Ducky Paredes

“Yap embarked on an aggressive rice procurement and distribution strategy when world market rates almost tripled to over $1,000 per metric ton (MT).” 

by Ducky Paredes

The good pre-Christmas news for consumers is that retail food prices are holding after dropping in mid-October and, hopefully, this situation will hold through the Christmas season.

Dduring a recent National Price Coordinating Council (NPCC) meeting attended by Vice President Noli de Castro and Trade Secretary Peter Favila, agriculture officials announced that prices of rice, pork and other basic commodities have either stabilized or dropped in October.

         Assistant Agriculture Secretary Salvador Salacup reported that the retail price of regular milled rice, for instance, had fallen to an average of P30 a kilo in the second week of October from P 37 in July. The price of dressed chicken has stabilized at P120 a kilo over the past three months, while that of pork has dropped to the prevailing rate of P140 to P150 from the month-ago price of P160 to P170.

         Salacup had traced the positive price trend partly to the efforts of Secretary Arthur Yap of the Department of Agriculture (DA) who has met with industry leaders to find ways of stabilizing retail prices ahead of the Christmas season.

         These consultative meetings started with rice millers at the height of the global rice price shock. Sessions with livestock industry leaders from piggery owners and meat processors to biyaheros and retailers led to recent adoption of the “reference price” band of P140 to P150 per kilo of liempo and other choice pork cuts. 

         Two umbrella organizations of major supermarket chains—the Philippine Association of Supermarkets Inc. (PASI) and the Philippine Amalgamated Supermarkets Association (PAGASA)—expressed their support for this “reference price” of P140-P150 during that NPCC meeting in Makati City. Among the members of these two organizations are the Uni-Mart, Cash and Carry, Makati Supermart, Rustans, Robinsons, Liana’s supermarket, Isetann and smaller supermarkets around the country.

         With his natural managerial acumen plus his experience as National Food Authority (NFA) administrator prior to his DA posting, Yap obviously knows how the rice market works. Thus, Yap embarked on an aggressive rice procurement and distribution strategy when world market rates almost tripled to over $1,000 per metric ton (MT) and when the domestic price of commercial rice zoomed to as high as P40 to P50 a kilo.

         After securing enough NFA stocks from abroad and launching a rice sufficiency program meant to raise the national sufficiency level to 98% by 2013, Yap began selling NFA rice to poor families at P18.25 a kilo. At the same time, he also tasked the NFA to sell commercial rice at P25 and P35 a kilo in the market for the benefit of middle-income consumers.

         With Government flooding the domestic market with cheap rice, most traders were caught in a bind. They had shrewdly increased their inventories, thinking that, by cornering the summer harvests at prices much higher than the NFA support price in anticipation of further price spirals, they would make a killing. Instead, because Arthur Yap had anticipated their move and also stocked up and released NFA rice at lower prices, they were forced to unload their stocks at a loss or at lower profit margins with the onset of the traditionally lean months.

The immediate reaction was to lash out at the DA and NFA for flooding the market with imported rice and depressing market rates.

         Agriculture officials were smart enough not to reply in kind.

         The NFA is losing at least P10 per kilo in buying high and selling low as this spread is roughly the cost of converting palay to rice, inclusive of the 65% recovery rate from palay to rice plus milling, repacking, storage and transport expenses.

To corner a lion’s share of the harvests during the dry crop, millers and traders were buying as high as P23 to P24 a kilo last summer against the NFA support price of P17, which means they had to sell rice later at about P34 to P35 just to break even. But that didn’t matter to them then as they were expecting to make a killing from the continued spiral in prices, which were in the P40-P50 range at that time.

The law of supply and demand worked for Yap. His aggressive procurement and distribution strategy led to the softening of the price of rice to P30. Hence, the grains businessmen stood to lose if they were forced to sell at the prevailing low rates in the domestic market.

In the end, rice millers from all over Luzon sought a meeting with DA and NFA officials to arrange a “truce.” These traders promised to sell low in exchange for an assurance from Yap that he would stop flooding the market with cheap government stocks. 

         The President apparently appreciated the DA’s efforts in averting a major food crisis. She singled out Yap in her State of the Nation Address for ensuring the stable supply and prices of the staple and running after hoarders and other profiteers cashing-in on the international food problem.

         At the start of harvest time, Yap directed the NFA to buy more stocks from small farmers by opening more warehouses to store such stocks, field over 50 mobile palay-buying stations to purchase palay even from farmers in faraway barrios, and relax quality standards so the food agency can purchase palay with moisture content of up to 30%, from the previous standard of 24%.

Also, he had offered an incentive of P1,800—or enough to buy one bag of petrochemical fertilizer—for every 50 cavans of palay that small farmers sell to the NFA.

                  As a result of Yap’s directives, the NFA purchased a total of 489,285 bags from farmers last August, or four times more than the food agency’s original target of 120,000 for that month.  In the first two weeks of September alone, NFA data show that the agency was able to buy 556,446 bags.

NFA insiders say that purchasing 10% of the harvests is enough for this food agency to somehow influence the buying rates during harvest time, thereby preventing traders and middlemen from ripping off small farmers by buying their produce at bargain prices despite the high cost of growing them.

Yap’s latest pro-farmer strategy has won praise from groups like the Philippine Confederation of Grains Associations (Philcongrains) and even from such acerbic critics as the Kilusang Magbubukid ng Pilipinas (KMP) that have been highly critical of the Arroyo government and the DA/NFA.

         In an atypical statement reported in the media, KMP chairman and Rep. Rafael Mariano of the party-list group Anakpawis was quoted by a major broadsheet as supporting this massive procurement policy.

         This massive palay buying by Yap is just the prelude to a policy and system overhaul at the Department that the secretary hopes to lead to a more effective implementation of its intervention programs and the long-term phase-out of rice imports that are draining the country’s dollar reserves.

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ComputerWorld carries a Princeton University report that describes vulnerabilities related to the Sequoia AVC Advantage direct-recording electronic (DRE) voting machine used in New Jersey, Pennsylvania, other states and in our ARMM elections and which the Comelec is looking to purchase as part of their projected P21 nillion budget for equipment for computerizing our elections. The Princeton report claims that the AVC Advantage is easily hackable.

The report which was done pursuant to a Court Order by the Hon. Linda Feinberg of the New Jersey Superior Court as part of a 2004 Rutgers Law School Constitutional Litigation Clinic lawsuit seeking to decommission of all of New Jersey’s voting computers, states:

“The AVC Advantage 9.00 is easily ‘hacked,’ by the installation of fraudulent firmware. This is done by prying just one ROM chip from its socket and pushing a new one in, or by replacement of the Z80 processor chip. We have demonstrated that this ‘hack’ takes just 7 minutes to perform.”

Because of this and other security-related issues, the Princeton report has as one its main conclusions that, “New Jersey should not continue to use the AVC Advantage 9.00, because it is insecure.”

Sequoia disagrees with the Princeton report’s conclusions:

“Many of the scenarios painted by the academics hired by the Plaintiffs depend on the existence of crooked, malicious and corrupt pollworkers. The success of some scenarios depends on BOTH corrupt pollworkers and inattentive voters.”

That may be an excuse in the United States (that they do not have too many corrupt pollworkers) but is that the case in the Philippines when even a sitting commissioner was found to have been a corrupt pollworker? Can we trust the present Comelec to do the job?

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hvp 11.03.08)

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