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ReportNo. 9848-PH Philippines IrrigatedAgriculture Sector Review (In Two Volumes) Volumel: Main Reportand Annexes 1-3 Public Disclosure Authorized April15, 1992 EastAsia and Pacific Region FOR OFFICIAL USE ONLY Public Disclosure Authorized MICROFICHE COPY Report No. 9848-PH Type: (SEC) BERKOFF, D/ X81920 / E-3041/ ASTAG Public Disclosure Authorized Documentof theWorld Bank Public Disclosure Authorized Thisdocument has a restricteddistribution and may be usedby recipients only in theperfonnance of theirofficial duties. Its contents may not otherwise be disclosedwithout World Bank authorization. a CURRENCY EOUIVALENTS (December 1990) Currency Unit - Philippine Pesos (P) US$1.00 - P 28.0 P 1,000 - US$35.7 P 1 - 100 Centavos (ctvs.) - ± - FOR OFFICIALUSE ONLY 'rrigated agriculture in the Philippines was last reviewea by the Bank in the context of the 1987 Agricultural Sector Riview. This report updates and in some respects revises the conclusions of tniatearlier study, with a special focus on the demend and supply of rice and other basic grains. In particular, it is less optimistic that rice self-sufficiency can be sustained through increases in rice yields or high return irrigationprojects, and suggests that substantial imports will be required. The report touches upon a wide range of food policy and irrigation issues and explores how these are related to help establish future priorities for meeting rice requirements in a balanced manner. It reviews other food sectors (wheat, corn, livestock etc.,) to the extent that they impact on prospects for rice, but is not intended as a comprehensive review of all food production and policy. Nor does the report provide a detailed review of agricultural supporting services (research,exter.sion, credit etc.) since its primary objective in relation to irrigation is to evaluate the justification for future invrestmentin the light of institutional support for improving irrigationperformance. A large body of work has been undertaken on these and related issues by a variety of national and internationalagencies including UPLB, NIA, DA, IRRI, IFPRI. and the ADB. An attempt has been made to reflect the detailed analyses undertakenby these other agencies in the report. The report is organized into two parts. The firsta (Chapters2 and 3) reviews prospects for rice demnandand supply within the context of the foodgrains sector, assessing trade and pricing policies in terms of their impact on the rice balance. The second part (Chapters 4 and 5) focuses more directly on the irrigation sector itself, reviewing priorities for investment and proposing approaches to improved irrigation performance, institutional support and inter-agency coordination. Chapter 6 draws together ;the conclusions of the earlier chapters. Annexes describe the physical setting (Annex 1); evaluate technical constraints on paddy yields (Annex 2); present an econometric model of the demand system together with preliminary estimates of supply response (Annex 3); review issues in the irrigation sector (Annex 4); and suggest mechanisms for improving inter-agency coordination and institutionalsupport for irrigated agriculture (Annex 5). The report was prepared by a mission comprising D.J.W. Berkoff, Y.K. Choi and D.O. Mitchell (Bank Staff) and M. Barber (Consultant)that visited the Philippines in July 1990. A second mission comprising D.J.1N.Berkoff, D.O. Mitchell and M. Ingco (Bank Staff) took place in February 1991. Annexes or working papers were prepared by M. Adriano, D. Taylor and A. Sanchez (Consultants). The mission is grateful for the assistance and suggestions it received from NIA, DA, NEDA and other agencies in the Philippines.A workshop was held in Manila in February 1991, hosted by NIA, at which the mission's preliminary conclusions were extensively discussed and during which it received important guidance. The mission is grateful to NIA for organizing this workshop and for the support it provided at all times. The final draft report was discussed with government in January 1992. This document has a restricted distribution and may be usedby recipients only in the performance of their officialduties. Its contents may not otherwise be disclosedwithout World Bank authorization. - iii - ABBREVIMONS AND ACB M= ACPC - Agricultural Credit Policy Council ADCC - Agricultural Development Coordinating Committee ADB - Asian Development Bank AMRIIS - Angat-Maasim River Integrated Irrigation System AMSL - Above Mean Sea Level ATI - Agricultural Training Institute BAR - Bureau of Agricultural research BAS - Bureau of Agricultural Statistics BCM - Billion Cubic Meters BPI - Bureau of Plant Industry BPW - Bureau of Public Works BSWM - Bureau of Soils and Water Management CAR - Cordillera Autonomous Region CALF - Comprehensive Agricultural Loan Fund CARP - Comprehensive Agricultural Reform Program CBP - Cer.tral Bank of the Philippines CDA - Cooperative Development Authority CHO - Constant Head Orifice CIDP - Communal Irrigation development Project CIS - Communal Irrigation Scheme(s) CRC - Center for Research and Development DA - Department of Agriculture DAR - Departmen of Agrarian reform DNER - Department of Natural Resources DPWH - Department of Public Works and Highways DS - Dry Season EO - Executive Order ERR - Economic Rate of Return ESCAP - Economic and Social Commission for Asia and the Pacific FAO - Food and Agricultural Organization FPA - Fertilizer and Pesticide Authority FSDC - Farm Services Development Corporation GSA - Gross Service Area HRS - Hydraulic Research Station HYV - High Yielding Variety IA(s) - Irrigation Association(s) IBRD - International Bank for Reconstruction and Development IADP - Integrated Agriculture Development Project IASR - Irrigated Agriculture Sector Review ICID - International Commission on Irrigation and Drainage IDD - Institutional Development Department IDO - Institutional Development Office IER - Impact Evaluation Report IIMI - International Irrigation Management Institute IOSP - Irrigation Operation Support Project IRRI - International rice research Institute ISF - Irrigation Service Fee ISIP - Irrigation Services Improvement Plan LBP - Land Bank of the Philippines - iv - JICA - Japan International Cooperation Agency LDC - Local Development Councils LWUA - Local Water Utilities Administration MARIIS - Magat River Integrated Irrigation System MCM - Million Cubic Meters MOA - Memorandum of Agreement MTPDP - Medium-Term Philippine Development Plan NAFC - National Agricultural and Fishery Council NAPHIRE - National Post Harvest Institute for Research and Extension NCCD - National Comm3ttee on Crop Diversification NEDA - National Economic Development Administration NFA - National Food Authority NGO - Non-Government:Al Organization NIA - National Irrigation Administration NIS - National Irrigation Scheme(s) NISIP - Naational Irrigation Systmes Improvement Project NPC - National Power Corporation NWRB(C) - National Water Resources Board (Council) OECF - Organization for Economic cooperation and Finance OED - Operations Evaluation Department O&M - operations and Maintenance PAFC - Provincilal Agriculture and Fishery Council PAGASA - Philippine Atmospheric, Geophysical and Astronomical Services Administration PAR - Philippine Area of Responsibility (for Typhoons) PBME - Project Benefit and Monitoring and Evaluation PCARRD - Philippine Council for Agriculture, Forestry and Natural Resources Research and Development PCR - Project Completion Report PD - Presidential Decree PHILRICE - Philippines Rice Research Institute PIO - Provincial Irrigation Office PIP - Provincial Irrigation Profile PIS(s) - Pump Irrigation Scheme(s) PARC - Presidential Agricultural Reform Council POM - Plan of Operations and Maintenance PPAR - Project Performance Audit Report RA - Republic Act RB - Rural Bank RDA - Regional development Assembly RDC - Regional development Council RIO - Regional Irrigation Office SEC - Security and Exchange Commission SFR - Small Farm Reservoirs SMD - Systems management Department SWIM - Small Water Impounding Management (project) TV - Traditional Variety UPRIIS - Upper Pampanga River Integrated Irrigation System USAID - United States Agency for International development UNDP - United Nations Development Program WHO - World Meteorological Office WS - Wet Season PHTILPPTNES RRIGATED AGRTCULTURE SECTOR REVIEW Table of Contents Volume I PBEEAC . ................................................................ i EE!CUTIVE SUMMARY ................................................... ix 1. INTRODUCTION General .......... .................................. 1 The Agricultural Sector ........................................ 2 Irrigated Agriculture .......................................... 3 GOP's Agricultural Objectives ........... ....................... 4 The Irrigated Agriculture Sector Review ...... ..................5 2. DETERMINANTS OF DEMANDAND SUPPLY A. Isues in Demand Consumption Trends ........... ......................... 6 Price and Income Effects .................................... 6 B. Issues in Supply Paddy .................................... 9 Corn and Livestock ........... ......................... 14 Other Food Crops ......... ........................... 17 C. Prospects for the Rice Balanne Past Trends .................................... 17 Demand Prospects .......... .......................... 18 Supply Prospects ................ 19 Prospects for the Rice Balance .20 3. TRADE AND PRICING POLICIES A.The Polirq Context General .21 Wheat .22 Paddy and Rice .24 Corn and Livestock .29 Transport
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