The Federation of Free Farmers (FFF) advised the Department of Agriculture (DA) and the Philippine International Trading Corporation (PITC) to follow the Rice Tariffication Law (RTL) and abandon its plan to import 300,000 metric tons of rice. After conducting a bidding for the government-to-government purchase at the behest of the DA, the PITC decided to withhold the award of winning bids reportedly due to the lack of a budgetary cover from the Department of Budget and Management (DBM) to finance the importation. In a recent news report, the DBM was quoted as saying that there was no legal basis for the PITC importation and that funds could not be released without a formal instruction from President Duterte.
The FFF explained that the RTL, which was enacted in March 2019, removed the import monopoly of the National Food Authority (NFA), an agency under the DA. It also limited the agency to the maintenance of buffer stocks that had to be locally procured and could be released only to address calamities and emergencies. The private sector, in turn, was given the freedom to import unlimited volumes of rice. Proponents of the RTL had argued that private traders were more efficient and less graft-prone than government in ensuring the country’s rice supply.
The FFF added that despite the implied removal under the law of any form of government involvement in the rice business, government officials managed to insert a provision in the Implementing Rules and Regulations (IRR) of the RTL giving the PITC the option to import rice. However, Rule 6.4 of the IRR allows the PITC to undertake imports only “in the event of a rice supply shortage” and only upon the issuance of a formal directive from the President.
Raul Montemayor, FFF National Manager, supported DBM’s position that there was no legal basis for the planned PITC imports. “Secretary Dar has insisted time and again that we have enough rice. Therefore, there is no rice shortage and there is no reason why PITC should import rice. That is the law and Secretary Dar, who has repeatedly referred to the RTL as ‘a good law’, should be the first to follow it.”, said Montemayor.
Montemayor speculated that the real reason behind the DA’s push for PITC imports was the depletion of NFA stocks that were released for relief operations during the COVID-19 lockdown. NFA would then have limited capacity to stabilize prices during the lean months from July to September during which rice prices historically go up. The situation could be exacerbated by the recent uptick in prices of imported rice.
The FFF however explained that the depletion of NFA inventories was largely due to the mismanagement of the agency’s buffer stocks. “The RTL was very clear that buffer stocks should be kept in reserve and released only during calamities and emergencies. A provision in the IRR was inserted allowing for a roll-over system by which NFA could dispose of its old stocks and replenish them with new ones. The DA however went beyond the IRR’s intent by instructing the NFA in 2019 to ‘flood the market’ with cheap NFA rice even though there was no crisis and there was already a glut in imports.”, explained Montemayor.
The NFA then failed to replenish its inventory during the dry season harvest in early 2020 as buying prices of private traders increased and the NFA ignored proposals to adjust its Php 19 per kilo procurement price. When the COVID crisis came, the agency’s stocks were further depleted when it was forced to release large volumes for the relief operations of local government units.
“The DA, which oversees NFA operations, should have properly calibrated the releases of buffer stocks in accordance with the law, knowing that unforeseen calamities can suddenly arise and that it cannot replenish inventories when the harvest season ends. It also appears that the DA did not do enough to comply with its mandate under the law to maintain buffer stocks equivalent to at least 15 days consumption. Maybe it was relying on the PITC imports all along.”, said Montemayor.