To better guide the policymakers on agricultural investments, an agriculture-based model seldom used in rice economic studies is proposed by a returning scholar based at Philippine Rice Research Institute (PhilRice) in Science City of Muñoz, Nueva Ecija.
Dr. Marc Jim Mariano, who recently graduated from Monash University in Australia, said that results derived from Computable General Equilibrium (CGE) model are useful for the policymakers in knowing the economy-wide effects of a policy.
Holding a PhD in Economics, Mariano intends to construct an agriculture-based CGE model for the Philippines with household microsimulation and updated database – the first CGE model yet developed for PhilRice.
“There are many methods used in analyzing the socioeconomic impacts of rice policies and market interventions in the Philippines. However, most of them are partial equilibrium analyses, only taking a part of the market so results are usually focused on one sector at a time. With its ability to capture the relationships and interactions of various agents and sectors in the economy, CGE provides a more holistic approach in assessing economy-wide impact,” Mariano explained.
Amidst the ASEAN integration this year, Mariano said that the model can simulate the possible economic implications of this trade reform; helping the decision-makers craft strategies to ensure food sufficiency and farmer competitiveness.
Applying the model in his study, the youngest PhD graduate of PhilRice found that removing the government’s rice domestic support mechanisms improves economic efficiency due to the re-allocation of labor and land inputs into more productive or higher value uses. Mariano used a CGE model to investigate the effects of removal of price subsidies on paddy production and rice consumption and removal of high tariff restriction on imported rice.
“However, in the event of a sudden severe spike in the world price of Philippine rice imports, the removal of existing rice market interventions makes the country more vulnerable to a loss in the purchasing power of households,” he said.
Mariano finished Bachelor of Agricultural Economics from the University of the Philippines Los Baños as cum laude. He has a master’s degree in economics from the University of New England, Australia where he was a recipient of the Australian Leadership Awards scholarship. His thesis was awarded the Best Masters Research by the Australian Agricultural and Resource Economics Society.