BY ASHZEL HACHERO and MAX ESTAYO

THE government should end its control of rice importation to insulate the availability of the staple from market shocks such as the current supply shortage, former Planning secretary Felipe Medalla said yesterday.

"The collective wisdom of the market should decide importation… The more the government interferes in the market, the more the economy is vulnerable to shocks and crisis," Medalla, an Economics professor at UP, said.

Opening rice importation to private stakeholders would also eradicate rice cartels, the people behind which he said "are closely linked to government operations."

Felipe did not name names during his presentation at the Philippines launching of the "Economic and Social Survey of Asia-Pacific 2008" in Pasig City.

Small traders have been complaining that big operators with strong political connections corner the allocation of rice imported by the National Food Authority.

Finance Secretary Margarito Teves said government is prepared to cut the current 50 percent tariff on rice to as low as 10 percent to encourage private importation during the current shortage.

The government, however, favors maintaining the high tariff and using the proceeds for direct subsidy to the poor in the form of a cash coupon program to be handled by the social welfare department.

Medalla said private importation will ease the financial burden on NFA.

The NFA subsidy is estimated to reach P100 billion by 2010, Medalla said.

"The government is losing money because they buy high and they sell low. Eventually taxpayers will have to shoulder that," he said.

Medalla said importation was good when the price of foreign rice was low, but with prices at record levels, the government should look at ways to increase local rice production.

"Now that the government is losing money from importation of rice, why do we import? Why don’t we allow the price to increase a little bit from the current price and increase production? If we allow the price of rice to increase, hopefully, it will encourage our farmers to produce more," he said.

"Of course, if the price of rice is high, the urban poor will be the most affected but in the long run the farmers will benefit from it," Medalla, who served in the Estrada administration, said.

Government is aiming to import up to 2.2 million tons of rice for this year.

Agriculture Secretary Arthur Yap, after signing a supply agreement with Vietnam Wednesday, said this would ensure food security in the coming months, especially the lean months which start in June.

Medalla said government has to improve domestic production by implementing reforms and investing more in the agriculture sector.

He said more post-harvest facilities like dryers, post-harvest and transport facilities should be made more accessible to farmers.

Government should also slow down on the conversion of rice lands to industrial or residential areas in the form of subdivisions.

He proposed a "conversion fee" for those who want to turn their holdings into industrial or residential lots.

Medalla said the rice crisis could be traced partly to the lack of data on the agriculture sector.

"There are very few analyses or data on this sector and this could be one of the reasons why agricultural productivity is not forthcoming. The agriculture sector is the worst-measured part of the Philippine economy," he said.

He said "lack of right statistics could result in wrong forecasts leading to crisis."

He said if statistics being made public by the NEDA, NFA and agriculture department are correct, there is no reason for the rice shortage.

"If rice production is growing higher than the population, there would be no need for rice imports. But the present situation alone would belie these rosy statistics," he said.

Yap said he and the DA are open to independent scrutiny.

He said the "unstructured way" that the rice situation is being discussed is leading the public to worry.

Yap said he is open to discussing rice inventories, upcoming harvests, import volumes, government efforts to raise harvests between now and 2010, and other rice issues.

Yap said government could not attain the food self-sufficiency goal overnight because of increasing in population, which has hiked the daily rice requirement to 33,000 metric tons from 27,000 metric tons

President Arroyo ordered the NFA to prioritize the filing of criminal charges against eight government-accredited rice distributors in Butuan City that were found to be overpricing NFA rice.

Arroyo, after inspecting the rice stockpiles stored at the NFA warehouses in Butuan on Thursday with Yap, instructed the NFA Central office to coordinate and work with NFA-Butuan in speeding up legal process against the alleged profiteers.

Gil Pepito Pequeo, NFA-Butuan officer in charge, reported to Arroyo and Yap that the eight are based in Agusan del Norte and Butuan City, but they are unable to file charges due to the lack of lawyers in NFA-Butuan.

Undersecretary Antonio Villar, chief of the Presidential Anti-Smuggling Group, said aside from operations against rice smugglers, his office is closely coordinating with the NFA and the DA in tracking down NFA hoarders.

Villar said there are big "smuggling and hoarding" operations in the Visayas and Mindanao where some of the exchanges and illegal rice trades are done in the high seas. – With Job Realubit and Jocelyn Montemayor