By Vincent Mariel P. Galang, September 3 2019; Business World

Image Credit to Philippines Star

LOCAL government purchases of rice directly from farmers are running into problems because of the constraints posed by government procurement rules, Senator Cynthia A. Villar said.

She said at a hearing of the agriculture committee which she chairs that some governors have cited the Government Procurement Reform Act, or Republic Act 9184, as a possible source of liability should they engage in the purchasing of palay, or unmilled rice.

RA 9184 prescribes competitive bidding for all agencies undertaking procurement activity and limits them to using funds expressly set aside for the purpose in the annual budget planning process.

The Department of Agriculture (DA) has asked provinces to buy palay directly from farmers to support the market amid falling farmgate prices and ample supply during this month’s harvest. The liberalization of rice imports has exposed the sector to stiff competition from cheap foreign grain, while traders who bought palay at higher prices from previous harvests have been reluctant to dispose of their stock at a loss, softening demand for new palay from this month’s harvest.

Last week the DA said six provinces have committed to buy directly from rice farmers during the September-October harvest — Isabela, Nueva Ecija, Ilocos Norte, Ilocos Sur, La Union, and Pangasinan. The provinces will dry, mill, and sell the rice to cities in Metro Manila, like Makati City, Quezon City, Mandaluyong City, and San Juan City.

The Rice Tariffication Law, or RA 11203, which took effect in March, opened up the market to increased rice imports, favoring sources from within Southeast Asia, whose producers are more efficient than Filipino farmers.

The tariffs collected on the imports are intended to fund the Rice Competitiveness Enhancement Fund (RCEF), which is intended to support farm mechanization and greater access to credit and farming know-how, among others. Under the law, RCEF is to be provided with P10 billion a year for six years, in a bid to close the competitiveness gap with the rest of the region.

RA 11203 was enacted after the inflation crisis of 2018, during which the National Food Authority allowed its rice stocks to dwindle, reducing the supply of low-cost rice on the market that poor families depend on. The law took away the NFA’s importing function, effectively privatizing foreign grain procurement, and limited the agency to procuring palay from domestic farmers.

Falling palay prices have sent officials scrambling to implement various relief measures, including the DA’s emergency purchasing plan by local governments.

Another such measure is the Sagip Saka Act, or RA 11321, which was signed into law on April 17, 2019 but is awaiting its implementing rules and regulations (IRR).

RA 11321’s principal author, Senator Francis N. Pangilinan, pressed for the immediate issuance of the IRR to provide relief to farmers, in part because it exempts local governments from procurement rules when they buy agriculture products directly from producers.

Kailangan ma-aprubahan na ang IRR (The IRR needs to be approved)… Gusto nating mabawasan o mareduce ang (We want to reduce the) unjust relationship between the middlemen and the farmers kaya papasok ang gobyerno bilang (which is why the government needs to intervene as an) equalizer,” Mr. Pangilinan said during the hearing, which sought to review the impact of the Rice Tariffication Law.

RA 11321 expands the government’s enterprise development program for farmers and fisherfolk. It creates the Farmers and Fisherfolk Enterprise Development Program and also exempts national and local government agencies from procurement rules when they buy agricultural products directly from accredited farm cooperatives and organizations.

Mr. Pangilinan said government rice procurement under Sagip Saka Act can take place under fair, “non-exploitative” prices.

At the hearing Ms. Villar backed the prompt issuance of the IRR, which Agriculture Undersecretary Ariel T. Cayanan said is currently being circulated for stakeholder comment.

“Actually, ine-expedite s’ya (it is being expedited). Nakakatatlong meeting na yata (I think there have been three meetings),” he told reporters. — Vincent Mariel P. Galang