The National Food Authority will continue to incur losses if the government will not provide the agency sufficient funds for its operational costs to subsidize the price of palay and rice.

This was pointed out by NFA Administrator Gregorio Tan Jr. in a statement even as the NFA has been performing the mandates of food security and supply and price stabilization in more than 33 years.

Tan, however, said that whatever losses NFA incurs in its day-to-day operations are gains for the rice farmers who continue to enjoy having a ready market at a reasonable price for their palay and the consumers who have continuous access to quality but low-priced NFA rice.

He said that while the NFA's subsidy allocation had continuously decreased for the past 10 years, it was also required to pay a 50 percent tariff on its rice imports since 2002, causing the agency to further bleed financially. About 86 percent of NFA's losses in the past three years went to tariff duties (68 percent) and interest cost (16 percent) of borrowings from financial institutions to pay for the tariff.

People expect the NFA to earn income as a government corporation, but Tan said that the nature of NFA's operations is just like other social-oriented agencies such as the Department of Social Welfare and Development.

To stabilize the grains market, the NFA buys high (now up to P10.50 per kilogram of palay) when traders offer much lower prices at the farmgate to help the farmers get a commensurate income from their produce. It also sells NFA rice at P18 per kilo (well-milled) compared to P22 to P24 per kilo of same variety commercial rice.

No corporation will ever implement this marketing strategy if its main objective is to profit from its operations, Tan said.*

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