Speaker says subsidized price increase ‘premature’

Gloria plans pullout of NFA rice from public markets

By Sherwin C. Olaes

04/11/2008

In a suprise move, President Arroyo yesterday disclosed plans of removing the National Food Authority (NFA) rice from the public markets, a move which is expected to create more problems for the people who buy the government-subsidized rice.

Speaker Prospero Nograles, reacting to the government’s announcement of a probable price increase in the price of the subsidized rice, said government must first exhaust all available options to cushion the spiralling prices of rice and other basic commodities, saying raising the price of rice is “bad timing.”

The government should also declare a state of calamity covering the entire country to allow local governments to immediately address the worsening rice crisis after the President said yesterday that the NFA has been ordered to study the pullout of state-subsidized rice from public markets, the United Opposition (UNO) said yesterday.

UNO president and Makati Mayor Jejomar Binay

said the declaration of a state of calamity will allow the release of calamity funds that would enable local governments to purchase and distribute rice to the “poorest of the poor” in their localities.

President Arroyo admitted yesterday the connivance between NFA officials and unscrupulous traders in cornering high-quality NFA rice, which are then mixed with expensive commercial varieties of the grain.

NFA rice sells at P18.25 per kilo compared to P36 to P40 per kilo for high-grade commercial rice.

In her speech in Bangued town, Abra, Mrs. Arroyo said NFA is considering to deliver rice directly to depressed communities nationwide with the cooperation of the LGUs and the Church.

Mrs. Arroyo said that with such a set-up, the conspiracy between some NFA officials and traders to mix NFA rice to commercial rice and sell for a higher price would be prevented.

“You see the NFA rice and commercial rice are almost the same in quality so what happens is we have caught several, sad to say, NFA officials conniving with traders and they divert NFA rice, which is supposed to be for the poor, to (be mixed with) commercial rice,” Mrs. Arroyo said.

“You can’t tell the difference because they are almost the same. We are toying with the idea of stopping the release of NFA rice through the public markets. These will be released (directly to) depressed communities,” she said.

“Because the price differential of the subsidized and commercial rice has become too big, the temptation to divert has increased as well and that’s why we are seeking the help of the LGUs and the church-based communities to help with that identification where to put the cheaper rice,” she added.

Malacañang, meanwhile, through Secretary to Cabinet Ricardo Saludo, confirmed the NFA’s plan to increase the selling price of subsidized rice as floated the other day by NFA administrator Jessup Navarro.

Navarro said an increase in the price of NFA rice is necessary to help increase farmers’ income and at the same time reduce the burden on the government’s finances through subsidies.

“The Cabinet will consider NFA’s proposal in light of our people’s needs. What they can afford and in the cost of rice subsidies, which could reach P50 billion a year,” Saludo said.

Press Secretary and Acting Executive Secretary Ignacio Bunye said the said plan is still “under study” and would still undergo a series of consultations.

The NFA said it is considering an increase in the price of rice that it is selling for P18.25 because of the agency’s heavy losses.

Navarro said that last year, the NFA incurred a loss of P1.5 billion as it tried to keep the current NFA price.

Speaker Nograles, meanwhile, said the government must first exhaust all available options to cushion the spiraling prices of rice and other basic commodities before even thinking of increasing the price of NFA rice.

“People first before profits. Precisely, that’s why there is the NFA rice that should serve as a buffer for the people to have access to the staple food. I don’t think this (increase in price of NFA rice) is a wise idea when the poor are sweating under the scorching heat of the sun lining up just for two kilos of NFA rice,” Nograles said.

Nograles noted that even if there is enough commercial rice in the market, its prohibitive prices are forcing the masses to scamper for the low-priced NFA rice.

Nograles said that it is “bad timing” for the NFA to even float the idea of increasing the price of its rice at a time when the price of commercial varieties and most food products are getting out of control.

“The NFA should not operate for profit but to protect our people from profiteers. The National Food Authority was established to ensure a stable supply of rice at affordable prices. I don’t think the President will like the idea,” he said.

At the same time, Nograles cautioned government critics and militant groups, including those from the left and the extreme right, from exploiting the situation to inflict more harm to the economy in the pursuit of their various political interests.

The food problem is a global problem aggravated by the continuous hike in oil prices, the decline in world food production, rapid population growth and internal political distractions, Nograles said.

Earlier, another member of UNO, San Juan Mayor JV Ejercito said, “The cause of rice shortage is the misgovernance of the Arroyo regime.”

“This could have been avoided had they given priority to the agri industry. During President Erap’s time, the agri sector was the top priority since he wanted the people to have cheap food on their tables. The problem with GMA is that she doesn’t know how it is to be hungry. She has lived a life of royalty which is why she is not sensitive to the needs of the people,” Ejercito added.

A number of groups, among them the Kilusang Magbubukid ng Pilipinas has said that contrary to Malacañang’s claim that there is an actual rice supply crisis may be made a reason for Malacañang to increase the country’s rice stock through importation, where more money can be made on the side.

Critics have warned that the rice cartel or the Binondo 7 knows of this Palace plan and that is the reason its is hoarding and increasing its prices.

Importing more rice from other countries, some critics say will only make matters worse because there is no more rice supply in the world market available for export. More importantly a food security program based on imports is not food security at all and will only make the country more dependent on other countries.

Unofficial sources cited by the KMP say NFA’s analysis of the causes of the rice crisis are, among others, the abnormal weather conditions until the end of the 1st quarter this year. The condition will more likely result in stress of the standing palay crop, more especially during its booting stage which would result in low yields.

The registered growth in palay production is not enough to meet the combined effect of an increase in demand and the need to maintain the required buffer stock by July 1, the start of the traditional lean supply months of July to September of each year.

For 2008 per capita consumption of rice is estimated to increase by two kilos from 118-120 kilos per capita per year.

Also the reported tight global rice situation has been lately reported to worsen with the reported purchase of 1 million MT milled rice by China from Vietnam.

World market price of rice also remains volatile, increasing at significant levels.

The militant fisherfolk alliance Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas (Pamalakaya) yesterday dismissed the plan of the state-run National Food Authority (NFA) to hike the price of rice in the market a gentleman’s agreement with the rice cartel to justify the soaring prices of commercial rice in the market and compel the people to buy them other than the limited supply offered by the government food agency.

“The plan of NFA to hike the price of rice is like a national blackmail. It is a marching order from Malacañang because it does not want to offend the rice cartel be selling NFA rice which is P10 cheaper to the commercial rice sold by the rice cartel,” said Pamalakaya national chair Fernando Hicap.

“The game plan is to further increase the selling price of limited supply of NFA rice, so that it could go at par with the prices of commercial rice sold by the rice cartel. In that sense, and given the tight rice supply condition in the country, the people will be forced to buy commercial rice at a monopoly price pegged by the cartel,” Hicap added.

The Pamalakaya leader further said the plan of Malacañang to hike the price of NFA rice and level with the prevailing commercial prices of rice best represents the objective and agenda of rice cartel who wants to take advantage of the current rice problem by raising prices of rice, and therefore rake in super profits.

“Even in times of crisis, the rice cartel sees the condition as an occasion to further grip the people with higher prices and seize the opportunity for profiteering,” Hicap added.

Hicap said the rice cartel in the country operates like the oil cartel in the country and they get what they want because they control the commercial grains like rice and other food stuff.

“President Arroyo never gave any directive to all government agencies to break up or dismantle the rice cartel for obvious reason that the President and her top government officials are in cahoots with this rice syndicate,” Hicap added.

Hicap said Malacañang, the Department of Agriculture (DA)and the Department of Justice are all aware of the existence of powerful rice cartel responsible for the skyrocketting prices of commercial rice in the market.

“It is public knowledge that both the agriculture department and the Senate during its 1995 probe have identified the existence and operations of Binondo 7. But nothing has been done to curb their cartelized and syndicated operations,” Hicap said.

Citing the report of the Senate hearings and confirmation of top government officials, Pamalakaya said the Binondo 7 or Big Seven allegedly composed of Joaquin Go Soliman of Jomerco Trading, Pio Sy Lato of PNS Grains Center, Ramon Ang Syson of Family Native Supply, Gil Go of Jocardo Merchandizing, Leoncio Tan and Janet Tiu of Leoneco Merchandizing, Santos Sese of Manila Goodyear and Teofredo Co of Teofredo Trading controls 45 percent of total rice needs of Metro Manila. Charlie V. Manalo

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