DOF: Grains agency cuts losses due to rice tariff law

State-run National Food Authority (NFA) managed to cut its net loss to P9.6 billion in 2021 after its powers and functions in rice importation and most of its regulatory functions were stripped away by the Rice Tariffication Law (RTL).

The Department of Finance’s (DOF) Corporate Affairs Group reported to Finance Secretary Carlos G. Dominguez III that NFA’s net loss last year was down by 37.8 percent from P15.44 billion in 2020.

The figure does not include the national government’s (NG) subsidy support to NFA amounting to P30.65 billion and P7.46 billion in 2020 and 2021, respectively.

Under Republic Act 11203, NFA was reduced to a rice buffer stocking agency which sources its stocks exclusively from local farmers.

“The targeted use of its buffer stock as mandated by law meant lower procurement volumes, which can be funded solely out of subsidies from the NG. Thus, it no longer needed to borrow funds to augment the financial resources needed for procurement activities,” said the report of the DOF-CAG headed by Undersecretary Antonette Tionko.

As a result, the NFA gradually slashed its outstanding borrowings and financial charges.

Finance Assistant Secretary Soledad Emilia Cruz said billions were saved by the government on the back of the NFA’s organizational restructuring and its operating costs were reduced because of its lower procurement volumes.

Meanwhile, Cruz said NFA also distributed about 1.76 million bags of rice in 2021 and 5.79 million bags in 2020 to NG agencies and local government units in line with its mandate to provide necessary buffer stocks for calamites and other emergencies.

Before RTL was passed in 2019, the NFA used to regulate all rice imports and was the chief importer of the grain in the country, Dominguez earlier said. It used to receive an average of P11 billion a year in tax subsidies from 2005 to 2018.

So far, the government has already earned P46.6 billion in rice import tariffs during the first three years of the RTL’s implementation.

These tariffs went to the annual  P10-billion Rice Competitiveness Enhancement, which is used to finance programs that will sharpen the competitiveness of palay growers by providing them with easy access to fertilizer, farm machinery and equipment, high-yield seeds and cheap credit; and offering them skills training programs on farm mechanization and modern farming techniques.

The DOF said the opening of the rice market following the RTL led to lowering of rice prices and dislodged the staple as the main contributor to country’s overall inflation rate.