Increasing Per Capita Rice Consumption in the Philippines: Facts and Realities

Both data from the Bureau of Agricultural Statistics (BAS) and the Food and Nutrition Research Institute (FNRI) showed an increasing trend in the per capita rice consumption (PCRC) in the Philippines contrary to the decreasing trend in other ASEAN countries. This study tried to explain the reasons of increasing PCRC using survey and secondary data from BAS and FNRI. Results revealed that the increasing annual PCRC can be explained by two factors: 1) substitutions from carbohydrate rich food such as corn to rice in major corn-eating provinces; and 2) over/under estimated parameters in the Supply Utilization (SUA) used in estimating PCRC. The estimated elasticity of substitution between rice and corn indicated that a one percent increase in the price of corn grits would tend to raise PCRC by 0.31 percent. The overestimated parameters in the supply side and the underestimated parameters in the demand side of the SUA framework also increased the annual PCRC. The milling recovery overestimated PCRC by 3.36 percent while seeding rate, feeds and wastage by 0.03 and 0.93 percent, respectively, which translated to 4.62 percent overestimation of PCRC. In addition, the declining rice smuggling has a positive effect on PCRC. Based on the results, the following recommendations were identified: 1) the parameters used in the SUA should be adjusted to have a realistic estimate of supply and demand of rice; 2) domestic price of rice should also be made competitive in the world market to discourage smuggling; and 3) there is a need for policy to encourage more production and consumption of major rice substitutes such as corn, camote, banana and cassava to help fast-track the achievement of the country’s goal of managing rice consumption, specifically diversification of food staples.