Agriculture Reference
In-Depth Information
7
Options for National Food Authority Reforms
in the Philippines
RAMON L. CLARETE
The National Food Authority is one of the most enduring parastatals in the
Philippines. Its responsibility is to ensure food security in staple cereals during
natural and non-natural calamities and to stabilize the supply and prices of
staple cereals at the farmgate and consumer levels. There had been efforts to
reform NFA that included privatization of its trading functions, and they suc-
ceeded briefly in 1985. However, the agency and its stakeholders managed to
reverse those reforms and bring the old policies back. Thus, the reforms remain
to be carried out, and the urgency to implement such reforms has increased as
the agency is incurring high costs for services that may be provided differently,
more effectively, and more economically.
This chapter discusses the mandate of NFA and analyzes the performance
and costs of its operations. Based on this analysis, it identifies elements of an
improved food security program and presents options for reforms.
NFA's Changing Mandate
Public intervention in the Philippine's foodgrain markets dates as far back as
the early 1960s, when two public agencies were in operation: RCA, a regula-
tory agency, and RICOB, a government-owned and operated grain-trading
company. In 1972, by virtue of Presidential Decree 4 (PD 4), the government
created NGA, which combined regulatory and trading functions of RCA and
RICOB. Faced with a rice supply crisis in the world market in 1981, a shortage
of domestic supply of white corn (a substitute for rice), and high retail prices
of rice and corn, the government resorted to price ceiling and rice rationing to
defend the ceiling. This led to NGA becoming NFA and covering nongrain food
items, the prices of which also needed to be stabilized and subsidized.
The mandate, functions, and powers of NFA are designed to support this
governmental thrust for rice self-sufficiency.
1
The NFA helps sustain the pro-
1. Attaining self-sufficiency continues to be one of the main thrusts of the Philippine food
policy, which is reflected in its programs (
Masagana 99
and
Masaganang Maison
) aimed at in-
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