A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Briones, Roehlano M. et al. Working Paper Monitoring and Evaluation of Agricultural Policy Indicators PIDS Discussion Paper Series, No. 2012-26 Provided in Cooperation with: Philippine Institute for Development Studies (PIDS), Philippines Suggested Citation: Briones, Roehlano M. et al. (2012) : Monitoring and Evaluation of Agricultural Policy Indicators, PIDS Discussion Paper Series, No. 2012-26, Philippine Institute for Development Studies (PIDS), Makati City This Version is available at: http://hdl.handle.net/10419/126894 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. 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David, Roehlano M. Briones, Arlene E. Inocencio, Ponciano S. Intal, Jr., Ma. Piedad S. Geron, and Marife M. Ballesteros DISCUSSION PAPER SERIES NO. 2012-26 The PIDS Discussion Paper Series constitutes studies that are preliminary and subject to further revisions. They are be- ing circulated in a limited number of cop- ies only for purposes of soliciting com- ments and suggestions for further refine- ments. The studies under the Series are unedited and unreviewed. The views and opinions expressed are those of the author(s) and do not neces- sarily reflect those of the Institute. Not for quotation without permission from the author(s) and the Institute. October 2012 For comments, suggestions or further inquiries please contact: The Research Information Staff, Philippine Institute for Development Studies 5th Floor, NEDA sa Makati Building, 106 Amorsolo Street, Legaspi Village, Makati City, Philippines Tel Nos: (63-2) 8942584 and 8935705; Fax No: (63-2) 8939589; E-mail: [email protected] Or visit our website at http://www.pids.gov.ph Monitoring and Evaluation of Agricultural Policy Indicators Philippine Institute of Development Studies based on contributions by: Cristina C. David Roehlano M. Briones Arlene E. Inocencio Ponciano S. Intal Piedad S. Geron Marife M. Ballesteros This study was supported by the World Bank and the Food and Agriculture Organization. Abstract: This study proposes a set of indicators for monitoring and evaluation of agricultural policy, patterned after the support estimates of the Organization for Economic Cooperation and Development (OECD). The main indicators are: producer support (incorporating indirect market support, and direct input support through irrigation, credit, and land transfer); general services support; and public expenditures for agriculture. The study finds that these indicators are viable measures of public support and may be consistently updated over time. Past trends in policy indicators suggest that price policy played the biggest role in agricultural support. Low to negative support to agriculture up to the late 1980s was due largely to indirect taxation of agriculture. From the 1990s onward though the protection structure swung in favor of agriculture resulting in expanding producer support, further enhanced by increasing budgetary outlays for agriculture, mostly towards provision of private goods (such as fertilizer subsidies). These patterns suggest resource misallocation, which may be remedied by rationalizing price policy as well as budgetary allocation from agricultural support services of DA (and land acquisition by DAR), towards provision of public goods such as R&D, extension, regulation, and participatory irrigation investments. Keywords: agricultural support, price policy, public goods Table of Contents I. Monitoring and Evaluation of Agricultural Policy Indicators Main Report……………………………………………………………………………………..…...1 II. Main Report: Tables and Figures…………………………………………………………….25 III. Annex 1. Details on the Methodology……………………………………………………….42 IV. Annex 2.1. The National Food Authority……………………………………………………57 V. Annex 2.2. MEAP: Rice Prices and the National Food Authority…………………………..72 VI. Annex 3. Irrigation………………………………………………………………………….176 VII. Annex 4.1. Land Redistribution…………………………………………………………….190 VIII. Annex 4.2. The Cost of Redistributive Land Reform in the Philippines…………………...202 IX. Annex 5. General Services Support………………………………………………………....249 X. Annex 6. The Impact of Agricultural Support Policy in the Philippines: A Review of Equilibrium Models………………………………………………………………………...270 XI. Annex 7. Thoughts on the Institutionalization of the MEAP……………………………….286 Monitoring and Evaluation of Agricultural Policy Indicators: Main Report 1. INTRODUCTION For the Philippines, agricultural growth has been slow and erratic since the 1980s. Previous studies have argued that poor agricultural performance has been caused largely by weaknesses in the sector’s policy and institutional framework (David 2003; Balisacan et al 2004). A clear understanding and timely evaluation of agricultural policies and programs would be invaluable for informing an efficient policy and institutional framework for the sector. Because of its unique features, agriculture is riddled with market failures. The private sector will tend to under-invest in key factors that could accelerate agricultural growth, such as research and development, irrigation, and market infrastructure. Such activities are generally characterized by public good attributes, strong economies of scale and scope, and long gestation periods. To address market failures, alleviate poverty, and achieve other developmental and social goals in the sector, the public sector finances the design, implementation, monitoring, and evaluation of a wide variety of public investments, regulations, institutional mechanisms, and other policy instruments. Efficiency and effectiveness of governance of the agricultural sector depend not only on the level and functional allocation of budgetary support, but also on other dimensions of budgetary structures and processes, as well as organizational and other institutional factors. Specifically, we examine the allocation of budgetary outlays between policy instruments that enhance productivity versus those that are primarily redistributive; and between those that provide public (such as research and development) versus private goods and services (such as fertilizer and seed subsidies). Policy support for agriculture is evaluated based on a set of measures of producer support over the period 1960-2008. The long time frame permits a wider perspective on the causes and consequences of agricultural policies. The measurement methodology draws from a recently completed World Bank multi-country study on distortions to agricultural incentives (Anderson and Martin, 2009) and the OECD indicators of agricultural support (OECD, 2008) which is periodically updated for its member countries. The measurement of agricultural support in its various forms is a sort of a prism by which to evaluate the size and even efficiency of resource allocation towards agriculture relative to a minimal- or no-intervention counterfactual. The objectives of this report are as follows: 1 Monitoring and Evaluation of Agricultural Policy Indicators: Main Report i) to develop a comprehensive set of quantitative agricultural policy indicators to monitor and evaluate the extent of price distortions in agriculture, the level and composition of public expenditures, and the magnitude of resource transfers to producers from agricultural expenditures and policies; ii) review the country’s agricultural policies, in terms of goals sought and policies adopted, covering key macroeconomic factors and policies affecting production incentives in agriculture, and the major agricultural policy developments since 1986; iii) analyze support to agriculture, based on the policy indicators developed in objective i), based on the policy goals sought, and suggest alternative configurations of agricultural policies that could secure attainment of these goals. A corollary aim is to clearly document, for the Philippine case, the empirical methodology, sources and limitations of data, and directions for improving the estimation of the policy indicators and the availability of budgetary and other relevant data for the eventual institutionalization of the monitoring and evaluation of these agricultural policy indicators. The systematic collection of the basic data and estimation of these agricultural policy indicators, coupled by their easy and timely access to the research community,