OECD blames high food prices to tariffs, quotas

PARIS-based Organisation for Economic Co-operation and Development is blaming the rising food prices to tariffs and quotas (non tariff barrier) that exacerbate the plight of Filipino consumers, triggering inflation upticks.

In its latest report, the OECD said support to farmers in the Philippines averaged 22 percent of gross farm receipts in 2023-25, which is slightly more than a fifth of farmers’ gross receipts that were generated by support policies.

The organization noted that support to farmers remains dominated by market price support (MPS), which generates transfers to farmers from consumers when domestic prices are higher than border reference prices, particularly for sugar, rice, corn, and livestock products, wrote the Business Mirror.

It explained that MPS mainly reflects border measures, such as tariffs and tariff rate quotas, while rice producers also benefit from public procurement at set prices and market interventions by the National Food Authority (NFA).

“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.

As such, it added that average domestic producer prices were 29 percent higher than border reference prices in 2023-25.

The organization also noted that budgetary support has gradually gained importance over time, mainly targeting farm inputs like seeds and fertilizer as well as investment in agricultural equipment, facilities, and concessional credit.

But the OECD noted that budgetary transfers to consumers were in the form of targeted food assistance programs/ayuda, aimed at enhancing food access for vulnerable households.

This includes school feeding initiatives, the Supplemental feeding programme, and the Walang Gutom food stamp program introduced in 2023.

The OECD noted, however, that transfers from consumers to farmers from MPS policies are greater than these budgetary transfers, “meaning, that consumers are net contributors overall.”

“On average, policies increase consumers’ food expenditures [measured at farmgate prices] by about 20 percent,” it added.

Roehlano Briones, senior research fellow of the Philippine Institute for Development Studies (PIDS), told the BusinessMirror that “the reason MPS transfers resources to farmers away from consumers is [because] it raises both retail and farmgate prices.”

The PIDS had been advocating replacing protectionist non-tariff quotas (such as Quantitative Restrictions or QRs) with uniform or moderate tariff rates to lower food prices, curb market distortions, and generate dedicated revenues for local farmers.

It had long supported lifting the QRs on rice and replacing them with a 35 percent tariff rate– which was later institutionalized via the Rice Tariffication Law, to reduce retail prices, double import volumes to stabilize supply and use tariff collections (of around P27 to P28 billion a year) to fund a P20-B annual safety net for local rice.

For corn, thePIDS research highlights that high trade barriers and restrictive policies (such as Minimum Access Volumes [MAV] and import caps) create persistent feed shortages (which has been happening for years now).

 While corn producers show a theoretical comparative advantage under a low 5 percent uniform tariff, actual import prices and logistical bottlenecks render them uncompetitive. Recent government interventions have had to adjust corn import volumes (such as raising MAV allocations to 500,000 metric tons) to manage feed supply and stabilize livestock and pork prices.

The impact of tariff and quotas on livestock and sugar as shown by the CGE (Computable General Equilibrium) modeling of PIDS on trade liberalization shows that reducing tariffs and non-tariff barriers (NTBs) increases imports for high-demand goods like hog and sugar, but it slows agricultural GDP growth slightly (by about 0.16%), but delivers net positive gains in overall economic efficiency and social welfare (averaging ₱40.5 billion annually).

The PIDS analysis on high tariffs and quotas emphasize that these schemes often fail to protect smallholders due to structural issues like land fragmentation, high transport (“archipelago”) costs, and lack of cold storage. Instead of helping poor farmers, protectionist policies frequently inflate consumer food prices (making items like rice, pork, and sugar significantly more expensive in the Philippines than in neighboring ASEAN countries like Thailand and Vietnam) and generate rents for large traders