An Analysis of the Effects of the ASEAN Economic Integration on the Philippine Rice Industry

This study examines the effects of preferential tariff elimination resulting from the ASEAN economic integration on the Philippine rice industry. Theoretical model is first explored to analyze the short- and long-run effects on prices, production, imports, and producers’ revenue within a partial equilibrium framework. For this purpose, Philippine rice market is segmented into three categories: market for domestically produced rice, market for imported rice from ASEAN, and market for imported rice from the rest of the world. Empirical results show that in the short run, the ASEAN economic integration will give negative impacts to rice farmers as it is expected to lead to the decreases in price, production, and farmers’ income. In the long run, however, domestic production would be able to increase depending on the degree of technological improvement and structural adjustment in supply side. Nevertheless, farmers will lose even in the long run because of the significant decrease in price along with productivity improvement in the rice industry.