State intervention and private sector participation in Philippine rice marketing

The primary findings of the study can be summarized as follows: First, the rice sector, even as it has been touted to aid the recovery of the Philippine economy in 1999, has been largely unsteady, if not stagnant, in the 1990s. As with the whole agricultural sector, it continues to be weakened by the bottlenecks in infrastructure and research and development. The Philippines has a lot of catching up to do in terms of public spending in roads and irrigation as well as research and development. As of 1999, the promise of the Agricultural and Fisheries Modernization Act of 1998 - that is additional appropriations for agriculture spending, especially infrastructure-related, in the amount of PhP105 M over a span of six years - remains to be realized. Second, of the government's direct market intervention tools, NFA's [National Food Authority] import operations also happen to have the most impact on the rice market. While the infusion of imports into the domestic market has helped stabilize retail prices, millers, traders and farmers are one in bewailing the impact of such intervention, especially when ill-timed, on their livelihood. Farmers and small-scale traders stand to lose most as their entitlements do not afford them to shift industries easily or without cost. The universal retail price subsidy, in conjunction with an ineffective farm gate support, program has neither been efficient or egalitarian. Third, the sweeping indictment of the private rice-marketing system as monopolistic is unfounded. In the case of traders, monopolistic tendencies only surface where infrastructure that enhances the access of farmers to more competitive markets are minimal or absent. Intense competition among millers across provinces is apparent. Moreover, the margins that accrue to marketing agents are within reasonable bonds. The factor behind huge incomes for paddy and rice traders is not exorbitant margins but huge volumes. Because of the centrality of volume turn-over in the trading business, institutions of trust (credit tying-suki system) have risen. Finally the millers appear to be a modernizing, entreprenurial class. Contrary to popular notion, new and modernizing investments are coming into the milling-trading sector. They are important contributors to the viability of rural economies and must not be cast in the mold of regressive and exploitative patrons