MANILA — Philippine agricultural policy is holding food prices above international averages and adding roughly 20% to consumer food bills, according to the Organisation for Economic Co-operation and Development (OECD), which is urging the government to redirect support toward infrastructure, innovation and risk management.

In its Agricultural Policy Monitoring and Evaluation 2026 report, the OECD said channeling more resources into those areas would improve farm productivity and resilience in the Philippines. The annual report benchmarks agricultural policy across the economies the OECD monitors, providing a like-for-like comparison of support levels.

“Redirecting support towards infrastructure, innovation systems, risk management tools and transparent market information would improve policy coherence and support more sustainable productivity growth,” the report said.

Support to Philippine farmers averaged 22% of gross farm receipts in 2023-2025, meaning slightly more than a fifth of farmers’ gross receipts came from support policies. Domestic producer prices averaged 29% above border reference prices over the same period, reflecting market price support (MPS), particularly for sugar, rice, maize and livestock products.

The OECD said MPS mainly derives from tariffs and tariff-rate quotas, while rice farmers additionally benefit from government procurement at administered prices and market interventions by the National Food Authority. Tariffs and tariff-rate quotas operate at the border, meaning incoming shipments of these commodities face duties or quota limits before reaching domestic buyers — the channel through which domestic prices sit above world reference levels.

“These policies are closely linked to longstanding objectives of food security and greater self-sufficiency, especially for rice, but imply that much of the cost of support is borne by consumers and other first-level buyers,” the OECD said.

The organization estimated that Philippine agricultural policies raised consumers’ food expenditures, measured at farmgate prices, by about 20% on average. It noted that while the government provides targeted assistance through school feeding initiatives, the Supplemental Feeding Program and the Walang Gutom food stamp program, that help is outweighed by the costs consumers bear through higher prices.

Total support to Philippine agriculture stood at 2.3% of GDP in 2023-2025, down from 2.9% in 2000-2002, yet remained among the highest across the economies covered by the report.

On rice, the country’s staple grain, the OECD recommended a gradual policy shift toward more targeted risk-management measures.

“While recent measures such as the formalization of a palay floor price mechanism and the introduction of a flexible rice tariff framework address short-term price volatility, continued reliance on commodity-specific price support may limit diversification and affect production and trade incentives,” it said. Palay refers to unmilled rice; the floor price mechanism and the flexible tariff framework are the government’s most recent levers on the commodity.

The report also recommended reducing reliance on border measures and administered prices for rice and sugar, while strengthening services that support the broader agricultural sector. Philippine spending on general agricultural services exceeded 5% of the value of agricultural production in 2023-2025, more than twice its level in 2000-2002.

“Spending is concentrated on irrigation systems and farm-to-market roads, alongside agricultural knowledge and innovation services, particularly education and extension programs,” the OECD said.

The organization urged the government to prioritize investments in innovation and resilience to support “long-term sector performance and reduce reliance on recurrent market interventions.” It further called for more predictable and transparent trade and sanitary measures, recommending that the Philippines limit ad hoc interventions and ensure measures are time-bound and aligned with long-term competitiveness, food security and climate goals.

“This would support stable investment signals and improve integration into regional and global markets,” it added. In practical terms, the recommendations point to levers already in use — rice tariff settings, National Food Authority procurement, administered prices and border measures for rice and sugar — making those the concrete policy areas to watch as any government response takes shape.

Source: BusinessWorld