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