Press Release
September 6, 2010

Reorganize the National Food Authority - Legarda

Senator Loren Legarda said there is an urgent need to start reorganizing the National Food Authority especially following the Department of Budget and Management's call for reforms in all government controlled and owned corporations which include the National Food Authority during this morning's briefing by the Development Budget Coordinating Committee.

Legarda asserted that "Many of the anomalies associated with the NFA operations may be traced to its charter which mandates it to exercise both proprietary and regulatory roles. The NFA is participating in a market that it also regulates."

"I filed Senate Bill No. 2347 to address this issue of conflict of interest through the reorganization of the NFA into the National Strategic Food Reserve Corporation, which will provide the government with a service arm for the maintenance of strategic reserves in basic food commodities."

"Regulatory functions of the NFA shall be reverted to the Department of Agriculture, while management of food subsidies for the poor shall be transferred to the Department of Social Welfare and Development, which is better equipped to implement a focused program. "These changes shall minimize the redundancies prevalent in the previous NFA administration, heighten the focus of government efforts on essential public services, and reduce opportunities for graft and corruption."

Legarda said the present rice policy is potentially very lucrative for well-connected rice traders and political insiders, creating opportunities for graft and corruption, hidden in the following:

1. Unnecessarily high commissions paid to import-brokers.
2. Bribes paid by rice traders and/or wasteful lobbying to obtain import rights.
3. Government-to-government contracts whereby the Philippine government commits to buy low-quality rice at high market prices, with some parties pocketing the difference.
4. High-profits extracted by importers and wholesalers (above their legal and illicit payments for import rights and lobbying expenses).
5. High-profits extracted by cartelized retailers.
6. Other unnecessary costs due to inefficiencies in marketing and distribution.

"We can help lessen the number of Filipino families who are hungry by reorganizing the National Food Authority. More will be able to afford to buy rice because it will cost much cheaper without the monopoly, "Legarda concluded.

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