price stabilization measures and its effects on - Philippine Institute ...

The expected increase in productivity will depend on the following conditions: (1)the level of credit availed by the producers is sufficient to purchase the optimal level ofinputs; (2) the loan is used for the intended purpose; <strong>and</strong> (3) the added return in the useof credit is sufficient to pay the added cost of credit4. Increase the role of informal lenders in the provision of credit. The governmentshould also adopt <strong>measures</strong> to encourage informal lenders to continue offering loans butat reasonable rates to small producers/farmers. This can be done also by supporting theinformal credit lenders by providing proper incentives. In addition, the governmentshould help establish cooperatives <strong>and</strong> associations among small producers <strong>and</strong> build upfunds through savings <strong>and</strong> government bank rediscounting. With more credit available tosmall <strong>and</strong> medium producers, supply of commodities will be increased which will resultto stable <strong>price</strong>s.5. Diversify food production. Since the country is always a host to strong typhoonswhich destroy agricultural crops, it is important to diversify production of agriculturalcrops other than the traditional crops that are vulnerable to weather-related disturbances,such as root crops. It is also important to develop such other areas that are less affectedby typhoons <strong>and</strong> other weather disturbances, such as Mindanao. However, this wouldrequire investments in infrastructure investment as well as resolving the peace <strong>and</strong> orderproblem. This program will help increase the supply of food commodities <strong>and</strong> stabilize<strong>price</strong>s.6. Develop the post-harvest sector. The government should support the development ofthe post-harvest sector in order to reduce losses <strong>and</strong> improve the quality of agriculturalcommodities. With improved post-harvest facilities, producers can avail of the incentivesof adopting post-production practices <strong>and</strong> technology, thus increasing their incomewithout increasing the <strong>price</strong>s of goods <strong>and</strong> services. In addition, reducing losses throughimproved post-harvest facilities <strong>and</strong> technologies would clearly increase food availability<strong>and</strong> stabilize <strong>price</strong>s in the country. The government should require the activeparticipation of different agencies involved in post-harvest development. A lead agencyshould be assigned to coordinate the efforts of different agencies/institutions to facilitatethe development of the post-harvest sector.7. Liberalize trade in food. The government should continue to liberalize the trade in foodcommodities. If we cannot source low-cost supplies of food domestically, then we mustbe prepared to procure low-cost food from the world market. However, the governmentin liberalizing the importation of food items should allow the private sector to participateactively in the importation of agricultural commodities (e.g., grains <strong>and</strong> sugar) duringtimes of shortage <strong>and</strong> export during the surplus period. Opening the international marketto the private sector would create incentives for quality improvement <strong>and</strong> employmentopportunities in the country. In addition, the government should help producers of foodto be self-reliant. With sufficient supply of commodities, <strong>price</strong>s will be stabilized.17