Vested with the function of stabilizing the supply and prices of rice, the country's staple, the NFA's operations aim to raise farmgate prices to secure farmers' profit, and at the same time, maintain retail prices at an affordable level for consumers. Government intervention on both sides of the market has led to huge public losses, increased the volatility of domestic prices, reduced the welfare of both consumers and producers, and discouraged the private sector from investing in distribution and storage facilities (Balisacan et al., 2006).
The NFA support price has on average led to an increase in consumer prices in ten regions of the country and contributed little to price stabilization (Purdue University, 2005). It is worth noting that among NFA rice consumers, only 46.6 percent are considered poor. In addition, among all poor households who are supposed to benefit from NFA rice, only 24 percent have been able to access them (Reyes et al., 2009).