Cordillera Career Development College

COLLEGE OF ACCOUNTANCY
Buyagan, Poblacion, La Trinidad, Benguet

Midterm Exam
2nd Semester, SY: 2020-2021

Romeo David, the newly-appointed administrator of the National Food Authority (NFA),
incurred the ire of a major farmers’ group last week when he announced that the government was
determined to import 200,000 to 300,000 tons of rice from Indonesia to meet an expected
shortage.
In a press release, David stressed that NFA would be making a lot of money in the deal,
which, he said, would involve no cash outlay in NFA’s part.
But the major farmers’ organizations in the country are now saying that David could not
have picked the worse time to make the announcement, just when the country’s 3 million
Filipinos are beginning to harvest their crops.
The immediate effect of his press release: Palay price all over the country have plunged
to the great disadvantage of the rice farmers.
Organized rice farmers, led by the militant Kilusang Manbubukid sa Pilipinas (KMP),
have already aired fears that palay prices may again nosedive to P 2.80 a kilo or almost one-third
the price of animal feeds.
Their fears are anchored on the fact that NFA does not have the cash to buy at least five
percent of this cropping season’s yield and prevent traders from offering bottom prices. “Instead
of helping the farmers, David showed his ignorance of rice culture and bias against the very
people he is supposed to serve,” the KMP said.
Projections by the Department of Agriculture of an impending shortage could only be
viewed with suspicion. Data from the Bureau of Agricultural Statistics prove that a local rice
shortage is remote. Land planted with rice has been estimated at 4.5 million hectares. During the
main cropping season, total harvest is 27 million cavans. Half of the rice lands are irrigated and
farmed two or three times a year. That would yield at least 60 million or more bags of rice as
buffer. In short, the country’s rice farmers produce no less than 200 million cavans of rice a year.
Each Filipino eats two cavans of rice or 100 kilos a year. With 60 million mouths to feed,
a year’s harvest is still 80 million cavans more than actual needs.

So why need to import?

The Agricultural Journalists Association of the Philippines has come out with a position
paper, urging the Ramos administration into reversing a prevalent anti-farmer bias of
government policies on agriculture. Central to this bias has been government control of palay
and rice prices through an illusory subsidy. NFA has set P 6.00 a kilo as subsidized price for
palay but has no money to buy at that price.
 What traders have been doing was use of the NFA price ceiling. They only offer the same
price during the months of August and September when most of the farmers’ harvests are already
in the traders’ warehouses.
At the height of the harvest season, the traders bring down prices even lower than the
break-even cost of producing the cereal at P 4.50 a kilo. (Business section, Manila Standard,
1992)

Questions:

1. What would be the effect of rice production in the Philippines? Who will suffer?
2. Will the importation of rice affect the rice consumption?
3. In your analysis, is the position to import rice compatible with the intention to support
palay prices?
4. What would be your better suggestions for the benefit of our farmers?

Instruction: Just answer the questions and send it in my email: abellofernando03@gmail.com on

or before 3PM today. Thank and stay safe.