Rice reforms cut NFA losses in 2021

State-run National Food Authority (NFA) managed to slash its losses last year following its mandated reforms under the the rice tariffication law (RTL), the Department of Finance (DOF) said.

In a report to Finance Secretary G. Carlos Dominguez III, the grains agency said that RTL enabled NFA to cut its net loss to P9.6 billion from January to December last year. The amount is 37.8 percent lower compared with P15.44 billion in 2020.

However, the net loss does not include the NFA’s subsidy support from the national government (NG) of P30.65 billion in 2020 and P7.46 billion in 2021.

Under the RTL or Republic Act (RA) No. 11203, the NFA’s mandate has been limited to providing emergency buffer rice stock to be sourced 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,” Finance Undersecretary Antonette Tionko.

The DOF and the Department of Budget and Management (DBM) provided the necessary support to facilitate NFA’s financial restructuring.

As a result, the NFA was able to gradually reduce its outstanding borrowings and financial charges, Tionko added.

Finance Assistant Secretary Soledad Emilia Cruz said NFA’s lower procurement volumes led to a reduction in operating costs and the organizational restructuring of the NFA, resulting in billions of pesos in savings for the government.

Cruz said that consistent with its mandate of providing the necessary buffer stocks for calamities and other emergencies, the NFA took part in the government’s Covid-19 response efforts by distributing to NG agencies and local government units (LGUs) about 1.76 million bags of rice in 2021 and 5.79 million bags in 2020.

Earlier, Dominguez said that before the RTL was passed in 2019, the NFA, which regulated all rice imports and was the chief importer of the grain in the country, received an average of P11 billion a year in tax subsidies from 2005 to 2018.

A complete reversal of this massive annual subsidy is the government’s earnings of P46.6 billion in rice import tariffs during the first three years alone of the RTL’s implementation.

Such import tariffs collected beginning March 5, 2019, went to the annual P10-billion Rice Competitiveness Enhancement (RCEF), which is used to finance programs that will sharpen the competitiveness of palay growers by way of 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.