Agriculture Reference
In-Depth Information
ductivity program by procuring grains at higher-than-market prices and assur-
ing grain producers a stable and reasonable return to farming, despite a tripling
of rice yields in those years. In addition to price support, NFA is responsible for
developing the postharvest system for grains, building and operating a network
of storage and postharvest facilities throughout the country. The amended PD
4 defines the current food security program of the Philippine government. It
provides the following mandates to the NFA: (1) to stabilize year-round rice
prices, (2) to make rice affordable for the country's population, and (3) to en-
sure that
palay
(unmilled, or “paddy,” rice) prices provide rice farmers a rea-
sonable level of income. However, the agency's mandates have undergone sev-
eral changes, in terms of commodity coverage and trading policies, which
reflect the government's policy responses to solving various problems in run-
ning its food security program over the years (Table 7.1).
From Rice and Corn to Wheat, Sugar, and Cooking Oil
In the early years, the Philippines was a food-deficit country and, as a result,
there was no major push for the government to procure rice or corn from farm-
ers. Nevertheless, when the country achieved self-sufficiency and managed to
have a modest exportable surplus, the political pressure developed for NFA to
stop the fall of farm prices in order to develop incentives for farmers to sustain
the country's success in rice production. This pressure resulted in an amend-
ment to the charter requiring NFA to institute price support programs for rice
and corn. This policy resulted in subsidizing both consumers and producers. Al-
though the farm price support program addressed the political problem of or-
ganized rice and corn producers, high farm prices meant high consumer rice
and corn prices, which had to be compensated through subsidized public dis-
tribution of rice and corn. As a result, the budgetary requirement of the gov-
ernment's food security program grew, in contrast to the first few years of NFA's
operation, when its costs were smaller and the mandate was simpler.
Efforts to solve the financial problem produced another problem—flour
millers were unable to source wheat at prices consistent with the price ceiling
on flour-based food products. The bad wheat crop in major wheat exporting
countries in 1975 resulted in prohibitively expensive wheat in the world mar-
ket, thus preventing the local flour millers from maintaining the government-
imposed price ceiling on wheat flour.
2
This series of events paved the way for
creasing corn and rice productivity during the 1960s and 1970s. At the second Food Summit in Au-
gust 1998, the national government urged and provided resources to provincial local governments
to lead the effort of becoming “self-sufficient” in rice production. These pronouncements under-
score the prevalent thinking in the Philippines toward self-sufficiency as an important strategy to
attain food security.
2. A similar scenario took place in 1977, but this time it involved feedgrains. When a price
ceiling was imposed on corn, rising world market prices of yellow corn increased to levels incon-
sistent with the price ceiling. This disparity gave impetus to integrators and large livestock and
