Agriculture Reference
In-Depth Information
The Philippines
The Government of the Philippines regulated and intervened in rice and corn
markets as far back as the 1960s. In the early years, intervention programs were
carried out through two agencies, the Rice and Corn Board (RICOB) and the
Rice and Corn Administration (RCA). These agencies were dissolved in 1972
when the National Grains Authority (NGA), the predecessor of NFA, was estab-
lished to promote the integrated growth and development of the grain industry
by addressing the key areas of market failures. However, until the early 1980s,
price intervention policies, both economy-wide and commodity-specific, cre-
ated an incentive structure that was significantly biased against agriculture. This
bias was primarily evidenced by an overvalued peso to protect industry and
other economy-wide policies to defend an unsustainable deficit in the balance
of payments (David 2003).
In 1981, during a crisis in which rice supply was scarce even in the world
market, the domestic supply of white corn (a substitute for rice) was short and
the retail prices of both rice and corn were high. The government decided that
it had to implement a price ceiling and rice rationing to defend the ceiling. With
an executive order, NGA was transformed to NFA with additional mandates that
were designed to protect consumers, promote rice self-sufficiency, and develop
post-harvest technology for grain. Besides providing price support, NFA was
tasked to build and operate a network of storage and post-harvest facilities
throughout the country. Its mandates included (1) stabilizing year-round rice
prices, (2) making rice affordable for the country's population, and (3) ensur-
ing that palay (unmilled rice) prices gave rice farmers a reasonable level of in-
come. Today it is both a regulator and corporation engaged in grain trading. As
such, it has four functions: (1) trading, (2) regulatory, (3) developmental, and
(4) corporate management. NFA has been the sole importer of rice into the
Philippines for more than 25 years.
Vietnam
Vietnam clearly followed a different path than the other five countries discussed
in this report. In the initial phase of unification of North and South Vietnam,
agriculture was a major disappointment, making reform imperative. Directive
100 in 1981 permitted cooperatives to contract with farm households to produce
given amounts on their own plots, but any surplus could be sold on the newly
liberalized free market (Minot and Goletti 2000). Farmers responded impres-
sively to the new incentives: per capita food production grew from 273 kilograms
in 1981 to 304 kilograms in 1985. However, in 1985/86, the fiscal deficit bal-
looned as a result of reduced assistance from the Soviet Union and losses from
the state-owned enterprises (SOEs). So in 1986 the government announced its
intention to move toward a more market-oriented economy. Resolution 10 in
