Imee on NFA rice: Buy High, Sell Low

In the meantime that Congress is working on the Senate and House versions of the Rice Tariffication bill, Ilocos Norte Governor Imee R. Marcos has suggested that the National Food Authority “be authorized to buy milled rice from the rice traders at prevailing average market prices or purchase palay from the farmers at prices matching rice traders’ buying rate.”

Rice traders’ buying prices are usually higher than the usual NFA buying rate. If the recommendation of Governor Marcos is followed, NFA will incur added costs because the NFA will be buying high and selling low.

“The TRAIN Law has a catch-all provision which could serve as legal basis for a rice buying program by the NFA using incremental proceeds from TRAIN Law revenues. This provision will address costs,” Gov. Marcos said.

She also proposed the NFA be tasked to beef up its stocks to anywhere from one month to three months.

“The size of the NFA rice buffer could depend on market supply forecast models. What matters is that higher NFA inventories will convince the poor switch back to NFA rice,” the Ilocos Norte governor said.

“When the poor are assured of the stable supply of NFA rice, they will choose the NFA rice instead of commercial rice and it will be this change in buying behavior that will reduce the demand for commercial rice and result in lower commercial rice prices while we wait for imported rice to come in,” Gov. Marcos explained.

Both the Senate and House bills removing import quotas and replacing them with import duties have safety nets for rice farmers. The Senate already has approved its committee report on the consolidated bill. The House passed its version last August 15 and sent it to the Senate.

Marcos is concerned about those safety nets having lag time of several months before their impact is felt by the farmers.

“Imported and cheaper rice will have immediate effects because instead of buying from Filipino farmers, some rice traders would be importing rice because importers have the advantage of selling in bulk,” she said.

Not all rice farmers are members of cooperatives that can sell to traders in bulk.

Governor Marcos also noted that under the country’s international tariff commitments on rice, the maximum import duty the government can impose is 50 percent, but the actual tariff to be imposed of imported rice could be lower than 50 percent.

“I hope the rate the NFA and other agencies will recommend to President Duterte is not too low. If the selling price of rice importers is much lower than the price local rice traders offer to Filipino farmers, then our own farmers would be at too much of a disadvantage because the rice traders will prefer the imported rice over Filipino rice,” the lady governor said.

“I therefore ask the NFA Council, now back under the supervision of Agriculture Secretary Manny Piñol, to calibrate the import duty just right so the eventual retail price of imported commercial rice will match the retail price of rice from Filipino farmers. It would be at that level where we address the welfare of both farmers and retail consumers—a win-win solution we can all live with,” Governor Marcos said.

Press release

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