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Agricultural policies

The government of the Philippines issues the provisions related to continue agriculture production as follows:1 1)all farming and fishing activities shall continue; 2)all farmers, farm workers, fisher folk and agribusiness personnel shall be exempted from home quarantine. Provided that they observe safety protocols and number is at a minimum; 3)all agricultural supply stores, outlets nationwide and animal clinics must be allowed to operate under a skeletal force; 4)essential farm personnel (including veterinarians, farm hands, farm and fisher folks) that works at production areas, bearing proper documentation, are also requested passage at quarantine checkpoints.

The Department of Agriculture (DA) is promoting backyard vegetable gardens or “survival gardens” as source of nutritious food during the enhanced quarantine period. Some Local Government Units (LGUs) are distributing vegetable seeds.

The National Food Authority (NFA) has completed the prepositioning of rice stocks in the country amid the enhanced community quarantine imposed in the entire Luzon, Philippine’s most populous island. Some Local Government Units (LGUs) have bought excess produce from the farmers in the local communities to be distributed as part of the relief packs to those in need. Others have already prepositioned food packs for distribution to its constituents. An LGU in Ifugao Province will be targeting indigent constituents for the distribution of family food packs.

Agro-food supply chain policies

The Department of Agriculture has been issuing food lane passes. All vehicles carrying essential food commodities, agro-fishery products and inputs bearing government-issued stickers must be allowed passage at quarantine checkpoints through these food lanes.

The National Police (PNP) designated a “Cargo Lane” for agriculture and fisheries inputs and food products transported through all forms of conveyance (air, water, and land), across all modes of deliveries. Priority for entry to cargo lanes shall be given to truckers/suppliers with Food Pass 2. Food pass accreditation is free of charge 3. DA accredits suppliers and trucks to use the “Food Lane” (Cargo Lane) 4.

The DA identifies a list of food items that must be allowed unhampered and unimpeded in all quarantine checkpoints: a)all vehicles carrying crop commodities, and fishery and other aquatic products with carriers must be allowed passage; b)live poultry and livestock, including meat and meat products, are allowed passage only with proper documentation as in DA MC No.5 series of 2020; c)movement of products and services related to farm inputs is requested for unhampered passage on quarantine checkpoints.

The Inter-Agency Task Force on Emerging Infectious Diseases (IATF-EID) has approved the food resiliency protocol proposed by the Department of Agriculture (DA) to speed up the transport of major agro-fishery commodities to Metro Manila and other urban areas in Luzon.

The DA is co-ordinating with the LGUs to ensure that households affected by the enhanced community quarantine will have access to the food supply. The DA’s distribution and marketing system identifies drop-points where farmers can directly sell their goods at retail prices, and where people can buy major agricultural goods at reasonably low prices. This marketing strategy directly connects the food producers to consumers, thereby lessening the cost of food products. It links the LGU in urban centres to farmer-producers in the different parts of the country to ease the delivery and distribution of food supply.

Consumer policies

The National Nutrition Council (NNC) issued their first Nutrition Cluster Advisory to support and remind the Local Government Units (LGUs) of useful guidelines that would prevent deterioration of nutrition. Government agencies continue to provide information and reminders on eating healthy at this time of crisis.

The Department of Social Welfare and Development (DSWD) provided official communication regarding the continuity of its major cash transfers programmes such as the Pantawid Pamilyang Pilipino Program (4Ps) and decided to do payouts earlier than scheduled.

The Department of Agriculture, Department of Trade and Industry (DTI), and the Department of Health (DOH) issued a joint memorandum circular imposing a 60-day price freeze for basic goods and agriculture products nationwide. Pricing is being monitored by DA (some spot-checks are being done jointly by DA and DTI) and information is released every two days.

Support to producers (%PSE) was around 27% in 2017-19, a higher number than the levels observed in 2000-02 (Figure 22.1). However, PSE declined from 2018 to 2019 due to a smaller price gap between domestic prices and world prices (Figure 22.2). Almost all producer support is provided through market price support (MPS), with a strong focus on rice. MPS and input subsidies without input constraints, both considered as potentially most distorting forms of support, explain practically the total value of support to producers. On average, prices received by farmers were 39% higher than world prices in 2017-19 (compared to 31% in 2000-02). MPS is also the main component of Single Commodity Transfers (SCT): rice, sugar and poultry and pig meat had the highest share of SCT in commodity gross farm receipts in 2017-19 (Figure 22.3). Expenditures for general services (GSSE) relative to agricultural value added more than doubled from 2000-02 to 2017-19, driven largely by higher investments in irrigation systems (Figure22.1).

Main policy instruments

Various measures provide price support to Philippine producers. Price support policies mainly focus on rice and sugar and comprise a combination of trade barriers and domestic market regulation. The system of quantitative restrictions for rice was abolished in March2019. The rice price support policy is also implemented by the National Food Authority (NFA) through buying buffer stocks at administered prices from domestic producers, and selling these stocks at subsidised prices to consumers. Up to March2019, the NFA also handled import restrictions. For sugar, production quotas and trade barriers are used for producer price support and market regulation.

Tariff protection remains the Philippines’ main trade policy tool. Trade liberalisation has primarily occurred within regional trade agreements, particularly the ASEAN Free Trade Area. The simple average applied Most Favoured Nation tariff on agricultural products was 9.8% in 2016. All tariff lines applied are advalorem and range from 0% to 65%.

Tariff rate quotas are applied for 14agricultural products, with in-quota tariffs ranging from 30% to 50% and out-of-quota from 35% to 65%. Products covered include live swine, goats and poultry and meat thereof, potatoes, coffee, maize, rice, and sugar. However, for three agricultural products (live horses, live bovine animals and beef), the TRQs are not applied. For three others (poultry meat, potatoes and coffee), it is only applied to a specific range of tariff lines (WTO, 2018[1]). Import licensing is required for all regulated products (including those under TRQs) and is intended to safeguard public health, national security and welfare.

In order to offset the effect of the liberalisation of rice imports (see section on trade policy developments), the government established a Rice Competitiveness Enhancement Fund (RCEF) with an annual appropriation of PHP10billion (USD192.3million) over the next six years (see the domestic policy development section). Several agricultural commodities are subject to export controls and require permits in addition to agency approval, namely grains and grain products, and sugar.

Budgetary support to agricultural producers, both through payments provided to farmers individually and to the agricultural sector as a whole (general services), is small compared to the importance of price support. During the 2000s, the main focus of budgetary support to producers was on subsidising the use of variable inputs, including seed and fertiliser subsidies. However, investment subsidies have increased in recent years. In 2019, such support increased due to the introduction of additional payments to rice producers in the form of seed and investment subsidies, compensating the liberalisation of rice trade.

Expenditures for key services to the agricultural sector have increased significantly since the end of the 2000s. The most important item is the development and maintenance of infrastructure, of which a major share is devoted to off-farm investments in irrigation systems. Financing extension services is another and increasingly important element of public support for the sector.

Since 1988, the Philippines has been undertaking an ambitious agrarian reform that covered close to three-quarters of the country’s total agricultural area. By end-2015, the redistribution of land was almost complete, but property rights remain to be settled. Almost half of the reform beneficiaries still have only collective ownership certificates instead of individual property rights. Various restrictions on land-market transactions and insecure property rights continue to limit on-farm investment and to weaken the potential economic benefits of the reform.

Domestic policy developments in 2019-20

Important institutional measures related to the changes in rice trade and related domestic market regulation were introduced by the Rice Tariffication and Liberalisation Law. The food safety regulatory function, and hence the responsibility for issuing permits, licenses, or registering trade and importation of rice has been transferred from the National Food Authority (NFA) to the Bureau of Plant Industry (BPI).

Today, the main role of the NFA consists of local paddy procurement from domestic producers and the management of buffer-stocks including sales to the domestic markets. In September 2019, the Department of Agriculture (DA) instructed the NFA to intervene on the domestic market by selling domestic rice from its buffers at PHP27 (USD0.52) per kg in order to lower consumer prices. In addition to the unloading of NFA rice stocks, the DA has instructed the agency to increase the buying price of rice into buffer (intervention) stocks from PHP17 to PHP19 (USD0.33 to USD0.37) per kg of rice (dried and cleaned). The President also ordered the NFA to increase the country’s emergency buffer stock from 15 to 30days by buying more rice from farmers and increase the turnover of the stocks. In reality, these stocks are playing more a role of an “intervention stock” rather than an “emergency buffer stock” with two functions: (i)supporting domestic prices through buying stocks at administered prices; and (ii)reducing consumer prices in the market by releasing from stocks at subsidised prices.

In order to offset the effect of the liberalisation of rice imports the government established A Rice Competitiveness Enhancement Fund (RCEF) with an annual PHP10billion (USD192.3million) appropriation through the next six years. In 2019, the expenditures were planned to be spent as follows: (i)PHP5billion for rice farm machinery and equipment; (ii)PHP3billion for rice seed development, propagation and promotion; (iii)PHP1billion for credit to farmers; and (iv)another PHP1billion for extension.

In addition, PHP3billion (USD57.9million) were provided in the form of an unconditional cash transfer to benefit 600000 small rice farmers (less than 2hectares planted for rice). Another PHP2.5billion (USD48.2million) went to finance the Expanded Survival and Recovery Assistance (SURE Aid) programme, which provides a PHP15000 zero-interest loan, payable in eight years to farmers tilling one hectare or less of rice.

Trade policy developments in 2019-20

Since joining the WTO in 1995, the Philippines has been applying quantitative restrictions (QRs) on rice imports, as it benefited from a special treatment clause (Article5 of the Agreement on Agriculture) which allowed QRs on rice imports to be maintained until 2012, on the basis of food security. In 2012, the Philippines requested a new extension of its special treatment for rice through a waiver until 2017. In order to comply with its WTO obligations, the Philippines replaced the quantitative restrictions (QRs) on rice imports with a tariff system as of March2019, under the “Rice Tariffication and Liberalisation Law” (RA 1120). For imports from ASEAN countries, no quota is applied only a single tariff of 35%. For imports from non-ASEAN countries, a tariff rate quota (TRQ) is established. Applied MFN in-quota and out-of-quota tariffs for rice are set at 40% and 180%, respectively. The Minimum Access Volume (MAV) for rice reverted from 800000tonnes to the 2012 level of 350000tonnes. The export restrictions for rice were eliminated.

On 13June 2019, the government issued Executive Order No.82, reverting tariff rates for Mechanically Deboned or Mechanically Separated Poultry from 40% to 5%, while those for frozen whole turkey were reduced from 40% to 20%. These rates are set to remain at the lower tariff until 31December 2020. Executive Order No.20, issued in 2017, prescribes the Most Favoured Nation (MFN) tariff schedule until 31December 2020. A new MFN tariff schedule, is expected to be released before the end of 2020, setting tariff rates for all products.

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