Economic incentives and comparative advantage of vegetable seed production in the Philippines

The study revealed that despite the positive implicit tariffs derived which indicate the imposition of disincentives to production, the effective protection rates (EPRs) suggest that pechay, radish and mustard seed production activities still receive net positive incentives. At present however, the country does not have a comparative advantage in the domestic production of the three seeds. The current economic inefficiency of Chinese Brassica seed production in the country was attributed to the domestic producers relative inexperience or newness in the business. In this connection, it was deduced that domestic vegetable seed producers were being protected with the government's expectation that they would learn how to produce at costs low enough to compete with importers. The results of the sensitivity analyses revealed that a comparative advantage in Chinese Brassica seed production can be attained if the 3 seeds adjusted wholesale C and F prices will increase from $5020/mt, $5090/mt and $7520/mt to values greater than $6310/mt, $8380/mt and $8690/mt, respectively. Moreover, the country could also attain a relative comparative advantage at average yield levels higher than 714.56 kg/ha for pechay, 782.41 kg/ha for radish and 444.72 kg/ha for mustard. Based on the findings, the following recommendations for the redirection of the vegetable seed industry were derived: (1) the private vegetable seed producer should strive to: (a) further increase their current yield level; (b) increase their raw seed procurement prices; and (c) decrease the wholesale prices of their seeds. (2) Seed importation should still be subjected to tariff duties for the next five (5) years, after which the trade restriction could already be lifted. (3) Local seed production, not only by current domestic producers but also by seed importer-dealers, should be encouraged by the government at the same time that regulated importation is being implemented. (4) The Philippine vegetable seed program should still revolve around a private seed industry. (5) Seed legislation should consider the relative time necessary to attain a comparative advantage in seed production.