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Philippines
EDITORIAL: PRO-FARMER?
21-Apr-2001 Malaya
 
Faced with a P240 billion budget deficit this year, we would expect the Arroyo administration to beg, borrow or steal from any source to bridge the yawning fiscal gap. But no, it would even forgo a $173 million (slightly over P8 billion) approved loan from the Asian Development Bank and dare risk losing additional assistance from that lending institution just to pursue an economically dubious program.

The first installment of the ADB loan, the amount of which could not immediately be learned, was drawn by the Estrada administration last year. A $30 million drawdown is scheduled this year, with the rest available a couple of years later. 

The money is earmarked for the modernization of agriculture. As a condition for the loan, the ADB is requiring the government to undertake market reforms principally in rice trading. 

The Estrada administration agreed to the conditions, but the Arroyo dispensation is set to renege on the commitments.

The reason? It says it wants to protect the Filipino farmer who would bear the brunt of the ADB's proposed 1) elimination of quantitative limits on rice importation and 2) abolition of the National Food Authority's buying support for rice.

It may be politically incorrect to question government support for poor farmers, but the ADB conditions make eminent sense. Instead of a quantitative import limit, the ADB prefers tariff-based restrictions. The tariff on imported rice is at least 70 percent. If Filipino farmers cannot compete with the Thais and the Chinese with that kind of tariff advantage, they might as well plant camote.

The rest of the populace, especially the workers whose wages have been eroded by rising prices, would save almost half of their budget for the staple if they eat imported rice.

The NFA's current palay buying support is P9 a kilo. But this harvest season, farm prices are down to P7 a kilo. The NFA obviously can hardly influence prices and yet it wants to continue its buying program which costs tapxpayers at least P2 billion yearly.

The consumers are gouged. The taxpayers suffer. And yet the Arroyo administration, which has a holder of a doctorate in economics at the helm, persists in pursuing an economically wrong program. 
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