Quandary

We are in a bit of a quandary over our rice supply.

On one hand, our buffer stock of the staple crop is thinning. We now have less of the buffer standing policy requires us to have. That puts us in peril of shortages should extreme weather take its toll on domestic rice production.

On the other hand, government under the present policy regime is prohibited from importing rice for our buffer stock. Importation is strictly reserved for private traders. The National Food Authority (NFA), whose role it is to look after the rice reserves we keep, can only procure from domestic producers.

The reasoning behind the present policy regime is clear. For many years, government importation of rice has been a source of corruption. Imported rice is cheaper than the prevailing domestic rice price regime. The NFA profited hugely from importation.

The profit made from buying cheap and selling at much higher prices to match the cost of domestically produced rice went to subsidizing palay procurement, milling, warehousing and distributing rice stock. But that has not always been the case, of course. Issuance of permits to import rice was always politicized.

Liberalization of rice importation is supposed to cure this. It is also supposed to cure the problem of delayed bureaucratic responses to looming rice shortages. In theory, private importers are supposed to read market signals more accurately and import more promptly.

Over-importation will drive prices down – a disincentive for greedy traders. It will also impoverish our farmers, leading to reluctance to plant the staple crop. Market forces are supposed to work perfectly, moderating the greed of traders while incentivizing our rice farmers. But market forces do not always work perfectly – or at least in a timely manner.

Right now, it seems there is not enough profit to be made for our traders to import rice. There has not been enough domestic production for the NFA to procure for the buffer stocks.

To compound things, some major rice exporting countries have restricted sale of the commodity to protect their local supplies in a climate of uncertainty. Even if we had the money to procure the rice we need, the commodity might not be for sale in the countries we usually import from.

And so we are hemmed in. The NFA cannot directly import even as some of our best rice lands are flooded. The private sector is hesitant to import a commodity with low profit margins.

The only way we can break out of this bind is to allow rice prices to rise. This will, however, fuel inflation and inflict great political costs to government.

What will the Secretary of Agriculture, who is also President of a people groaning about inflation, do?

Overlapping

The provincial government of Cavite and the local government of Bacoor are fighting over two separate reclamation projects. The fighting might not have been necessary had the Philippine Reclamation Authority (PRA) been more diligent in the discharge of its duties.

It turns out the PRA awarded separate reclamation projects within Bacoor Bay that overlapped.

The first project is an 844-hectare reclamation project signed with the Cavite provincial government and Cavitex Holdings, Inc. on Dec. 18, 2012. This award is based on a 1994 joint venture agreement that subsists.

The second project was awarded by the PRA in 2016 to the city government of Bacoor involving a 944-hectare reclamation project. Bacoor is undertaking the project in a joint venture with Frabelle Fishing Corp. and Diamond Export Corp.

The boundaries of the two projects overlap. In response, Cavite Governor Juanito Victor C. Remulla and Cavitex Holdings CEO Leonides J. Virata filed a complaint against PRA chairman Alberto C. Agra and general manager Janilo A. Rubiato for violation of the Anti-Graft and Corrupt Practices Act. The complainants allege that the two top PRA officers did not only “commit grave misconduct but also showed manifest partiality, evident bad faith and inexcusable negligence in giving premature and unwarranted benefits, advantage and preference to the other reclamation project.”

Both of the respondents are lawyers. Agra was former solicitor general, government corporate counsel and secretary of justice. Rubiato belonged to a law firm based in Davao City where Deputy Ombudsman Warren Rex Lion was a partner. Lion was suspended some months ago in connection with another case lodged at the Office of the Ombudsman.

Recently, the ombudsman ruled that both Agra and Rubiato were administratively liable for grave misconduct. As a consequence, both officials were suspended for a year without pay or fined the equivalent of six months’ worth of salary should the suspension not be enforced due to their separation from service.

The suspension order is without prejudice to the filing of criminal cases against the two for violation of the anti-graft law.

With the two senior officials of the PRA ordered suspended, the fate of the two competing – and overlapping – reclamation projects is uncertain. If the two suspended officials are eventually replaced, the PRA will still have to sort out the mess created by the approval of reclamation projects that overlapped.

Both projects were supposed to bring huge economic benefits for the province of Cavite and the city of Bacoor. By their nature, such projects are capital-intensive and require a large amount of financing. Even if work on the two projects are suspended because of the legal issues surrounding the sloppy decisions of the PRA, financing costs will continue to run.

The two high-impact projects are now on hold, causing so much economic opportunities to be missed.