Rice tariffs may be cut to end NFA monopoly
MANILA, Philippines—President Gloria Macapagal-Arroyo wants a moratorium on the land use conversion of agricultural land, particularly rice land, in view of the worldwide tight rice supply that has been jacking up the local prices of the grain.
Justice Secretary Raul Gonzalez said the matter was discussed at this week’s Cabinet meeting. He said the Cabinet had long been discussing the many cases of land use conversion involving agricultural land, and tackled the matter again last Tuesday when it met with the President on measures to address the rice supply problem.
This time, Gonzalez said, some Cabinet members including himself suggested to Ms Arroyo a moratorium on land use conversion of rice farms, many of which had been turned into residential areas and even golf courses.
“The President adopted the recommendation, and it was my impression that this is now a policy,” the justice secretary said.
“She was sold on the idea,” he said, adding that in the first place, Ms Arroyo knew that “we’re an agricultural economy.”
Gonzalez also said that the way he understood it, Ms Arroyo would instruct the agriculture and agrarian reform departments on this new policy.
Relax tariff rates
The President has also ordered the Department of Finance to draw up mechanisms to relax tariff rates on rice, similar to that of oil, to allow greater private-sector participation in importation, said Agriculture Secretary Arthur Yap.
“Basically, this is a move to open up importation to a greater and broader sector of society rather than keeping it with the National Food Authority,” Yap said at a news briefing.
Normally, the private sector is allowed to import a maximum 300,000 metric tons of rice annually. These importations have to undergo tenders conducted by the National Food Authority (NFA).
In the past two years, however, less than 10 percent of this volume was brought in by private groups because of high prices and tariff rates.
End NFA monopoly?
Currently, tariffs for rice and corn stand at 50 percent and 40 percent, respectively.
Yap did not disclose details of the ongoing talks with Finance Secretary Margarito Teves. He said he would leave it to Teves to come up with a mechanism.
He also said the Department of Agriculture had been studying the possibility of allowing the private sector to import rice because “these people are calling for an end to the NFA monopoly of importation.”
“So rather than going through the very extreme process of displacing the NFA immediately and letting the private sector take over, why don’t we lower the tariff and see whether the private sector will take the call and if it is capacitated to make the importation?” he said.
No-pickup policy
Yap likewise announced measures to stabilize rice prices and ensure that government rice was distributed to its rightful beneficiaries.
He said that starting next month the NFA would have a stronger presence in the market through “supervised and direct selling.”
“We will start initially with 400 major and minor markets in Metro Manila, where sales of NFA rice will be conducted together with accredited NFA personnel, with the view of taking over the selling operations during the lean months,” Yap said.
He said this move would enable the Department of Agriculture and the NFA to safeguard stocks in the market and curb rice diversion by unscrupulous traders.
Yap has also directed the NFA to directly deliver rice to its accredited retail outlets and stop its practice of allowing traders to pick up their stocks in NFA warehouses.
“While this new no-pickup policy will entail additional costs on the part of the food agency, this will be another way of preventing the diversion of government-subsidized stocks to private warehouses” he said.
Break packaging
Another measure involves break packaging, wherein the NFA will repack the grain into smaller one-kilogram, two-kilogram or even three-kilogram bags to “prevent the illegal practice of diverting these stocks or mixing them with commercial varieties and selling them at higher prices.”
Yap said a common practice by unscrupulous traders is to repack NFA rice as commercial rice or mix it with a higher variety and sell it at a higher price.
“We are thus calling on the public to report to proper authorities if the NFA rice being sold in their markets has not been repackaged,” Yap said.
The Department of Agriculture will also set up a Rice Action Center to monitor the status of rice supply and prices, he said.
He added that NFA Isabela provincial manager Alfredo Paguila and regional director Danilo Pastrana had submitted letters of temporary leave pending completion of an inquiry into an alleged rice scam in the province.
Adequate supply
Yap also assured the public of an adequate rice supply in the market amid projected bumper rice harvests and adequate import volumes.
For the wet season alone, the Department of Agriculture will expand areas planted to rice to 2.54 million hectares to sustain record-high rice yields. These are expected to yield some 10 million metric tons of rice, before milling, in the second half of the year.
For the first half of 2008, Yap has projected that production may reach a high of seven million metric tons.
Philippine rice production has actually been increasing steadily in recent years.
But Yap said that because of unabated population growth the government could not resolve food security concerns overnight.
He said this was why the government had been importing rice from Vietnam and the United States to stabilize the domestic supply.
NBI probe
The agriculture secretary said he had tapped the National Bureau of Investigation (NBI) to look into all rice import agreements since he was reappointed to the post in October 2006.
He said the NBI probe would “give us a clear picture of who are really involved in the rice business: who has been given a permit, what volumes, when these arrived, where these were stored, and how these were disposed.”
He added that the probe would also help the Department of Agriculture facilitate its re-accreditation process for all NFA grains traders and millers and find out who were still qualified to have their licenses renewed.
Yap said that should the NBI find clear proof that his father-in-law Jimmy Gaw was not involved in rice trading, Senate Minority leader Aquilino Pimentel Jr. “should be gracious enough, as a statesman and as a respected politician of our country, to offer apologies to my father-in-law.”
He said his father-in-law started out as a small businessman with a small textile shop on Soler Street in Manila, who was later able to put up the Uniwide Warehouse Club.
“Even my father is not involved in the rice trading business. I’ve always had a rule—no members of my family or even extended family are allowed to do business in any government agencies I am involved in,” he said.
Politicizing rice issue
Yap said both the public and the lawmakers should focus more on the real state of Philippine agriculture and the measures that could be implemented to increase local rice production.
He said he was saddened that some quarters had sought to politicize the rice issue and fan public misperceptions on the actual rice supply in the country.
Malacañang has asked the Presidential Anti-Smuggling Group (PASG) to help authorities in going after rice hoarders.
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