Economic analysis of the price stabilization program for grains in the Philippines
1998
Quicoy, C.B.
The findings indicate that grain production declined due to the decrease in area devoted to grains while consumption increased steadily. The continuous decline in production, while consumption continues to increase resulted to large importation of grains to meet the domestic demand. In addition, the study found out that although nominal prices of grains increased, the real prices of grains decreased, which could have caused the decrease in the area devoted to grains. The results of the study further showed wider fluctuations in farm prices compared to wholesale and retail prices of grains. Wider fluctuation in farm prices was explained by the limited volume of grains transacted by NFA [National Food Authority, Philippines] which was the result of its limited budget and the weaknesses of its procurement and disbursement schemes. Likewise, this failure was influenced by the decline in grain production that resulted to the country's continuous importation of rice and corn. Furthermore, the study found out that the buffer stock operation of the government failed to meet its target of a 90-day buffer stock level by July 1 each year. The producers and consumers gained in the implementation of price support and release price on grains. However, the program resulted to huge losses on the society, as a whole. This means that the Net welfare effect of the program was found to be negative or not beneficial at all
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