Press Release
April 2, 2008

Villar says AFMA underspending led to rice crisis

Government's scrimping on the agricultural modernization is partly responsible for the rise in the prices of rice and other food and the failure of production to keep up with rising demand, Senate President Manny Villar said today.

Villar said there was no need to pass a law that could boost farm production as there is already one , the Agriculture and Fisheries Modernization Act (AFMA) of 1998, although the law's funding guarantees , he rued, hasn't been met.

Enacted in February 1998, the AFMA or Republic Act 8435 was supposed to allocate P20 billion in additional money for agriculture in the first year of its implementation (1999) and a minimum P17 billion annually thereafter.

The law further mandates separate funding for research and development and extension services which will be pegged based on the agriculture sector's output.

However, appropriations for 1999 to 2005 totaled P120 billion, or P61 billion less than the P181.4 billion that was supposed to be allocated during the period as set by law.

"Funding shortfalls were worse in 2004 and 2005 when the deficits posted were P16.3 billion and P15.9 billion respectively," Villar said.

In 2006,or eight years after its enactment, AFMA appropriations was still below the P17 billion minimum mark, at P16.3 billion.

"It only exceeded the P20 billion mark last year and will reach P23.3 billion this year, in part due to congressional insistence that government pay its AFMA dues," Villar said.

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Villar added the P61 billion in foregone spending could have irrigated 610,000 hectares of land or cemented 30,500 kilometers of narrow roads that can double as drying pavements for palay.

"Or we could have given one million farmers P61,000 each in production support so they can buy fertilizers and farm equipment, " Villar said .

But these are all water under the irrigation bridge now , Villar lamented , saying that there were ample opportunities "and funding" in the past two years to make up for AFMA under spending in the previous years. "For example, last year we were targeting a deficit of about P63 billion but due to the P90 billion plus in privatization proceeds, we brought down our budget deficit to just P12.4 billion," he said.

"It wouldn't have hurt us if, for example, we spent P10 or P15 billion for agriculture or even education because the end result is a deficit that would be far, far below than expected," he said.

"But again, the ideals of AFMA will be achieved and the same will be an effective instrument to help the people, if the same is spent wisely, transparent and fully accounted," he added.

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