NFA brouhaha

THE Ombudsman has ordered the suspension of 138 officials and employees of the National Food Administration (NFA), including Administrator Roderico Bioco, over an allegedly anomalous rice sale.

Prior to this, on February 12, NFA Assistant Administrator Lemuel Pagayunan sent a letter to the NFA Council complaining about what he said was the improper disposition of NFA rice stocks to selected private traders.

Pagayunan noted the following irregularities:

– The stocks sold were not deteriorating but were fit for consumption and disposition in the natural course of NFA operations.

– The sale to private traders did not have NFA Council approval, and the administrator awarded contracts to selected traders at a disadvantageous price of P25 per kilo.

– No bidding was conducted for the sale, resulting in foregone revenues for the government.

– Given that the country is experiencing a rice supply shortage resulting in soaring rice prices, the complainant questioned why the NFA administrator disposed of the stocks even before these were supposed to “deteriorate.”

Bioco immediately issued response to the NFA Council on February 14. The main points of his reply are as follows:

– Though the stocks were still fit for human consumption, these were already exhibiting “deteriorating quality due to prolonged storage in the warehouse.”

– The NFA Council has a policy, dated Jan. 25, 2022, regarding the warehousing/storage of stocks, and the stocks were disposed of in accordance with the “approved NFA Council resolution.”

– The sale to private traders was based on NFA criteria that the buyers complied with. The traders were also deemed most capable and qualified by the NFA because they were “engaged in the business of rice milling with the capability and capacity to reprocess aging stocks.”

– As to the selling price, Bioco claimed that the NFA just followed a Feb. 18, 2020 bulletin, issued by then-NFA administrator Judy Carol Dansal, that set the price at P25 per kilo.

A rejoinder was immediately submitted by Pagayunan the following day, in which he highlighted the following:

– Based on several NFA laboratory tests, the disposed rice stocks were fit for human consumption.

– Due to the negligence of the administrator, the rice had reached near “deteriorating” stage as he failed to distribute the stocks as quickly as possible despite the rice supply shortage.

– While the NFA Council approved guidelines for “NFA’s acquisition, maintenance and disposition of buffer stocks,” the sale to private traders should have been subject to the “scrutiny, evaluation and approval of the NFA Council.” Said sale to the private sector was not even submitted to the council for approval.

– A new memorandum issued by the administrator himself stipulated that the replacement cost of WD1 stocks (W1 to W3 categories are used by the NFA to determine stock quality) is P27 per kilo. Why then was the old price of P25 per kilo as set by the previous NFA administrator used as the guideline for disposing of the stock?

– As there was no need for the “reconditioning” of the rice stocks since these were fit for human consumption, the purpose of rebagging the NFA stocks was really to sell these in the commercial market.

– The administrator failed to explain why no bidding was conducted and why specific traders were directly contracted to buy the rice stocks. Thus, it alleged that the choice of the buyers was left to the sole discretion of the administrator.

Based on the above proceedings and objectively looking at the situation, one cannot help but raise several concerns.

First is why would the NFA allow rice stocks to reach near deterioration given the country’s serious rice supply shortage. Allowing stocks to remain in warehouses for months without urgently disposing of them is tantamount to gross negligence of duty, particularly when many poor Filipinos are going hungry.

Second, if these can be sold to a few selected millers, why not sell to Kadiwa stores or local government units (LGUs) before the stocks become too old, as what was done during the Covid-19 pandemic? NFA stocks surely do not age at the same time as the agency knows which came first and which should be disposed of before these get spoiled.

Third, why was there no bidding

and why did the sale not warrant obtaining NFA Council approval? Does the council allow the disposition of stocks to selected traders without a bidding process?

To be on the safe side and to impress that the transactions were above board, the administrator could have easily informed the council about the planned sale and secured its approval. After all, the NFA Council is the corporate decision-making body of NFA and its members include most of the government’s economic managers.

It is a lame excuse to argue that there were guidelines on such a transaction,

particularly if Pagayunan’s claim that such pertain only to the warehousing or storage of stocks but not on sales — especially to selected private millers — is true.

An as is-where is bidding would have surely attracted better bids than P25 per kilo considering the current retail price of commercial rice. Surely, Bioco as an experienced business person knows these realities.

Fourth, why did the NFA settle for the P25 per kilo price using the lame excuse that it was pegged in the 2020 guidelines issued by the previous NFA chief. At that time, rice was priced at P30to P35 per kilogram and NFA rice was being sold in Kadiwa stores and by the LGUs for assistance programs.

I am sure that Bioco knows that rice prices have significantly increased in

the last three years. Why settle for a price that is grossly disadvantageous to the government?

Finally, admitting that the stocks were still fit for human consumption and hence would not need reprocessing, and then requiring prospective buyers to re-bag the rice under their brand names so it could be sold at a higher price is blatantly injurious not only to the government but also the consuming public.

Commercial rice at the wholesale level is priced at around P45 to P48/ kilo and when sold at the retail level as regular milled it can fetch up to P50-P54 per kilo. Even the low-class rice for animal feed is priced much higher than P25.

Bioco has a lot of explaining to do.