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Saturday, April 19, 2008

Rice and Philippine politics

Mula sa Popular Economics BY MA. SUZETTE R. DAQUIZ, Researcher

In the world of politics, numerous strategies have been tried and tested just to gain a lead against one’s opponents. But who would have thought that the country’s staple food would play a huge role in politicians’ pursuit of glory?

In the Philippines, rice has become more than just a staple.

A paper from Philippine Institute for Development Studies (PIDS) written by Ponciano S. Intal, Jr. and Marissa C. Garcia, shows that the price of rice has become a significant determinant of electoral results since the 1950’s with just one exception, 1998.

A previous literature used by the authors said that rice was a major electoral issue before the Martial Law regime.

"The ruling party always used its control over rice supply and distribution in order to gain more votes from the electorate. The opposition party, on the other hand, often capitalized on recurring rice crises in order to discredit the incumbent administration, " it said.

The authors have noticed that rising rice prices have preceded periods leading to presidential elections in the late 1950s up to the latter 1960s.

This scenario of rising rice prices is accompanied by long queues for the government’s low-priced but inadequate rice stock.

The opposition would then highlight this so-called failure of the incumbent administration’ s rice policy, resulting in a loss of confidence in the current government. Eventually, this translates to a shift in voters’ preference, in favor of the opposing political party.

"The electoral defeat of President [Carlos] Garcia in 1961 and President [Diosdado] Macapagal can be attributed in part to...spikes in rice prices during the run-up to the presidential elections," the authors observed. "It is to be noted also that for the 1965 elections, the Macapagal administration increased substantially the level of rice imports (in 1964-1965) apparently in an attempt to dampen the price of rice before the elections but to no avail," they added.

Meanwhile in 1992 and 2004, when the price (real and nominal) of rice was "benign", the incumbent administration or its handpicked predecessor was elected into office.

This, according to the authors, "is consistent with the hypothesized direction of the political impact of rice in presidential elections in the Philippines. "

The year 1998 could be considered a unique case as the price of rice was not influential to the outcome of the presidential elections.

Despite stable prices at the time, the candidate of the incumbent administration did not emerge as the victor in the presidential race.

A POLITICAL COMMODITY

The authors have noted that rice has been a pivotal political commodity since the Commonwealth era before the Second World War.

For one, rice is a main component of Filipinos’ diet and an important calorie source. It is also a major source of employment and income in the country.

"By the sheer magnitude of its contributions to the country’s economic development as well as the diverse and conflicting economic impacts it has on various segments of society, the sustainable supply of rice at low and stable prices has been the government’s overriding objective," the paper said.

In fact, administrations both past and present, have tried their best to keep prices stable and at a level that is both affordable for consumers yet remunerative for farmers.

However, the government’s efforts in the past two decades have shifted towards protectionism, which does not bode well at all for economic progress.

"In fact, the shift to rice protection since the 1980s has failed to stabilize domestic rice prices and has effectively penalized the poorer households. This has been traced largely to the failure of the National Food Authority to provide timely, accurate, and appropriate intervention in the country’s rice market," the authors noted.

Historical data reveal higher nominal protection rates (NPRs) towards the recent years, which indicate a movement towards protectionism.

NPR is defined as the percentage difference between domestic and border prices. High NPRs indicate high domestic prices, which benefit producers while lower NPRs mean low domestic prices, which favors consumers.

"These high rates of protection, which are expected to encourage output growth of domestically produced rice have yet to show substantial positive results," the authors said.

Between 1995 to 1998, at the time when NPRs were considerably higher, rice production moved at an average of negative 6.7%. It hardly changed, at 3.3% from 1995-2002 compared with 3.2% from 1970-1994, when NPRs were significantly lower.

Also, the country has become a growing rice importer from being a marginal exporter until the early 1990s. This indicates that the gap between production and consumption further widened while dependency on the external rice market to meet local food requirements has risen, putting food security at forefront of the country’s many problems.

"If the Philippines is to achieve sustained, stable rice supply at low prices and at the same time promote rice consumer and producer welfare, the adoption of a private-focused, market-based regulatory regime without a rice trading parastatal (but with rice emergency reserves, not for price stabilization) remains as a long-term objective," the authors said.

The authors suggest a two-pronged transitional approach to resolve the problem.

First, is to set up a tax expenditure fund ceiling for all subsidies to government- owned and- controlled corporations (GOCCs), which will limit the budgetary cost to the government.

Second, adopting a more aggressive support for productivity enhancing investments in the rice sector such as irrigation and better varieties and improved farming practices through agricultural research, development, and extension.

"The net effect is to shift the supply curve outward, resulting in the country being a marginal net rice exporter."

Source:

- "Rice and Philippine Politics" by Ponciano S. Intal, Jr. and Marissa C. Garcia, Philippine Institute for Development Studies Discussion Paper No. 2005-13, July 2005.

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