WORLD TRADE
ORGANIZATIONG/STR/N/4/PHL
G/STR/N/5/PHLG/STR/N/6/PHL
G/STR/N/7/PHL
24 September 2002
(02-5108)
Working Party on
State Trading EnterprisesOriginal:  English
STATE TRADING
New and Full Notification Pursuant to Article XVII:4(a) of the GATT 1994 and
Paragraph 1 of the Understanding on the Interpretation of Article XVII
PHILIPPINES
The following communication, dated 12 September 2002, has been received from the
Permanent Mission of Philippines.
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In accordance with Article XVII of GATT 1994 and paragraph 1 of the Understanding on the
Interpretation of that Article, the Government of the Philippines submits the attached notification on
State Trading Enterprises for calendar years 1998 to 2001.G/STR/N/4/PHL, G/STR/N/5/PHL,
G/STR/N/6/PHL, G/STR/N/7/PHL
Page 2
PHILIPPINES
I.  ENUMERATION OF STATE TRADING ENTERPRISES
A. IDENTIFICATION OF STATE TRADING ENTERPRISES
National Food Authority (NFA)
B. DESCRIPTION OF PRODUCTS :  T HE NFA IS ENGAGED IN THE TRADE OF THE FOLLOWING
COMMODITIES :
1. Rice (H.S. No. 1006.10 and 1006.30)
2. Corn (H.S. No. 1005.90)
3. Other commodities as authorized by the President of the Philippines
II. REASON AND PURPOSE
A. REASON OR PURPOSE FOR INTRODUCING AND MAINTAINING STATE TRADING ENTERPRISES
As the trading arm of the Government, NF A is tasked to ensure the following:
1. Food security – The NFA ensures food security in staple cereals in times and places of
emergency, both natural or man-made.  Specifi cally NFA responds within 48 hours to the
requirements of calamity/emergency stricken areas.  Also, it should restore or maintain within
two weeks the commodities' supply and prices at levels immediately prior to the
calamity/emergency.
2. Stabilization – The NFA ensure farmgate price levels that enable farmers to derive reasonable
returns on their production investment on the one hand, and ensuring reasonable retail prices
for consumers on the other.
B. LEGAL AUTHORITY
1. National Grains Authority (NGA) Act of 1972 (P residential Decree No.4), as amended, which
created the NFA (then NGA) to promote the integrated growth and development of the grains
industry and accorded the exclusive authority on the importation and exportation of rice, corn
and other grains.
2. Agricultural Tariffication Act of 1996 (Republic Act No. 8178), which lifted the quantitative
import restriction on corn, liberalized corn importation and reiterated NFA's exclusive
authority to import rice while restoring its prerogative to allocate import quotas of rice to local
importers in cases of production shortfalls.
III. DESCRIPTION OF THE FUNCTIONING OF THE STATE TRADING ENTERPRISE
A. SUMMARY STATEMENT PROVIDING OVERVIEW OF THE OPERATIONS OF THE STATE TRADING
ENTERPRISE
The NFA's mandates are currently anchored on a direct market intervention strategy that
revolves around the maintenance of a year-round 15 day rice buffer stock which is to increase to a
30 - day stock level during the lean season of each year.  Under this strategy, NFA is allowed toengage in domestic grain procurement from individual and organized small farmers at governmentG/STR/N/4/PHL, G/STR/N/5/PHL,
G/STR/N/6/PHL, G/STR/N/7/PHL
Page 3
support prices.  The strategy banks on the price-pull effect of its marketing operation and is oriented
on a support or release price structure that is sustained by subsidy infusion from the Government to
finance the cost of stabilization.  Alternatively, the NFA may undertake rice importation.
B. SPECIFICATION OF EXCLUSIVE OR SPECIAL RIGHTS OR PRIVILEGES ENJOYED BY THE STATE
TRADING ENTERPRISE
The NFA has the exclusive authority to import rice.   It also has the authority to issue import
quotas and import permits for rice, corn and other cereals.
C. TYPE OF ENTITIES OTHER THAN THE STATE TRADING ENTERPRISE THAT ARE ALLOWED TO
ENGAGE IN IMPORTATION /EXPORTATION AND CONDITIONS FOR PARTICIPATION
The private sector, registered and licensed with NFA, is given limited participation in the
importation of rice (i.e. limited volume and importation of premium, fancy and glutinous
varieties only).  Those who have availed of this privilege were rice millers and traders.
D. HOW IMPORT /EXPORT LEVELS ARE ESTABLISHED BY THE STATE TRADING ENTERPRISE
Determination of import quantity is the function of an Inter-Agency Committee on Rice and
Corn led by Department of Agriculture (DA), with the NFA as a member.  The Committee regularly
conducts an evaluation of the country's Rice Supply/Demand Situation and Outlook on a crop year
basis.  During the evaluation process, the Committee determines the volume/deficit the country will
have by the end of the crop year, for approval by the President of the Philippines.
It is also governed by commitments to Annex 5 of the Agricultural Agreement.Import price is determined through negotiations between the NFA and the source of
importation, taking into consideration, prevailing world market prices.
E. H
OW EXPORT PRICES ARE DETERMINED
Rice exportation is carried out only in times of surplus or excess supply.  The last time that
the Philippines exported rice was in 1987 when it shipped out 111,000 MT as partial payment
of the country's rice loan with Indonesia.  Si nce then , the Government, through the NFA has
not engaged in exports.  In case of private exports, prices are generally based on the world
market prices.
F. HOW THE RESALE PRICES OF THE IMPORTED PRODUCTS ARE DETERMINED
NFA considers the following parameters in determining the selling prices of the rice it
imports – procurement, unloading, dispersal, handling, and distribution costs, tariff rate and
equalization fee.
G. WHETHER THE STATE TRADING ENTERPRISE IS USED TO FULFILL CONTRACTUAL OBLIGATIONS
ENTERED INTO BY THE GOVERNMENT
Negotiations entered into by NFA depend on who is availing of the imported rice stocks.G/STR/N/4/PHL, G/STR/N/5/PHL,
G/STR/N/6/PHL, G/STR/N/7/PHL
Page 4
H. BRIEF DESCRIPTION OF MARKET STRUCTURE
The private sector is the major player in the grains industry.  The NFA intervenes only
through set standards, rules and policies.  It likewise monitors adherence to the regulations
implemented.
During the lean months of July, August and September, the NFA sells directly to end
consumers or through its various accredited retailers/outlets at government-set release prices.  At the
onset of the main crop harvest months, NFA buys palay at a given support price purposely to give
farmers reasonable returns and to pull farm prices up.
IV. STATISTICAL INFORMATION
Please refer to attached Tables I and III
V. REASONS WHY NO FOREIGN TRADE HAS TAKEN PLACE (AS APPROPRIATE)
The National Food Authority did not engage in the export of rice and corn in the years 1998 -
 2001 because of shortage of domestic supply of both products.
VI. ADDITIONAL INFORMATION (AS APPROPRIATE)
There is no additional information.G/STR/N/4/PHL, G/STR/N/5/PHL,
G/STR/N/6/PHL, G/STR/N/7/PHL
Page 5Table I
State Trading:  Philippines
State Trading:  National Food Authority
Statistical Information, Imports
(in Metric Tonnes)
Product/year Description of product(s)
(including HS No.)Total quantity
imported (tonnes)Quantity imported by
state trading enterpriseAverage import
price (P/kg)Average representative
domestic sales price (P/kg)National production
(Calendar Year)
Rice *
1998 2,126,531 2,125,662 10.59 13.25 13,161,268
1999 833,923 781,717 10.85 12.78 11,786,625
2000 636,306 616,518 9.13 13.50 12,389,412
20011006.10 Rice paddy/10006.30
semi-milled or wholly milledrice, whether or not polishedor glazed
763,661 746,124 9.44 14.37 12,954,870
Corn
1998 367,829 317,293 5.54 7.15 3,823,184
1999** 177,080 0 - - 4,584,593
2000 566,233 59,650 5.36 7.54 4,511,104
200110.005.90 Maize (corn), other
than seed
198,288 84,937 7.64 7.81 4,525,012
*Note:  Columns 3 and 4 are in rice terms while column 7 is in palay term.
**Due to NFA zero-importation of corn during the period, data on corn import price by the private sector and average representa tive domestic sales price
are not available at NFA.G/STR/N/4/PHL, G/STR/N/5/PHL,
G/STR/N/6/PHL, G/STR/N/7/PHL
Page 6Table II
State trading: Philippines
Statistical Information, Exports
(In Metric Tonnes)
Product/Year Description of product(s)
(including HS No.)Total quantity
exported
(tonnes)Quantity exported by
state trading enterpriseAverage
procurement price
(P/kg)Average representative
domestic price (P/kg))Average export
priceNational
production
(tonnes)
The National Food Authority did not engage in the export of any product, particularly rice and corn in the years 1998-2001 beca use of shortage of
domestic supply of both products.G/STR/N/4/PHL, G/STR/N/5/PHL,
G/STR/N/6/PHL, G/STR/N/7/PHL
Page 7Table III
State Trading:  Philippines
Statistical Information, Domestic Activities
(In Metric Tonnes)
Product/Year Description of product(s)
(including HS No.)Domestic purchases by state
trading enterpriseNational production Domestic sales by State trading
enterpriseNational
consumption
(tonnes)
Rice *
1998 61,708 13,161,268 1,626,742 6,722,790
1999 560,503 11,786,625 1,372,329 7,451,760
2000 663,326 12,389,412 1,168,636 7,890,890
20011006.10 Rice paddy/10006.30
semi-milled or wholly milled
rice, whether or not polished or
glazed
477,441 12,954,870 813,462 8,072,700
Corn
1998 208,258 3,823,184 107,694, 1,094,970
1999 10,614 4,584,593 158,948 1,322,360
2000 8,144 4,511,104 43,248 1,421,280
200110.005.90 Maize (corn), other
than seed
0 4,525,012 33,246 1,114,310
*Note:  Columns 5 and 6 are in rice terms while columns 3 and 4 are in palay terms.
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