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EXECUTIVE SUMMARY

Rice is an integral part of history and culture in the Philippines that for many Filipinos,
rice has been a pivotal political commodity because of its importance as a primary staple food for
about half of the worlds population, mostly in Asia and Africa.
It is also the one of the most agricultural crop in the Philippines, whom farmers grow in
huge area in the country - and is the main source of income for the million small Filipino farmers
who grow it on millions of hectares throughout the region, and to the many landless workers who
derive income from working on these farms. Since it is a staple diet and necessity, which is being
served almost three times a day in our tables, constant buyers are already there. The main
objective is to outline the strategies adopted by the management of food retail with regard to rice.
Providing opportunities offered for reaching the suppliers target market, building product
demand through retail promotions and providing consumers feedback. By giving them the ability
to purchase small quantities of a wide assortment of products with the highest quality at prices
that are considered reasonably affordable.
Rice has been intertwined with the Philippine politics even before the Second World War.
Today, rice continues to play a vital role in Philippine political economy. Because of its
significance, the government is heavily involved both in its supply and distribution to assure
consumers a sufficient and stable supply at low prices and to maintain a reasonable return to rice
farmers with adequate price incentives. One major policy instrument of the government at
present is the control on imported rice through the Quantitative Restrictions.
The Philippines, one of the biggest rice buyers in the world, doesnt need Quantitative
Restrictions (QR) set by the World Trade Organization in order to boost its rice sufficiency level.

In 2014, the World Trade Organization let the Philippines keep the Quantitative Restrictions on
its rice imports. This allows the Philippines to limit the volume of rice that may be imported into
the country from overseas markets. The Quantitative Restrictions, which was extended until
2017, is meant to lessen the pressure among local farmers to compete with subsided, cheaper
imported rice.
A perennial question on the minds of many Filipinos is Why do we import rice? Why
cant we produce enough of our staple to feed ourselves? For many Filipinos rice imports are a
source of national shame, many reasons are typically advanced for the failure to achieve rice
self-sufficiency by alluding to bad politicians, corruption, incompetence or laziness. But the real
answer: in a word, it is Geography. The Philippines imports rice because it is a nation of islands
without any major river deltas like those in Thailand and Vietnam, which has been the countrys
main trading partners since 1990s. Climate change and the vulnerability of crop production to
drought and heavy rainfall, especially during the typhoon season, severely affect production. The
Philippines bears the brunt of typhoons coming in from the Pacific Ocean. Successive heavy
rains cause severe drainage problems in paddy fields and inadequate irrigation facilities, thus
resulting in a significant reduction in rice yield and quality. This scenario led the government to
look at rice imports to augment the insufficiency supply of rice in the country.
Trade liberalization is a term that is often not properly understood, it does not necessarily
mean more imports for all commodities in all situation. What it does mean is that the price for a
specific commodity inside the country (the domestic price) becomes the same as the price for the
same commodity outside the country (the world price), after taking account of the exchange rate
and any necessary transportation costs.

Generally speaking, for any commodity that is tradable across international borders, the domestic
price will naturally tend to equal the world price unless the government intervenes with trade restrictions.
If domestic prices are higher than world prices, private traders will try to profit by importing from abroad,
buying low, and selling high. This process will continue until the additional supply of imports lowers
domestic prices and erases those profits. The reverse will happen if world prices are higher than domestic
prices: private traders will profit by exporting.
For rice in the Philippines, the government is the only entity that has the legal authority to arrange
imports. Vested with this authority, the government limits the quantity of rice imports each year. Not
surprisingly, the very high paddy prices received by Filipino farmers translate into very high rice prices
paid by consumers. These high domestic prices have nothing to do with the operational capabilities of the
National Food Authority (NFA)they arise naturally because the government has decided to limit the
quantity of imports each and every year. Some smuggling does occur, but it is not enough to lower
domestic prices to the same level as world prices.
Any rice price policy is focused on how to strike a balance between the interests of rice producers
and consumers, where virtually the only policy instrument under discussion has been the price of rice.
Not surprisingly, the price policy debate can be expanded in two different directions. The producer
compensation approach asks how farmers achieve satisfactory incomes when prices are too low. On
the other hand, the consumer compensation approach asks how consumers achieve satisfactory
nutritional status when prices are too high. There is a wide range of income distributions, with many
consumers too poor to afford rice even at low prices. Similarly, there is a wide distribution of land
holdings and cost structures, such that many rice farmers are unable to earn adequate income even with
high prices. Consequently, no single price of rice can satisfy all consumers and producers. Because rice is
a tradable commodity, and the Philippine rice market is reasonably integrated, at any given time, a single
rice price exists. Generally, in this case, it is not possible to separate rice prices for producers and
consumers, for large and small producers, for rich and poor consumers.

In thinking about the future of rice policy, it is important to keep a balanced perspective. Rice is
what many farmers grow, but it is also what nearly all consumers eat. Although self-sufficiency can be a
laudable goal, it can cause great harm if it is pursued at all costs, without regard for the welfare of the
poor. It is important that decisions be made with as much information as possible, to monitor the effects
of trade liberalization, both positive and negative.

Sorry, medyo late ah.


Peace! ^_^
-Nikka Baboy