‘Government has no money for P10-billion rice fund’

Published by rudy Date posted on April 10, 2019

By Cai U. Ordinario & Jasper Emmanuel Y. Arcalas, BusinessMirror, Apr 10, 2019

FARMERS may have to wait until the third quarter at the earliest to benefit from a fund that will consist of tariffs from rice imports, according to the National Economic and Development Authority (Neda).

Neda Regional Development Office Assistant Secretary Mercedita A. Sombilla told the BusinessMirror in an interview that currently, no funds are available for the Rice Competitiveness Enhancement Fund (RCEF).

Sombilla said an allocation of P5 billion for the RCEF was made in 2018. However, when the rice trade liberalization bill was not passed last year, the funds were channeled instead to the National Rice Program.

“I told the DBM [Department of Budget and Management], ‘so you still owe P10 billion in the RCEF not unless you’ll be able to talk with DA [Department of Agriculture] to give back the funds,’” she said. “It [RCEF] will only have funds probably by the third quarter when government savings are already available.” Sombilla said there was a debate over the P5-billion allocation made last year.

She said she insisted that allocating the amount to the national rice program is not the same as putting up the RCEF.

The Neda official said the funds may have already been allocated to various regions as money intended for the national rice program. This is part of the reason she knew the funds did not go to the RCEF.

If the funds have been used, Sombilla said the DA would be forced to “make do with whatever funds they have in 2019.” She admitted that at this point, she does not know how the DA will address the situation. “When the government was able to generate savings in 2018, the DBM set aside funds for the RCEF in the hope that the law will be passed. But the law was not passed but the funds were allocated. The DBM was acting in good faith, it just wasn’t clear on the rice program,” she said.

New fund pool

The national government is also mulling over the creation of a new fund pool that farmers can access and financed from interest payments from the rice fund, according to the Neda.

This is something that is being studied, Sombilla said, since the interest income and repayments from the credit to be obtained from farmers do not automatically accrue by the end of the year.

“We’re still working on it, that’s why we did not push the credit so much. The only thing that I really fought for in terms of credit was to make it [interest] very, very minimal. If it’s possible, [the interest should be] even lower than ACPC [Agricultural Credit Policy Council] so that farmers can access it,” Sombilla said.

Under the rice trade liberalization law, farmers and cooperatives may access a P1-billion expanded credit facility under the RCEF, a revolving fund. It will offer loans at preferential rates.

This is in lieu of the low access farmers and cooperatives have on agriculture credit offered by the banking sector. This despite a law that requires banks to allot a portion of their credit facilities to the agriculture sector.

Farmers’ dismay

The Federation of Free Farmers Inc. (FFF) expressed dismay over the apparent lack of source for the P10-billion RCEF.

FFF National Manager Raul Q. Montemayor said the confusion among government officials over the P10-billion RCEF shows that “as early as now” they are “already shortchanging the farmers.”

“If the P5 billion was for RCEF, how could [the DA] use the money when there were no implementing guidelines yet for the RCEF?” Montemayor told the BusinessMirror.

“If it was for other support programs, the [rice trade liberalization] law says RCEF will be over and above regular program budgets,” he added.

Montemayor said the RCEF should not come from government savings as it is “over and above regular budgets.”

“If they cannot even agree with each other, that’s disappointing. And yet they kept telling farmers not to worry because there would be the RCEF to assist them,” he said.

Montemayor, who is also the Philippine Council for Agriculture and Fisheries Food Staples Committee chairman, said the RCEF should be released immediately to cushion the anticipated detrimental impact of liberalization on the rice sector.

“Plus, the support programs will take time before they take firm root,” he said.

“In fact, the RCEF should have been extended to farmers when the government decided already not to extend the quantitative restriction. They should have started early the adjustment program. Even if the money was made available now, it is arguably late already,” he added.

Montemayor also noted that there is no “clear statement” under the IRR that the RCEF credit allocation would be a “revolving” fund. He explained that in previous IRR discussions, representatives of the DBM “maintained that any collection and interest earned from the credit fund will revert back to the general fund.”

“This is because there is no explicit statement in the law regarding this, unlike in the law that created the Agricultural Competitiveness Enhancement Fund,” he said. “What will now stop the DBM from enforcing its own interpretation [of the law] in the future?” he added.

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