Rice Importation Hurts Local Farmers, Costs NFA Billions in Losses


For this year, the Arroyo government would import 2.296 million metric tons (MT) of rice.

Based on the estimated NFA stock inventory as of July 1 this year, 929,337 MT are imported rice, accounting for 97.99 percent of the NFA stock.

The NFA targets to import 971,145 MT of rice from July to December. Meanwhile, the planned local palay (rice grain) procurement during the same period is only 51,238 MT.

Fines Cosico, NFA grains operations officer, said the NFA normally imports about ten percent of the country’s annual rice requirement and and imported rice supposedly constitutes only three percent of its buffer stock.

More expensive

In a primer titled “100% Rice Self-Sufficiency and Self-Reliance Equals Genuine Food Security,” the NFA Employees Association (NFA-EA) stated that from 1968 to 2008, the price of wholesale imported rice per MT was more expensive than domestic rice for 21 years out of the 48-year period.

In January this year, the price of imported rice per MT was US$409 or P16,769. It rose to US$1,091 per MT or P44,731 in April. The landed cost of imported rice is estimated at P67,096 ($1,604 at the April exchange rate of $1=P41.82) per MT during the same period. The landed cost takes into account freight cost, insurance, tariff, equalization fee, among others.

Meanwhile, the wholesale price of local rice in April is P30,000 ($717) per MT or less than half the landed cost of imported rice.

Even private traders are not interested in importing rice due to the high cost.


The NFA-EA also said, “Rice importation has greatly contributed to the NFA’s losses especially with the imposition of the rice import tariff.”

From 2002 to 2006, the NFA paid more than P20 billion ($389,787,565 at the 2006 average exchange rate of $1=P51.31) to the Bureau of Customs – Department of Finance. The tariff on rice was pegged at 50 percent.

On top of this tariff, the NFA also spends for transport, handling, stevedoring, and arraste services, warehousing, pest management, among others.

It is only in 2007 when the Arroyo government exempted the NFA from paying tariff on rice imports.

WTO commitment

Why does the government insist on importing rice?

Even the Department of Finance (DoF) said that losses of the NFA may reach P43.1 billion ($925,786,703 at the September 19 exchange rate of $1=P46.555) if the price of rice in the world market increases to more than US$1,000 per MT.

Cosico said the Arroyo government’s rice importation program is in compliance with its commitment to the World Trade Organization (WTO). Under the WTO’s minimum access volume (MAV), the country is obliged to import a certain volume of rice whether or not there is a supply shortage.

Cosico said the Arroyo government seems to be telling them to buy imported rice at any cost. On the other hand, local procurement remains very low.

Local procurement

The NFA buys local palay at low prices.

The NFA-EA revealed that from February 1999 to October 14, 2007, the NFA bought palay at only P10 ($0.216 at the 2007 average exchange rate of $1=P46.148) per kilogram even as the actual farmgate price then reached P11.21 ($0.24).

Since October 15, 2008, the price of palay increased by P1.50 ($0.03) per kilogram.

In April this year, Mrs. Gloria Macapagal-Arroyo increased the P0.50 incentive to farmers selling palay to the NFA to P5.50 per kilogram. Of the P17 ($0.365) per kilogram buying price of the NFA for clean and dry palay, farmers receive only P11.50 ($0.247) as cash payment and P5.50 ($0.118) as incentive.

Cosico said farmers who sell at least 50 kilograms are given P1,800 ($38.66) as subsidy for fertilizers.

In 2007, the NFA absorbed only 0.19 percent of the total local palay production of 16.237 million MT.

Not for poor farmers

Willy Marbella Kilusang Magbubukid ng Pilipinas (KMP-Philippine Peasant Movement) deputy secretary general said farm gate prices of palay remain low even as the cost of production increases.

Marbella said poor farmers cannot afford to sell their produce to the NFA and cannot avail of the subsidy on fertilizers. Landless peasants, he said, have to pay for land rent, interest payments for debts they incurred, and also have to shoulder all the expenses in production, said Marbella.

Cosico said that even with the NFA’s mobile procurement, poor farmers cannot sell their produce to the NFA. “Wala na rin silang maibenta… napunta na sa trader na pinagkautangan ng binhi at abono.” (They have nothing to sell…their produce goes to the trader from whom they loaned the seeds and fertilizers.)

Basic problems

Marbella said the Arroyo government should address the Filipino farmers’ basic problem of landlessness if it wants to resolve the rice crisis.

The KMP has been pushing for the passage of House Bill 3059 or the Genuine Agrarian Reform Bill filed by the late Anakpawis Representative Crispin Beltran.

Cosico who is also an officer of Agham (Science and Technology for the People) said the government must support local agriculture by providing continuous incentives and credit to farmers.

Marbella criticized the Arroyo government for various agriculture-related scams. “Ang dinadaya nila, 75 porsyento ng mamamayang Pilipino.” (They are cheating 75 percent of the Filipino people.)

She described as token the subsidies provided by the Arroyo government to farmers. “The Arroyo government has no decent policy to strengthen local agriculture,” said Cosico.

She also called for the mechanization of agriculture. Today, farmers pay for the use of irrigation facilities and other services, said Cosico.

Moreover, both the KMP and the NFA-EA are calling for the passage of House Bill 3958 or the Rice Industry Reform Act sponsored by Bayan Muna Representative Satur Ocampo.

The bill aims to strengthen the NFA’s domestic procurement capability, among others.

Cosico concluded that the country’s food security must be met through local procurement and enhancing local agricultural production. (Bulatlat.com)

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