The macroeconomic and food security implications of price interventions in the Philippine rice market
The Philippine government has a number of policy interventions in the domestic rice market aimed at promoting national food security. This paper examines the economy-wide and food security implications of three of the main policies: a ceiling on prices paid by rice consumers; a floor on prices received by paddy producers; and a subsidy on prices paid for seeds by paddy farmers. These programmes have been subject to domestic criticism on allocative efficiency and distributional grounds. We examine the effects of removing the programmes using an economy-wide model with detailed treatment of agricultural activity, land use, and food security measures. We find that the programmes make a small contribution to food security, for a modest budgetary outlay. The allocative efficiency gains available from ending the programmes are small, and may be outweighed by the potential for adverse short-run macroeconomic consequences.
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