How Successful Are Government Interventions in Food Markets? Insights from the Philippine Rice Market

This paper investigates the Philippine government's price stabilization policy for rice. Seemingly unrelated regressions are used to examine the effectiveness of the program at regional and national levels over a 21-year period (January 1983 to December 2003). Results of the regional analysis indicate some National Food Authority (NFA)-induced spatial and temporal differences in terms of producer prices. The NFA successfully increased producer prices in 5 of 13 regions through stock accumulation and paddy rice purchase at floor prices. NFA stock releases do not correlate strongly with retail prices at the national level, although results from the regional model indicate NFA stock releases reduced retail prices in five regions. We argue that the NFA should concentrate its efforts in the poorest areas of the country, where it might exert greater and more useful influence in smaller and locally thin rice markets. [PUBLICATION ABSTRACT]