THE DEPARTMENT of Agriculture (DA) rejected blame for the rice crisis of 2018, saying that the National Food Authority’s (NFA) inventory dropped because of its governing council’s refusal to import foreign grain.
In a social media post, Agriculture Secretary Emmanuel F. Piñol said the NFA’s stores of imported rice first started showing signs of depletion in October 2017, at a time when the DA was not in control of the agency. The NFA had asked the NFA Council for permission to import, but was refused.
The drawdown in inventory continued. By February 2018, Mr. Piñol said, the agency started making less imported rice available to the market.
The NFA rice, sold at retail for a subsidized price of about P27, is typically patronized by low-income families, and shortages of the low-cost staple strengthened the pricing power of commercial traders, causing inflation to spike in 2018.
The inflation basket of goods in poor countries is usually heavily weighted towards food, making Philippine inflation especially sensitive to swings in rice prices.
“As early as October of 2017, then NFA Administrator Jason (Laureano Y.) Aquino asked the NFA Council to allow the agency to import rice because it was running low. This was, however, opposed by a majority of the members of the Council,” Mr. Piñol said.
He said despite the record domestic harvest in 2017 of 19.28 million metric tons (MMT), domestic output fell short of meeting demand by about 7%, and there was a need to import rice during lean months from July to September.
He said in April 2018, President Rodrigo R. Duterte ordered the NFA Council to allow imports, but too late to contain rampant speculation by traders who had anticipated the shortfall.
“Nag-speculate (traders speculated) and manipulated the prices,” he told BusinessWorld in a text message.
“In July, reports of increasing rice prices came out and by August, Zamboanga City declared a ‘State of Calamity’ as rice prices soared to as high as P70 to P80 per kilo. When I heard of these reports, I called up Executive Secretary Salvador (C.) Medialdea and volunteered to help defuse the Zamboanga City rice crisis. I told him that while the NFA rice supply issue does not involve the DA, as Secretary of Agriculture, I had to do something about it,” he said.
The NFA was then transferred along with other agencies to the DA, making the Agriculture Secretary the Chairman of the NFA Council. The suggested retail price (SRP) strategy was then implemented and rice imports were approved.
“Prices of rice stabilized and the issue of the ‘rice crisis’ died down,” he said. He added that since the transfer of NFA, its buffer stock has grown sufficient to meet the country’s needs until the end of August.
The NFA, which switched exclusively to domestic procurement since the enactment of the Rice Tariffication Law in March, said it purchased 5.412 million bags of palay, the unmilled form in which farmers sell their crop to dealers, in the first half.
The price of rice has been generally in a downward trend in the past few months as traders press farmers for lower prices amid the threat of competition from more freely-imported foreign grain.
The Philippine Statistics Authority (PSA) said during the fourth week of June, the average wholesale price of well-milled rice fell 0.1% week-on-week to P39.30. At retail, it fell 0.2% to P42.92 per kg.
The wholesale price of regular-milled rice fell 0.2% week-on-week to P35.39 during the period. At retail, the price decreased 0.3% to P38.56. — Vincent Mariel P. Galang
