DSWD to take over rice subsidy for poor

MANILA, Philippines – The National Food Authority (NFA), the state-owned grains agency, will no longer provide subsidized rice to the poor as this role would now be transferred to the Department of Social Welfare and Development (DSWD).

The move is part of efforts to reform the NFA.

Budget and Management Secretary Florencio Abad said that the provision of subsidized rice to poor consumers has now been proposed to be transferred to the DSWD through its conditional cash transfer program.

Abad said the DSWD, with its National Household Targeting System, is better positioned to identify and directly reach indigent households.

Citing data from the World Bank, Abad said that through the NFA route, subsidized rice do not reach enough poor households.

“The World Bank has said only about 31 percent of NFA rice went to the poorest 20 percent of households, and that it cost NFA as much as P8.60 to deliver P1 of cheap rice,” Abad said.

Furthermore, as part of the proposed reforms, the regulation of the trade of staples, especially rice, will be transferred to the Department of Agriculture (DA).

Abad said the DA is the more appropriate institution to regulate rice, and that it is folly to think that NFA – a virtual monopoly – could function both as a regulator and a trader.

The transfer of these functions, Abad said, will allow the NFA to focus on its core food security functions such as rice procurement from poor farmers and buffer stock management.

Along this line, the NFA will be conducting domestic rice procurement via charter of small farmers, and within an inventory of 15 days during harvest season and 30 days during lean months, Abad said.

NFA, in its buffer stock management function, will serve as a “buyer of last resort.”

“Furthermore, as the President has directed, the private sector will be allowed to play a great role in the importation of rice. Discussions are ongoing as to the reduction of the current 40 percent tariff on rice,” Abad said.

The government has been looking for ways to reform the NFA as the agency has incurred debts amounting to P171 billion as of end-2009, from only roughly P43 billion in 2003. –Iris C. Gonzales (The Philippine Star)