Agriculture Reference
In-Depth Information
In 1998, by virtue of a government executive order, the
Kadiwa
stores were
re-introduced, which further reversed the reforms in 1985. This time these
stores were called “ERAP” stores after then-President Joseph Estrada. Unlike
those in the
Kadiwa
program, ERAP stores were operated by private entrepre-
neurs, who bought from NFA the basic household necessities that they distrib-
uted to the poor. There was another type of ERAP store called the “ERAP-
Palengke ng Bayan,
” which was typically located within the premises of a
market. In 1998, NFA operated more than 1,500 ERAP stores nationwide. It
spent almost Php 10 million in 1998 to purchase nonrice food items.
Analysis of NFA's Performance
According to official documents, the agency has the following four specific
functions: domestic procurement, imports, buffer stocking, and public distri-
bution of rice. In this section, I examine the implementation mechanism, costs,
and effects of these four interventions on the markets.
Domestic Procurement
A quick review of the data on NFA's procurement reveals three facts. First, pub-
lic procurement is concentrated in the areas of the priority production programs
of the Department of Agriculture only. For instance, up to 65 percent of NFA's
procurement comes from the provinces classified as surplus; and the number
reaches 85 percent if the procurement areas are defined by the priority areas of
the Department of Agriculture. The remaining 15 percent is from several deficit
areas that produce less than 2,000 tons annually, where private milling capacity
is either limited or, where available, the facilities are not within NFA specifica-
tions. Second, the NFA's
palay
procurement as a percentage of total production
has consistently declined from more than 7 percent in the late 1980s to less than
1 percent in 1996-98, suggesting that the program is becoming increasingly in-
effective (Table 7.2). Finally, an Asian Development Bank study estimated that
only 3 percent of the total number of rice farmers in the country directly benefits
from the agency's procurement, and most likely, these are farmers whose farms
are located within a relatively short radius of NFA's warehouses (ADB 1999).
Imports
For more than 25 years, NFA has enjoyed monopoly control over the import of
rice into the Philippines.
3
The total quantity of rice imports depends largely on
the levels of carryover stocks and production. From 1986 to 1998, except for
3 years when the country exported rice, imports, on average, have accounted
3. The private sector has been allowed to participate in rice imports, but only for small vol-
umes of fancy varieties, varieties for experimental use as planting materials, and for relatively small
volumes required under the country's minimum access volume commitment to WTO.
