Rice self-sufficiency policy limits farm incomes — OECD

THE Organisation for Economic Co-operation and Development (OECD) is recommending that the Philippines seek to diversify its crops rather than pursue market-distorting policies such as rice self-suff iciency.

The report, a review of Philippine agricultural policy published on the OECD Website last week, said policy initiatives pursued by the Philippines may be hindering farmers from realizing bigger incomes.

“A shift from low-value commodities to those offering high returns or occupying less land area (contributes) to higher productivity and higher farm incomes. This trend is apparent in developing Asian countries across a diversity of crops, but not in the Philippines, largely due to a set of distortive policies driven by the self-sufficiency objective in rice production,” the OECD report read.

The report explained that the global rice crisis in 2008 prompted the government to hike its expenditure on agriculture in the following years with intensified programs aimed at boosting rice production.

OECD Director of Trade and Agriculture Ken Ash, in a statement released last week by the Department of Agriculture (DA), said that “restructuring government support away from selfsufficiency targets, in particular for rice production, towards measures that strengthen productivity and overall farm profitability on a sustainable basis will be critical.”

The OECD report noted that the share of the staple grain in the total value of Philippine agricultural production climbed from 16% in 1991 to 22% in 2013.

Sought for comment, Agriculture Secretary Emmanuel F. Piñol said that the government’s riceself sufficiency target cannot be abandoned.

“Targeting rice sufficiency as part of our food security program is a matter of national interest and while we appreciate the review we will not veer away from our target of achieving rice selfsufficiency,” Mr. Piñol said in a text message on Monday.

To attain its 2020 goal, the agency, in the next few years, will seek to plant high-yield hybrid rice on one million hectares, distribute small irrigation systems, including solar-powered ones, and providing easy access to credit, among other interventions.

The DA estimates that rice self-suff iciency will require output of 21.67 million metric tons of palay or unmilled rice.

For 2017, the agency targets output of 19 million metric tons for palay, which if achieved, will be a record.

Mr. Ash endorsed the course of agriculture signaled by the Philippine Development Plan 2017-2022 in which the government targets a 2.5-3.5% growth in output starting this year until the end of the current administration’s term.

“A reformed policy environment, consistent with measures included in the most recent Philippine Development Plan 20172022, would help ensure the sector contributes to improved food security and poverty reduction,” the OECD off icial said.

The OECD report found that government support for agriculture — representing about 25% of farm revenue — is higher than in other Asian countries, and the highest among all emerging economies covered by OECD indicators.

The government’s interventions through market price supports and budgetary transfers accounted for 3.3% of the country’s gross domestic product (GDP) over the two-year period ending 2014, but often failed to meet policy objectives, the OECD said.

“Such high %TSE (total support estimate as a share of GDP) contrasts with the sector’s relatively poor performance in terms of productivity growth and highlights the need to ensure that the money is spent effectively,” the OECD report said.

Overall, the report recommended more investment to be allotted in agriculture while resolving policy distortions, among others.

The OECD noted that agriculture’s share in GDP dropped from 22% in 1990 to 11% in 2014 while currently employing a third of the country’s work force.

The report is one of a series of reviews of national agricultural policy undertaken by the OECD’s Committee for Agriculture and initiated at the request of DA Undersecretary for Policy Planning Segfredo R. Serrano.

The assessment measures the support provided to agriculture using the same method the organization employs to monitor agricultural policies in OECD countries and a growing member of non-member economies.

The OECD has 34 members, including some of the most highly-developed countries, and works with more than 70 nonmember economies to promote economic growth and sustainable development.