The Philippine agricultural sector employs over one-third of the labor force and accounts for roughly 14 percent of gross domestic product (GDP). There have been significant shifts in policies affecting this important sector in the Philippines since the mid 1980s. Prior to that time there was a general bias against agriculture effected by a diverse set of policies. These policies included import substitution which favored manufacturing and penalized returns to agricultural investment; export taxes on agricultural commodities and exchange rate overvaluation, which greatly reduced earnings from agriculture; and operations of government corporations, which siphoned off the gains from trade (Intal and Power 1990). However, starting in the 1980s, policy shifted towards protecting agriculture. The system of protection included higher tariffs and nominal protection rates compared to the manufacturing sector, as well as some measures of domestic support (Aldaba 2005, David 2003). The sectoral protection and support was deemed essential for agriculture to be able to provide a stable domestic supply of food at affordable prices. The domestic support came in various forms: roads, market infrastructure, irrigation, post-harvest facilities, and product-specific support that affected markets and behavior of producers. But there are limits to the extent of support the Philippines has provided.

This chapter analyzes government support to agriculture in the Philippines within the framework of the WTO. The next section provides an overview of agriculture and its place in the economy. Trade and domestic support policies are characterized.