Philippine Agriculture to 2020: Threats and Opportunities from Global Trade

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Agriculture confronts several challenges over the decade, i.e., meeting burgeoning food requirements with limited farm land, and balancing the need to import with the provision of livelihoods. The current policy regime leans heavily toward import substitution, with supply side interventions to boost production, combined with protectionism toward sensitive products (particularly rice). The study conducts a scenario analysis to examine the likely evolution of Philippine agriculture to 2020, as well as the implications of pursuing alternative policies. It finds that, under a business-as-usual scenario: Agricultural growth continues with dramatic increases for rice production in the offing. Likewise per capita consumption of most food items would continue increasing. Import growth is curtailed, with substantial price increases for meat products and rice.

The alternative scenario involves liberalization and re-allocation of expenditure support toward export-oriented agricultural subsectors. Under this scenario, imports of rice, yellow maize, and poultry increase, with faster increases in per capita consumption than under business-as-usual, and lower retail prices. While consumers gain, producers of import-competing products face harsher competition and cut back on their production. Deepest cuts are expected for rice. Export-oriented commodities experience a production and export boost, with brightest prospects for other crops, banana, aquaculture products, and even coconut. This study recommends the outward-oriented policy, with concomitant measures to compensate losers, ease the burden of adjustment, and facilitate the transition toward a more diversified and dynamic agricultural sector.