"The NFA is a government corporation so it doesn’t reflect on the national government budget, unless we, the national government, gives it money," Mrs. Arroyo said.

"But if it sources from its own credit, then it will not reflect in the national government deficit figures,"she added

The NFA’s deficit this year alone is expected to hit P43 billion with the increasing prices of rice it imports from the world market to sell at a subsidized price of P18.25 per kilo.

Sen. Edgardo J. Angara charged that the NFA has become prone to corruption because of its monopoly over the importation of rice, and has already incurred at least P111 billion in debts over the years.

Press Secretary and Presidential Spokesman Ignacio Bunye said the NFA will continue subsidizing the price of cheap NFA rice even amid the record high prices of rice from Thailand and Vietnam.

Bunye said the rationale behind the establishment of the NFA is to provide Filipinos with access to cheap food even if it meant selling it at a loss.

"The rationale behind having the NFA around is to ensure stable prices and distribution of food even if it means having a deficit in the process," Bunye said.

Meanwhile, President Arroyo allayed fears that imported rice from the US was unsafe. Mrs. Arroyo said the rice from the US complies with the requirements of the World Health Organization (WHO) which certifies that the imported rice is safe for eating.

The US rice stocks alleged by the environmental group Greenpeace to be contaminated with genetically modified organisms (GMOs) have passed tests conducted by the Bureau of Plant Industry (BPI) and found to be free of the controversial LL62 and LL601 strains.

"The National Food Authority, in the contract to buy and sell, we specify the kind of fumigant, the dosage and method to comply with the requirements of the WHO," the President said.

The rice from the US would still be subsidized and sold by the NFA at the markets at P25 per kilo which is still cheaper than commercial rice priced at P30 to P40 per kilo.

Mrs. Arroyo defended the Philippines’ importation of rice, saying the Philippines had been importing rice since the Spanish colonial period. She assured, however, that the government has laid out plans to increase production and achieve self-sufficiency on rice.

Department of Agriculture-Biotechnology Program Office (DA-BPO) Director Alicia Ilaga stressed that both rice varieties have not been approved for importation and consumption in the country under the strict procedures of Administrative Order No. 08.

Ilaga showed a BPI report detailing the tests conducted on the rice shipments from the US in the last two months.

Last Thursday, Greenpeace claimed that based on the test conducted by Yokohama-based Genetic ID Japan, Inc., the Blue Ribbon Texas Long Grain was "contaminated" with GMO rice strain LL601. Ilaga was surprised by the finding and said, "Hindi sa hindi siya safe eh, hindi pa lang talaga siya approved dito sa atin (It is not because it is not safe. It has not been approved here)."

LL601 and LL62 are genetically modified rice varieties resistant to herbicide. LL62 has already been deregulated in the US and has been approved for planting by farmers in the US.

As for LL601, it has been declared safe for human consumption by the US Food and Drugs Authority (USFDA), the European Food Safety Authority (EFSA), the New Zealand Food Safety Authority (NZFSA), and the Canadian Food Inspection Agency (CFIA).

Golden rice (a GM rice variety rich in Vitamin A, and resistant to tungro and bacterial leaf blight) is being developed under Philippine conditions. The Philippine Rice Research Institute (PhilRice) says golden rice is likely to be permitted between 2011 and 2012, should field tests yield positive results.