A NEWS story in one of the morning dailies reported that the Department of Agriculture (DA) was proposing that instead of a monthly P600 cash assistance, the rice equivalent should instead be given to beneficiaries of the 4Ps (Pantawid Pamilyang Pilipino Program) program.

Agriculture Undersecretary Roger Navarro was quoted as saying that "distributing rice instead of money to 4Ps beneficiaries could help lower rice inflation, which soared to a 14-year record high of 22.4 percent last month."

There is nothing novel to this proposal. It was raised during former Agriculture secretary William Dar's tenure but was rejected by economics-related agencies, particularly the National Economic and Development Authority, because it would lead to inefficiency and waste government money. More importantly, it was soundly rejected by the association of 4Ps beneficiaries.

Let me explain the reasons.

First, providing the rice equivalent of the monthly cash assistance will not guarantee that the beneficiaries will receive good quality rice. Knowing the government, what will be provided is low quality rice, which if one is lucky enough will be regular milled rice, which is defined as 25 percent broken. But there is cheaper rice available — 35 or even 50 percent broken. Will the poor end up eating this type of rice, which is used as animal feed in other countries?

A typical poor Filipino consumer will tell you that even if they just feast on tuyo (dried fish) or dilis (dried anchovy), these are already considered heaven if the rice is of good quality. Substituting the rice equivalent of the cash assistance means depriving 4Ps beneficiaries of the power to decide what kind of rice to buy to satisfy their needs.

Second, since the Department of Social Welfare and Development (DSWD) does not possess the logistics (i.e., warehouses, trucks, etc.) to distribute rice all over the country, it will have to rely on the National Food Authority (NFA) for this task. At present, the cash assistance is deposited by the DSWD directly to 4Ps beneficiaries. It is practically a no-hassle and leakage-free transaction.

Inevitably, the distribution of the in-kind assistance to 4Ps beneficiaries will necessitate expanding the role of the NFA in the rice market to include bulk importation of the grain (the agency has limited local palay [unmilled rice] procurement reach) and the use of its warehouses, trucks and other facilities. This means hiring more staff and bigger budgets from the government.

Third, regarding the claim that providing the rice equivalent instead of cash will result in lower rice inflation, I am not sure whether any economist in his right mind will buy the argument.

There are around 760,000 households that are 4Ps beneficiaries. Assuming an average of five to six members per household, that means around 5 million beneficiaries who will benefit from the proposed rice equivalent. Our population is now almost 110 million rice-eating Filipinos. How can less than 5 percent of the rice consumer market lower rice inflation?

Also, the NFA of the past traditionally procured 2 to 4 percent of the total rice supply in the country. It was never effective in stabilizing prices for consumers and in providing fair incomes to palay farmers.

And as noted earlier, it is most likely that the rice equivalent will be in the form of regular milled rice. However, current demand is for well-milled, special and premium rice, which are the varieties contributing to high rice inflation. How can the distribution of regular milled rice tame rice inflation?

On another issue, the DA recently issued Administrative Circular (AC) 01 dated Feb. 5, 2024, entitled "Guidelines on the Conduct of Regulatory Impact Assessment (RIA) for the Proposed Regulations in the DA." The circular repealed AC 8, Series of 2022, which required the conduct of RIAs by DA regulatory agencies before officially issuing regulatory measures.

The latter AC was aligned to the goal of Republic Act (RA) 11032, or the "Ease of Doing Business Act of 2018," and hence was an instrument in encouraging greater private sector participation in agriculture ventures. It is part of what I wrote last week regarding the need to have a clear engagement strategy for the private sector that is interested in investing in agribusiness.

Although there is a body, the Anti-Red Tape Authority (ARTA), that is mandated to assess the impacts of regulatory measures issued by various government agencies, AC 8 took the initiative of easing the workload of the ARTA given that it has limited resources and staff to conduct RIAs on all regulatory measures passed by various agencies.

However, the recently signed AC 1 felt that the conduct of RIAs by the DA was duplicative of the function of the ARTA, particularly its Memorandum Circular (MC) 2022-06 issued in October 2022 and entitled "Establishing the National Policy on Regulatory Management System." The MC prescribes the policies and guidelines on the conduct of an RIA and affirms the mandate and jurisdiction of the ARTA on RIA implementation under RA 11032.

Although there are steps stipulated by the new AC on how to review regulations internally by the DA, this is still no substitute to the conduct of a robust RIA. Even if one argues that the ARTA can review and render a final verdict on any regulation issued, that decision will take time due to resource and staff constraints. And before that happens, implementation of the harmful regulatory measure would have done its damage.

The internal conduct of an RIA should not be seen as duplicative of the work of the ARTA. It should be viewed as complementing an agency's function to ensure a conducive regulatory environment for businesses to flourish.

Aren't too many regulations, and inconsistent ones at that, one of the main reasons why the private sector (both foreign and domestic) are not investing in the country, particularly in agriculture and the agribusiness sector?

fdadriano88@gmail.com