Big rice mess, due to Alcala, Calayag

Agriculture Sec. Proceso Alcala is one of Noynoy Aquino’s Cabinet favorites. That’s because, as the President likes, Alcala reports solutions, not problems. But the boss is in for a big letdown soon. That’s when he finds out that Alcala has created a looming rice crisis – for which there are no quick solutions.

Signs of approaching storm are in sight. For one, Alcala has failed on his promise of Philippine rice self-sufficiency by last 2013. His excuse: the typhoons that hit rice-producing provinces. Predictable bad weather was precisely why agriculturists had cautioned Alcala in 2010 against over-ambition. He didn’t listen.

Another factor the rice experts cited against Alcala’s bold goal was government’s slowness to boost harvests. This too Alcala ignored. Instead of irrigation, seedling propagation, fertilizer subsidies, and palay driers, he used scant government funds to import rice.

The result is the present rice mess. Domestic prices doubled that in neighbor-countries in 2013, according to the Philippine Rice Institute. The steepest price surge came last June, ironically right after the April bumper harvest. Subsidized retailing by the National Food Authority (NFA), which Alcala chairs, soared to P33 a kilo from P22. It has since dipped to P27 a kilo, still higher than before.

Alcala and NFA administrator Orlan Calayag, blamed it all on a supposed cartel of rice hoarders-cum-smugglers. It did not compute. The NFA’s first import shipment for 2013 of 205,700 tons had then just arrived from Vietnam. Either there still wasn’t sufficient stock, or the NFA was too slow to distribute it. (Calayag, Alcala’s ex-congressional aide and U.S. citizen, has no training or experience in food logistics.) Besides, if the hoarders were also smuggling in the staple, then there would have been a flood in the market, thus dampening prices, to the benefit of consumers. Yet prices not only NFA but also commercial rice spiked to P45 a kilo then and till today.

At any rate, Alcala and Calayag neither identified nor indicted any supposed hoarder-smuggler, then or now. Recently Davidson Bangayan alias David Tan was exposed in a Senate inquiry as the “Goliath of rice smuggling.” Alcala and Calayag confirmed so. Yet they still have not charged him in court. Reports are that Bangayan is the head of a faction of cartelists that Alcala and Calayag are replacing with another group. NFA records show, in fact, that Bangayan headed the list of 19 importers given special NFA permits in 2011 and 2012.

Alcala must be fudging the figures. He says rice production rose while consumption fell. That’s not what NFA records infer. The food-security agency’s direct and special-permit rice imports have in fact been rising. NFA and private licensees’ total of 692,221 tons in 2012 swelled to 710,446 in 2013. For 2014 the NFA at first announced 800,000 tons of imports. In a stormy meeting of the NFA council last week, the import plan rose to one million tons.

Alcala and Calayag’s rising import volume mimics that of the hated past administration. Aquino alleges that the regime of Gloria Arroyo in 2005-2010 bloated rice imports at 1.8 – 2.4 million tons for the kickbacks. Alcala and Calayag’s 705,700-ton purchase of Vietnam rice in 2013 allegedly was overpriced by $100 a ton, for a kickback of P3.2 billion. A plunder suit against them alleges that a certain privateer “Buddy R.” brokered everything. Why an outsider was needed in a government-to-government deal between two rice agencies is a mystery.

Could there be bigger kickbacks in this year’s NFA imports? That leaves to be seen. What is perceptible, although Alcala and Calayag are trying to keep it secret, is their lack of legal basis to monopolize imports.

The two are forum shopping. Late last year Alcala asked the Dept. of Justice to support his line that the NFA has monopoly right to impose rice import permits. Supposedly that power comes from the Agricultural Imports Tariff Act of 1996 (R.A. 8178). But Justice Sec. Leila de Lima opined on Dec. 16, 2013, that it is not the only applicable law for rice imports. The 1994 General Agreement on Tariffs and Trade, an international treaty signed by the President and ratified by the Senate, forms part of the law of the land, she said. In that pact all member-states shall no longer monopolize food imports, or require permits for private importers starting 2005. The Philippines negotiated a seven-year reprieve, which expired in June 2012. Thus, de Lima said, the NFA must scrap all its “quantitative restrictions” and allow private imports under normal tariff, in this case 50 percent of the value of the rice import. Non-compliance could mean sanctions by the World Trade Organization, she warned. Indeed, other members could cut their imports of Philippine farm produce, like sugar, banana, and pineapple.

Alcala was unsatisfied. So Calayag on Jan. 9, 2014, sought similar support from the Office of the Government Corporate Counsel. No go, the OGCC said on Feb. 3, 2014. While the OGCC agreed that the NFA could monopolize and thus license rice importers, it cited a fatal flaw in the implementing memo of March 2013. The NFA had failed to have it published first in the newspapers, thus invalidating it under Supreme Court jurisprudence.

Meantime, on Jan. 21, 2014, Calayag sought de Lima’s reconsideration. He said that negotiations are ongoing with Thailand, Canada, and the United States to allow a WTO extension of NFA restrictions till July 2017.

It’s unclear if de Lima found out about Alcala and Calayag’s forum shopping. On Feb. 3, 2014, she elevated the matter for the President and the Cabinet economic cluster to decide.

If that meeting convenes to discuss issues openly, two points will be brought to the fore. One, the National Economic and Development Authority, headed by the President, has long decided, and the NFA agreed, that the latter lift all restrictions on rice imports by June 2012. Two, thenceforth the NFA shall focus on direct aid to farmers, and to stockpiling of 30 days’ rice buffer. More so since the ASEAN Economic Community starting 2015 shall limit rice import tariffs to 20 percent max.

Alcala and Calayag would be found to have left farmers unready for global competitiveness, and consumers unshielded from price spikes. –Jarius Bondoc (The Philippine Star)