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Welfare Effects of NFA Market Interventions

The paper examines the current operations of the National Food Authority (NFA) to determine whether the economic justifications for state intervention in the rice market still holds. The study indicates the agency's limited success in achieving food security and in stabilizing rice prices, and that its policies have resulted in huge financial losses and higher debt. Legislative reform efforts seeking to rationalize the functions of the NFA or to decouple its proprietary and regulatory functions are briefly discussed. Also, the paper presents some reform measures to address the institutional and policy gaps that could help bring NFA to a more viable fiscal position. The policy recommendations for NFA include, among others: (a) to reduce its role in rice importation, (b) concentrate rice buffering preferably though domestic palay procurement, and (c) invest in better rice forecasting/intelligence.


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Oct 13, 2015