Distributional Impact of the
2008 Rice Crisis
in the Philippines
George Manzano & Aubren Prado
University of Asia & the Pacific
Manila, The Philippines
UNCTAD Virtual Institute Seminar on Trade and Poverty
Geneva, 8-10 September 2014
Policymakers
Jerome Bunyi & Maria Araceli Albarece,
Permanent Mission of the Philippines to the
World Trade Organization
Dr. Segfredo Serrano, Department of
Agriculture of the Philippines
CONTEXT
CONTEXT
Context
Rice: most sensitive food item
THE Staple
Major food expense for many households
Many farmers depend on rice farming
one of the most protected
commodities
with a government office just to
regulate trade in rice primarily
Context
Philippines has generally been a net
importer. Largest importer in 2008.
Self-sufficiency in rice as a most
challenging goal
Talks of a no-import stance
Adds to the sensitivity
Food Price Spike
2007-2008
Volatile world rice market conditions
Low ending stocks
Export bans by certain countries
Herd reaction of importers
Context
2008 Rice Crisis
World rice market, 1960-2012
Source: Authors estimations, based on USDA (2013)
Context
2008 Rice Crisis
Monthly trends in rice prices, January 2007 August 2009
Source: Authors estimations, based on BAS (2013)
CONTEXT
OBJECTIVES
Objectives of the Study
Determine the distributional impact of the
2008 rice price shock in the Philippines.
What are the characteristics of the
affected households?
Immediate Policy Context
Why are we interested in knowing who are
the vulnerable groups to a rice price
spike?
Efficient
targeting
Immediate Policy Context
How to make use of the information?
Measures to alleviate suffering
Food: time element is critical
Design for rapid mobilization of aid in the
future
Broad Policy Context
Response is always a rationing exercise
Resources are always scarce compared to the
needs.
Cost-benefit of more permanent solution,
crisis prevention
CONTEXT
METHODOLOGY
Methodology
In general, when price of a commodity rises
Producer gains (higher income)
Consumer losses (higher expense)
Extent of benefits and costs varies in
degrees
Benefit to household: share of rice income to
total income
Cost to household: share of rice expenses to
total expenditure
Vulnerability Indicator
Net Income Share of rice
Income Share of Rice
Budget Share of Rice
Methodology
Distribution of Benefit/Cost on per
capita expenditures
Classify according to household
groups
Gender of the HH head
Agricultural vs Non-agricultural
Urban vs Rural
Vulnerability of households
Groups that are more vulnerable to shocks in
rice prices:
In general, poorer households across groups
Non-agricultural than Agricultural
Urban than Rural
Female-headed than Male-headed
Methodology
Simulation
Actual rice price changes
Adjustments for the difference in farm gate and
retail prices of rice
Price changes between the pre-crisis phase
(January 2007 to February 2008) and the crisis
phase (March 2008 and September 2008)
Construction of the Benefits/Costs
variable
Context
2008 Rice Crisis
Monthly trends in rice prices, January 2007 August 2009
Source: Authors estimations, based on BAS (2013)
Methodology
Constructed a Benefits/Cost Variable (BC)
Change in farm gate
prices
X
Rice Income Share
Change in retail
prices
X
Budget Share of Rice
Methodology
Constructed a Benefits/Cost Variable (BC)
BC =
[a(rice income share) rice budget share] x
[change in retail price]
where a is the ratio of average rates of changes in
farm gate and retail prices
CONTEXT
FINDINGS
Characteristics of the Sample
Female; 20%
Agricultural; 26%
Urban; 45%
Rural; 55%
Non-Agri; 74%
Male ; 80%
All Households: 38,400
Source: Authors calculations, based on the 2009 FIES
Structure of the Sample
Source: Authors calculations, based on the 2009 FIES
Benefits/costs by gender of household head
(controlling for per capita expenditure)
Source: Authors estimations, based on the 2009 FIES and BAS
(2013)
Benefits/costs by level of urbanity
(controlling for per capita expenditure)
Source: Authors estimations, based on the 2009 FIES and BAS
(2013)
Benefits/costs by Agricultural HH indicator
(controlling for per capita expenditure)
Source: Authors estimations, based on the 2009 FIES and BAS
(2013)
Distributional impact of the 2008
crisis by region
CONTEXT
CONCLUSIONS
AND
POLICY
RECOMMENDATIONS
Conclusions
The effect of a rice price shock is
regressive.
Across HH per capita income, those
affected more were
Female-headed HHs
Urban HHs
Non-agricultural HHs
Geographical differences in gainers/losers
Policy Implications
More efficient targeting exercise for safety
net measures
Conditional Cash Transfers
NFA subsidized rice
Future Directions
Access to better data on rice income per
household
Effects of rice changes on wages and
inflation: second-order effects
Thank you!
George Manzano & Aubren Prado
University of Asia & the Pacific
Manila, The Philippines
