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NFA defends debt as part of food security mandate

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rice NFA
PHILSTAR

THE National Food Authority (NFA) defended its total debt of P140.5 billion by end-2018 as the “cost of government’s commitment and policy to make rice available, affordable and accessible to the poor and marginalized sectors, and to stabilize palay and rice supply and prices at the farm and consumer levels.”

In a statement released on Friday, the NFA said it has been paying an average of P6 billion every year for its debts, which stood at a high of P165.6 billion in 2010.

“Because NFA exercises a social responsibility function of government, the agency’s viability or efficiency should not be assessed based on whether it profits or loses from its operations,” it said.

“‘Buy high, sell low’ is a policy of the government to ensure food security and stabilize the supply and price of rice, which are the mandates of the NFA. Although the NFA is a government corporation, this policy makes it impossible for the agency to profit from its mandated activities,” it added.

The NFA said it kept taking out loans since 1973 to fund its operations and fulfill its mandate of making rice accessible and affordable by selling it to the public at a cheaper price.

Its financial records reflect loans worth P459.8 million made from 1973 to 1985, P4.9 billion from 1986 to 1991, and P5.7 billion from 1992 to 1998. No loans were made from 1998 to 2001 and from 2010 to the present. The administration of former President Gloria M. Arroyo took out the most loans from 2001 to 2010 for a total of P165.6 billion.




According to the release, the NFA had been spending an average of P6 billion annually to pay off its “legacy” debts, which is 200% more than the agency’s operational expenses.

“The NFA’s debts ballooned to as high as P165.6 billion in 2010. But prudent financial management has cut it down to P140.5 billion by end of 2018. NFA’s fulfillment of its mandate is also influenced by the priorities and direction given by the incumbent government administration,” it said.

The agency also flagged another problem, which is its low subsidy from the government at an average of P4.25 billion annually. It noted this has gone as low as zero in some years. “It was only in 2018 and 2019 that NFA was given a higher subsidy at P7 billion, respectively, solely for palay buying,” it said.

For the first two months of 2019, the NFA bought a total of 232,447 bags of palay, a huge increase from the 10,960 bags purchased in the same period last year.

The NFA targets to purchase at least 7,780,000 bags of palay from local farmers during the year.

“With the implementation of the Rice Trade Liberalization Law signed by the President [Rodrigo R. Duterte] last Feb. 14, NFA is expected to have a higher market participation now in palay procurement as farmers will also take advantage of the bigger incentives offered by the government,” NFA Officer-in-Charge Administrator Tomas R. Escarez was quoted as saying in a statement released earlier this week.

“Buying palay at a high support price and distributing rice at a low, uniform price across the country are not intended for profit but to operationalize the government’s basic social responsibility of food security and stabilization,” the NFA said. — Denise A. Valdez

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