buy the farmers’ fresh harvest within the P8 to P12/kilo range, which is worse than a rampaging typhoon or pestilence ravaging the rice fields.

In sum, a farmer nets P17,000 per hectare per harvest per year, or P34,000 if he plants twice a year assuming his land is irrigated. This is based on the assumption that he produces 100 sacks of palay weighing 50 kilos each.

For brevity, I will skip other details and proceed to suggest that the government through the NFA must buy the fresh palay harvest at the very least at P18/kilo. Buying palay at P20/kilo will be a big bonanza to farmers and will guarantee that in the third harvest season the supply will be stabilized.

Using the same assumptions or givens, at P18/kilo the farmer will net P47,000/year/harvest/hectare, or double (P94,000) if he plants twice a year which translates to P7,800/month. A farmer’s average landholding is two hectares, which means P15,600/month. That will be enough incentive for a farmer to improve his yield. A hectare of paddy rice could produce more than a hundred sacks of palay based on best practices and that would be a big bonus.

There is a disconnect between the announcement of the Department of Agrarian Reform and what is actually happening on the ground. DAR says the farmgate price of palay is P19/kilo. But farmers are complaining that the actual buying price of palay is only P8 to P12/kilo.

If Marcos means business about helping the farmers, he should stop importing rice and selling it at the subsidized price of P20 per kilo. The cheapest rice in the market is about P38/kilo. The government subsidy of P18 should instead be used for procuring palay.

It used to be that the NFA buying stations were equipped with rice mills, silos and solar dryers and there was always adequate funds to buy the farmers’ production. This is what the NFA did during the era of the late President Ferdinand E. Marcos Sr.

Sadly, when President Cory took over, the NFA and its adjunct agency, the Food Terminal Inc., ceased to function and were virtually mothballed. Rice mills were cannibalized and silos were left to rust and rot. The FTI’s real estate assets were sold for a song; irrigation systems were not maintained.

The Department of Agriculture should completely resuscitate the NFA and resume buying palay perhaps at P18-P20/kilo, dry and mill this, and sell the rice through its authorized retailers within the P23 to P28 per kilo range which is fair and just. Rice at this price is sustainable.

The P20 subsidized rice is a populist idea. President Marcos should realize by now that it cannot win votes because it’s like a noose that slowly strangles the farmers.