Agriculture Reference
In-Depth Information
these markets as a result of natural causes. Typhoons, floods, earthquakes, vol-
canic eruptions, and other natural calamities may cause temporary disruption
of the private-market activities of rice businesses in disaster-stricken areas. The
government presently has a system for coping with calamity situations. The Na-
tional Disaster Coordinating Council (NDCC), in coordination with the local
government units in affected areas, has the capability to respond to problems
induced by natural calamities.
There may, however, be emergency situations disrupting the ordinary rice
trade that NDCC may not regard as a natural calamity situation. The residents
in these affected areas become vulnerable to temporary increases in rice prices
as the marketing infrastructure is rendered impaired because of natural causes.
Because NDCC would not recommend to the president that these areas be de-
clared in the state of natural calamity, the government may have to prepare for
such emergency situations and directly intervene to keep rice prices from go-
ing up unnecessarily. A rice contingency fund may have to be created that the
government may tap in responding to such area-specific emergency situations.
The intervention to cope with this extraordinary situation, however, may be car-
ried out by a private trading company engaged for this purpose.
Targeted Rice Distribution to the Poor
Providing safety nets to the poor will always be a critical feature of develop-
ment policies, particularly for a developing economy, such as that of the Philip-
pines, which must pursue structural and macroeconomic adjustment reforms to
achieve a more sustained pace of growth. As Balisacan (1995) has argued, a
tight budgetary situation, such as the one confronting the Philippines today, does
not allow for a generous amount of food subsidies. This constraint calls for a more
targeted approach to providing food subsidies, in contrast to the general con-
sumer subsidies currently implemented by NFA.
A separate program to target rice subsidies for the poor will have to be de-
signed, funded, and implemented. Another feature of the program must be the
provision of assistance to disadvantaged regional markets to reduce price dis-
parities arising from transport cost differentials. Effective ways ought to be de-
veloped for identifying beneficiaries and for developing the appropriate mech-
anism of delivering assistance.
A related problem is the poor quality of marketing infrastructure. The rice
market in a specific area may gain access to rice at substantially higher prices
than found at more competitive markets. The higher prices may be the result of
higher marketing costs and/or monopoly rents. It is even a possibility that some
regional markets may not be serviced at all by the private sector for fear that the
government, for political reasons, will regulate rice prices at levels comparable
to those in the rest of the country.
An appropriate response may require subsidizing transportation of rice to
isolated areas. It is important to confine such interventions to truly needy areas
