Truth About RTL! (5th of a Series) NFA Rice Sale Controversy Result of Poorly Studied RTL

The Senate Version of the Rice Tariffication Bill, which was signed into law six years ago, is a perfect example of a legislation crafted in the comforts of an air-conditioned room which failed to consider realities on the ground.
In fact, the current controversy over the alleged connivance between officials of the National Food Authority (NFA) in the sale of NFA stocks is a result of the flawed Rice Tariffication Law.
Here is why and how it happened.
The Senate Version of the RTL took out government’s regulatory and supervisory functions over the Rice industry and emasculated the NFA turning it into a buffer stocking agency for rice.
The principal author of the Senate Version, Senator Cynthia Villar originally wanted to abolish the NFA altogether citing its poor performance and issues of corruption but she was prevailed upon by the Economic Managers to keep NFA as a buffer stocking agency.
What were the salient features of the Implementing Rules and Regulations of the RTL Senate Version?
1. NFA could not import rice for its buffer stocks and should exclusively buy from the farmers;
2. NFA could only sell its stocks to government agencies during calamity and could not sell rice commercially, thus effectively ending the subsidized NFA Rice Program which offered P27 per kilo to the poor;
3. NFA is allowed to dispose of aging stocks “to prevent deterioration” but the RTL says it could only sell to government agencies and, when agencies could not absorb the huge volume of “aging” NFA rice, to private traders.
This was the window of corruption that the RTL opened because by prohibiting NFA from selling the stocks commercially in the market, it justified the transactions between the agency and the private traders.
The latest controversy led to the suspension of over 100 NFA officials and employees because of allegations that NFA connived with private traders for the sale of aging stocks at very low prices.
While the Ombudsman is still investigating the controversy, this problem was really bound to happen because the Senate Version of the RTL opened a window of opportunity for corruption.
There were other windows of corruption opened by the RTL simply because the framers of the Senate Version did not listen to the inputs provided by stakeholders and discarded the Congress Version which was a product of nationwide consultations.
1. Under-valuation of imported rice. Since tariff for imported rice was determined by its classification, namely 25% Broken, 15% Broken and 5% Broken or Premium Rice, Premium Rice could be declared as 25% for lower tariff and since NFA was stripped of the power to classify the grains, this resulted in rampant undervaluation and government lost billions of losses in uncollected tariff;
2. Smuggling, Price Manipulation, Hoarding. Since big-time Rice Traders and Importers were no longer under the supervisory and regulatory powers of government, technical smuggling through the use of recycled import documents and the manipulation of the pricing of rice in the market. Without NFA, traders dictated the buying price of farmers produce and hoarded rice stocks to influence market pricing.
From a market price of P38 per kilo in 2018, rice is now being sold at P60 per kilo and from a sufficiency rate of 95.5% in 2017, the country is now importing 30% of the country’s rice supply requirement every year.
All because the framers of the RTL Senate Version deliberately failed to consider realities on the ground and crafted a law inside the comforts of air-conditioned rooms.
#GovernanceIsCommonSense!