Polytechnic University of the Philippines

City of Santa Rosa Laguna

“SELLING NFA RICE AT A SPECIFIC RETAIL PRICE, BUT LIMITING THE

A Study
Presented To the Faculty of
Polytechnic University of the Philippines
Santa Rosa City, Laguna

In Partial Fulfillment
Of the Requirements for the Subject
Business Logic

by

Diaz, Haidie R.
Escosura, Pamela D.
Oruga, Christel Mae L.

July 2019
Objectives of the Study

1. To know what factors does the government consider in coming up with a stabilize retail

price for NFA rice.

2. To know why does the number of kilograms offered to a single customer were limited per

day.

3. To know if there is any significant relationship between the retail price of NFA rice and

the number of kilograms offered per customer.

Statement of the Problem

This study determined the relationship between the retail price of NFA rice and the

limited offer per customer. Specifically, this sought answers to the following sub-problems:

1. What factors does the government consider in coming up with a stabilize retail pricing?

2. Why does the number of kilograms offered per customer were limited per day?

3. Is there any significant relationship between the retail price of NFA rice and the number of

kilograms offered per customer?

Statement of the Hypothesis

Based on the identified problems, the researchers formulated the following hypothesis:

H0: There is no significant relationship between the specific price of NFA rice and the number

of offered kilograms per customer.

The National Food Authority (NFA) is one of the most important policy instrumentalities

of the Philippine government with respect to agricultural price policy and food security. Despite

its name, the government-owned and controlled corporation deals primarily with rice, the

country’s foremost food grain which accounts for the largest share of the food basket of the

average (but especially of the poor) Filipino consumer. NFA is tasked to stabilize the price of

rice consistent with farm prices that are remunerative to the country’s rice farmers and retail

prices reasonable enough for the country’s consumers.

Stabilized Retail Pricing

The researchers gathered information from different people such as a government

employee and a dealer of NFA rice. To provide strong evidence on such questions, here are the

answers of the interviewees. Mrs. Ma. Edwina S. Morano a city agriculture officer at the

municipality of Santa Rosa Laguna was the first one who was asked. The researchers first

question is "What factors does the government consider in coming up with a stabilize retail

pricing?" She said that the NFA procures “palay”, rice in its raw form, from farmers at a price

that is higher than the market-determined farm gate price, and then sell the same to consumers at

a price that is lower than the market-determined retail price. The two major activities that

comprise the stabilization of prices include procurement and distribution operations.

Procurement Operations, price is initially determined based on analysis conducted by a certain

committee that will be used as a price basis in a particular season. Distribution Operations

provides a subsidy for rice consumption aside from providing support to farmers. This ensures
that the price of the staple commodity remains affordable to consumers, particularly low-income

families.

Limited Kilograms Offered

Aside from that, the researchers also asked why does the number of kilograms offered per

customer were limited per day. Mrs. Morano said that the reason why the government had set

limitations with the number of kilograms offered and available for purchase is because to avoid

unwanted acts that was spreading in different regions of the country. She told that some Filipinos

have this kind of attitude of buying excess kilos of rice and took advantage of it for them to sell it

again to other people with a higher price than normal. Exploitation was undeniably popular way

back before so the government had come up with that solution to prevent it in happening again.

She also elaborates some hidden secrets that were not known to the public. Mrs. Morano said

that many rice dealers who sells NFA rice were the ones who took advantage of the situation,

they tend to mix the NFA rice with other milled rice in the market and sell it with a higher price

value without the customers’ knowledge that they were being deceived. Another fact was

because the price of NFA rice was lower compared to other local milled rice, the stocks were

limited and cannot accommodate the large number of customer who wants to purchase it. The

government think of ways to sufficiently provide rice to every Filipinos who were not financially

capacitated. The retailers were compelled to limit the amount of subsidized rice each customer

may buy as the NFA place restrictions on the supply. This is because the unloading of stocks of

NFA rice was hampered in some parts of the country by weather conditions. They limit the

number of available kilograms offered for purchase in a day to accommodate many customer

compared to the number of customers without limitations.

The researchers also interviewed Mr. John Leovin, one of the few NFA rice dealers in

Santa Rosa Market. The questions asked were connected to the previous one. He was asked how

much the retail price of NFA rice was. He told that the price of NFA rice was only 27 pesos per

kilo. To further deepen the study, Mr. Leovin was also asked how many kilograms were

available for purchase per customer and he said that the allowed number of kilograms offered per

customer according to the government was only 5 kilos of rice in a day. As a rice dealer he also

told that they only have 50 sacks of stock NFA rice in their store and they personally come and

order the rice. Regularly, all the sacks of rice were being sold immediately because of its low

priced value compared to other milled rice in the market. As of the date, Mr. Leovin said that

they do not have stocks in their store because NFA were not able to deliver sacks of rice due to

the rice shortage that is currently happening in the country.

Significant Relationship

According to Mrs. Ma Edwina S. Morano, she strongly agreed that there is a significant

relationship between the retail price of NFA rice and the number of kilograms offered per

customer. Since the government subsidize the retail price of NFA rice it was way beyond

cheaper among all of the rice available in the market, with that consumers patronized it even

more. However, because of the reasons provided above the number of kilograms offered per

customer were limited.

The researchers come up with these analysis, comments and recommendations regarding

the answers on the said sub-problems.

For the first question, "What factors does the government consider in coming up with a

stabilize retail pricing?" The interviewee said that they consider what is reasonable enough to the

farmers and consumers in stabilizing the rice prices. The researchers agreed with the two major

activities, procurement and distribution operation, in comprising stabilization of prices. In

connection, the researcher recommends to strengthen these two major activities. In procurement

operation, the assigned committee that will do a survey in analyzing the price basis should widen

the scope of the survey, especially those poor Filipinos living in rural areas, to address their

afford prices of commodities. Moreover, in the distribution process, the government should have

monthly inspection in the market to regulate if the NFA rice dealers are selling the rice at a

suggested price, which is 27 per kilo.

For second question, "Why does the number of kilograms offered per customer were

limited per day?" The respondent said that they set limitations with the number of kilogram

offered to public to prevent unwanted acts that was spreading to different regions of our country.

In addition, they said that some tend to mix the NFA rice with other milled rice in the market and

selling this at a higher price. In line with these greedy rice dealers the country is reeling from, the

researchers suggested that NFA should get the help of DILG to be coursed through the

baranggays to reach those who want affordable rice, especially those low income families. The

NFA rice should not be sold to traders or hoarded by greedy businessmen, but instead it should

be delivered to baranggays-to-baranggays to make sure that it will directly reach people who
really need it. Furthermore, it is recommended that the people who will sell and distribute the

rice to the public is not a public official to avoid unfair treatment towards others, instead they

will just assist the people assigned. Also, the government suggested the public to have

cooperation to go against these erring businessmen so that the government subsidized rice will

truly benefit the marginalized sector of the society.

For the last question, "Is there any significant relationship between the retail price of

NFA rice and the number of kilograms offered per customer?" The researchers also strongly

agreed with the statement of Mrs. Morano, City Agriculture Officer, that there is significant

relationship between the retail price of NFA rice and the number of kilograms offered per

customer. Having it connected with law of supply and demand in economics, as the price of NFA

rice goes down, consumers demand goes up at the same time supply of rice goes down.

Conclusion

1. There are two major activities that constituted the stabilized retail pricing. First is

Procurement Operations where price is initially determined based on analysis conducted

by a certain committee that will be used as a price basis in a particular season. Last is

Distribution Operations which provides a subsidy for rice consumption aside from

providing support to farmers.

2. The number of kilograms offered to customer per day is limited up to 5kgs. to avoid the

unappropriate acts such as taking advantage of the low price by buying excess amount

and to re-sell it again with a higher price and to reach or to accommodate a larger number

of customers.

3. There is a significant relationship between the retail price of NFA rice and the number of

kilograms offered to a customer per day.

Mrs. Ma. Edwina S. Morano, City Agriculture Officer at Santa Rosa Laguna

Mr. John Leovin, a NFA rice dealer at Santa Rosa Market