NFA failed to meet rice buffer requirement in 2022 —COA

The National Food Authority (NFA) has failed to meet the optimum level of national rice buffer stock requirement of 300,000 metric tons at any given time in 2022, according to the Commission on Audit's (COA) annual report. 

COA said that the rice buffer for the entire year of 2022 only ranged from around 111,000 to 182,000 metric tons.

The number of NFA buying stations and mobile procurement teams also significantly decreased from 598 in 2020 to 232 in 2022 due to the NFA restructuring program pursuant to RA No. 11203 or Rice Tariffication Law, according to COA.

The state auditor noted that's despite the full receipt of the P7 billion subsidy from the national government.

COA added that the NFA posted a shortfall of 177,349 MT, or 36.95 percent, of the targeted palay procurement of 480,000 MT and had inadequate information dissemination of their palay procurement program.

“[A] review of the 2022 reports of the NFA on its Annual Accomplishment and the Budget and Financial Accountability showed that, despite NFA’s full receipt of the P7.000 billion government subsidy, only P5.750 billion was disbursed for the 302,651 MT of palay procured or 63.05 percent of the targeted 480,000 MT of palay for 2022,” COA said.

“The inability to maintain the optimum level of national rice buffer stocking requirement of 300,000 MT at any given time pursuant to NFA Council Resolution No. 999-2021-B dated February 16, 2021, poses risk to the country’s food security in cases of calamity and emergency situations, or non-sustenance of the disaster relief programs of the government during natural or man-made calamities. Likewise, it might result in the shortage of rice supply and higher prices of commercial rice in the market,” COA added.

GMA News Online has reached out to NFA for comment, but it has yet to reply as of posting time.

Low absorption rate

COA attributed the shortfall of the targeted palay procurement to low absorption rate of palay by NFA caused by, but not limited to, the following:

• Higher farm gate price of palay as compared to NFA’s buying price of P19.00 per kilogram
• Occurrence of strong typhoons in major palay production areas; and
• Private traders intensified procurement strategies by offering more incentives such as free delivery, consignment, advance payment, and free use of postharvest facilities.

“The low absorption rate of the NFA on local palay procurement in 2022 could be attributed to inadequate information dissemination, especially in the top three rice producing Regions, i.e., Central Luzon, Cagayan Valley, and Western Visayas, which have the highest number of palay production in the country in 2022 with 3.617 million MT, 2.928 million MT, and 2.322 million MT, respectively,” COA said.

The NFA, COA said, only procured 36,877 MT in Central Luzon, 125,496 MT in Cagayan Valley, and 20,550 MT in Western Visayas, or equivalent to 2.06 percent of the total production of the top three rice-producing regions.

The state auditor also found that NFA procured a total of 257,896 bags from only nine out of the 81 Provinces that participated in the Palay Marketing Assistance Program for Legislators and Local Government Units (PALLGU) in 2022.

These nine provinces include:

• Ilocos Sur
• Isabela
• Tarlac
• Laguna
• Occidental Mindoro
• Quezon
• Capiz
• Iloilo and
• North Cotabato

“The relatively low absorption rate of the NFA on local palay procurement is an indication that farmers, especially those in surplus palay producing areas, are not aware of the NFA’s palay procurement activities and program,” COA said.

“Had there been an intensified information dissemination, more farmers could have sold their harvests to the NFA through the mobile procurement teams in their localities at a higher price than the prevailing farmgate price without incurring additional delivery expenses,” COA added.

In addition, COA said the deployment of adequate number of mobile palay procurement teams during harvest season should address the shortfall in palay procurement due to the decrease in the number of NFA buying stations “as this program is more convenient and economical to farmers, especially those in far-flung areas.”

COA's recommendation

The state auditor made the following recommendations to ensure that the optimum level of national rice buffer stock requirement of 300,000 MT is maintained at any given time:

• Intensifying the information dissemination on NFA palay procurement activities in the producing regions at the start of cropping season;
• Strengthening the NFA’s campaign on PALLGU through meetings with the legislators and local chief executives to discuss the benefits thereof to their farmer-constituents to encourage them to participate in the program;
• Increasing the number of mobile procurement teams deploye in areas where harvesting is in progress.
• Providing assistance and additional incentives to farmers to encourage them to sell their produce to the NFA, among others.

COA said NFA agreed to such recommendations and “committed to continuously exert all efforts possible to be able to sufficiently maintain the required 300,000 MT government rice buffer stock to ensure the country's food security concerns.” —VAL, GMA Integrated News