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How Successful Are Government Interventions In Food Markets? Insights From The Philippine Rice Market

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  • Richard Yao

    ()

  • Gerald Shively

    ()

  • William Masters

    ()
    (Department of Agricultural Economics, College of Agriculture, Purdue University)

Abstract

We investigate the Philippine government’s price stabilization policy for rice. Seemingly Unrelated Regressions are used to examine the effectiveness of the program at regional and national levels over a 21-year period (January 1983 to December 2003). Results of the regional analysis indicate some NFA-induced spatial and temporal differences in terms of producer prices. The NFA successfully increased producer prices in 5 of 13 regions through stock accumulation and paddy rice purchase at floor prices. NFA stock releases do not correlate strongly with retail prices at the national level, although results from the regional model indicate that NFA stock releases reduced retail prices in five regions, leading to perceptible spatial and temporal differences between regions. Although the NFA support price appears to have been moderately successful in increasing producer prices at a national level, on average, the support price led to an increase in consumer prices in ten regions and contributed little to price stabilization. Overall, therefore, our results indicate very limited success on the part of the NFA to achieve its major objectives at either regional or national level. We suggest the NFA should concentrate its resources in the poorest areas of the country, where it might exert greater and more useful influence in smaller and locally thin rice markets.

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Bibliographic Info

Paper provided by Purdue University, College of Agriculture, Department of Agricultural Economics in its series Working Papers with number 05-06.

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Length: 26 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:pae:wpaper:05-06

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Keywords: Philippines; rice; price supports; markets; commodity storage; food policy;

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References

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  1. Martinez, Elmer & Shively, Gerald E. & Masters, William J., 1998. "Testing The Link Between Public Intervention And Food Price Variability: Evidence From Rice Markets In The Philippines," 1998 Annual meeting, August 2-5, Salt Lake City, UT, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 20883, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Ghysels,Eric & Osborn,Denise R., 2001. "The Econometric Analysis of Seasonal Time Series," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521565882.
  3. Williams,Jeffrey C. & Wright,Brian D., 1991. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521326162.
  4. Birdsall, Nancy & Ross, David & Sabot, Richard, 1995. "Inequality and Growth Reconsidered: Lessons from East Asia," World Bank Economic Review, World Bank Group, World Bank Group, vol. 9(3), pages 477-508, September.
  5. David, Cristina C., 1997. "Food Policy: Its Role in Price Stability and Food Security," Discussion Papers DP 1997-11, Philippine Institute for Development Studies.
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Cited by:
  1. Senate Economic Planning Office SEPO, 2012. "Subsidizing the National Food Authority: Is It a Good Policy?," Working Papers id:4814, eSocialSciences.
  2. Intal, Ponciano Jr. S. & Cu, Leah Francine & Illescas, Jo Anne, 2012. "Rice Prices and the National Food Authority," Discussion Papers DP 2012-27, Philippine Institute for Development Studies.

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