OECD: Agri growth in PH still slow amid strong financial buffer

Among emerging economies, the Philippines had one of the highest rate of support to its farmers in the last three years, a report showed.

In its latest agricultural evaluation, the Organization for Economic Cooperation and Development (OECD) said the country gave out the biggest support to the sector at an average of 26 percent of the country’s total gross farm receipts for 2015 to 2017.

This is higher than the OECD average of 18 percent and one of the highest among all emerging economies covered by the report, which included Brazil, Chile, South Africa, Thailand, Mexico, Malaysia, India and Indonesia, among others.

The dominant form of support to the country’s local producers is through the market price support (MPS). The MPS, which is in the form of subsidy or price control to sustain the competitiveness level of agricultural goods, is mostly concentrated on rice producers.

Overall, the government’s support cost through MPS and budgetary transfers was high at 3.2 percent of the country’s gross domestic product (GDP) during the 2015 to 2017 period. This was nearly five times the OECD average and one of the highest across all countries measured.

Yet, the OECD noted the productivity growth of the country’s agricultural sector was much slower compared to most regions and the world’s average due to “decades of underinvestment.”

The organization recommended the “diversification of production, consumption and income by removing commodity-specific incentives; gradual removal of rice import quotas; and transformation of the NFA (National Food Authority) into a market-neutral agency managing emergency stocks.”