Price Support

Price Support

• A form of gov’t intervention which intends to maintain equilibrium in market prices
• 1. Increase quantity produced through subsidies: price floor, incentives to producers
• 2. Government purchase of any surplus: protects producers

isabela province

The Situation in isabela

• Isabela Province is one of the biggest corn and rice producing provinces in the Philippines
• Only big traders and middlemen were benefiting and not the farmers who were the real producers
• Prompted the provincial government to launch the Price Stabilization Program for Rice and Corn

Price STABILIZATION PROGRAM

Price STABILIZATION PROGRAM

• Partnership between the Provincial Government of Isabela and the National Food Authority (NFA)
• October 2005, Isabela’s Economic Development Fund was used to subsidize rice and corn production in the province
• Addition of PhP2.00 per kilo is added to the support price of the NFA for corn and rice

Price STABILIZATION PROGRAM

• Government invested PhP4.5 million and earned a net profit of PhP450,000
• Local gov't is set to expand and improve the project in order to serve even more farmers
• Ensures leverage alongside big traders for them to tow the prevailing support price since they are no longer the sole buyers of the staple produce

Price STABILIZATION PROGRAM

• Plans to make more agricultural facilities available, such as trucks to haul products especially from the remote and inaccessible barangays

"Price subsidy programs, in general, do not work. But maybe, localities like Isabela, where
political will and the support of farmers and traders are present, could make the price
support program work."

Impact

Impact

• Consumers: Traders from other parts of the country were able to directly negotiate with the farmers
• Producers: Farmers were encouraged to produce more, being ensured that they will be able to sell their goods at a higher price

Impact

• Government: Local government (especially the governor) received praise from the residents
• Society: With its success, the program has been able to improve local agricultural facilities

Who Benefited?

• The program benefited 87,500 rice farmers and 85,086 corn producers

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