NFA budget hike to stem palay price drop

Policymakers and agricultural stakeholders are seeking a P15 billion hike in the budget for the National Food Authority (NFA) to allow it to directly procure more palay (unmilled rice grain) from local farmers.

The NFA buying more palay is seen to cushion the impact of the farmgate price drop on the Filipino food staple in the wake of Republic Act 11203 or the Rice Tariffication Law (RTL).

According to Agriculture Secretary William Dar, the P7 billion budget of the grains agency is not sufficient to buy all the rice produce of about 2.4 million small farmers.

He said the amount can only procure 450,000 metric tons of palay, which is far from the expected harvest this year of six million metric tons (MT).

Dar pointed out that once the country secures a bigger buffer stock, the supply and price of rice would stabilize.

“I believe that the 30-day buffer stock of the NFA is not enough. We will provide the cooperatives, stakeholders and traders a new inventory program that is two percent rigorous, provided they buy from farmers at 17 per kilo,” he said.

Under the RTL, NFA’s function has been limited to buffer stocking for emergencies and calamities. The law also stipulates that NFA source its buffer stocks solely from local farmers.

However, the NFA’s buying price for palay is pegged at P17 per kilo, way lower than the average P20 offer of private traders to farmers. The P20/kilo, while higher by P3 compared to NFA’s buying price, is still seen as too low to really support local farmers.

Kilusang Magbubukid ng Pilipinas president Rafael Mariano said the additional P15 billion should be on top of the current P7 billion earmarked for NFA. Such an increase would allow the grains agency to buy about two million MT of rice good for 30 to 35 days of buffer stocking.

According to Mariano, if NFA can intervene in a market where there is a lot of supply, that’s the time that government can influence the price of commercial rice.

He also warned that the reduction of the NFA support price could cut farmers’ profit margin as their production cost had already gone up due to, among other factors, higher fuel prices.

Meanwhile, to mitigate farmers’ income losses from a recent deluge of rice imports, the Department of Agriculture clarified on Tuesday that they may get zero-interest loans — but not conditional cash transfers — from the government.

In a radio interview, Dar said that should conditional cash transfers be the option, the government needs to shell out P6 billion if it gives P5,000 each to 1.1 million farmers tending to rice fields one hectare and below in size.

“We don’t have that money,” said Dar, adding that the farmers listed in the government’s registry could avail a P15,000 loan payable in eight years with zero interest, which would be sourced from the Agriculture department’s credit policy council.

Dar explained that in the “later part of September,” the government will offer another P25,000 loan package with two percent interest payable in three years, which would come from rice import tariffs.

The government is henceforth mandated to allot P10 billion to aid farmers wherein out of this amount, P5 billion should go to the mechanization of rice farming, P3 billion to the distribution of inbred rice seeds, P1 billion to credit for farmers and another P1 billion for their skills development, said Dar.

To offset the alleged rice undervaluation as rice traders deliberately lower their declared value of imports, Sen. Cynthia Villar urged the Bureau of Customs to fast-track the implementation of the national single-window system anew.