The Rice Problem in the Philippines: Trends, Constraints, and Policy Imperatives

Abstract

This paper examines the performance of the rice sector over the last three decades. The rice sector accounts for 30% of Philippine agriculture’s gross value added. It is the single most important source of livelihood among small farmers and landless agricultural workers, who also comprise 40% of the total labor force. Rice production and importation fluctuated in the past forty years. The productive years, 1977 and 1983, during which the country was even able to export rice at some point, were short-lived. During most of the ensuing years, given the low growth of productivity and rapidly growing population, consumption increasingly outpaced production. Imports rose with population growth, especially in the second half of the 1990s when the country was also beset by the El Niño phenomenon. With the country’s joining the WTO, Congress passed Republic Act 8178, which lifted all quantitative import restrictions in agriculture except rice. While the overall tariff protection for agriculture is 13.3%, the tariff equivalent of the present QR of rice from 1995-2002 is 67.2%. The exemption of tariffication of rice QRs is due to expire in 2004. The rice and agriculture problem was analyzed using the Agricultural Policy Simulation Model, a multi-market simulation model of Philippine agriculture, with two scenarios: a business-as-usual agenda and a strong reform agenda. The business-as-usual simulation results suggested that yield growth rates in the medium term are low by historical and international standards, and poverty reduction is low. On the other hand, the strong reform agenda scenario suggested reduced domestic agricultural prices arising from the reduction in tariffs and removal of QRs. Furthermore, the impact on poverty is high in the medium term; poverty incidence is lower by 10 percentage points.

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