Press Releases Archived (December 2015)

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Access to postharvest facilities (PHFs) can increase rice farmers` income as using modern technology allows them to produce good-quality milled rice and reduce postharvest losses.

This assessment was based on a study by state think tank Philippine Institute for Development Studies (PIDS) that looked into the effectiveness of the government`s programs to address the problem of postharvest losses. These programs cover various stages of the food supply chain such as on-farm postharvest activities, processing, logistics, marketing, and trading.

Among these projects are the rice processing centers (RPCs) in the provinces of Pangasinan, Davao del Sur, Bohol, and Iloilo. These RPCs, which were established through a PHP 648-million grant by the Korea International Development Agency (KOICA) with counterpart investment from government and farmer beneficiaries, are equipped with modern milling and drying equipment. Under the deal with KOICA, the Philippine government, through the Department of Agriculture (DA), provided counterpart investment of PHP 20 million for each of the four sites while farmer organizations who are the beneficiaries of the projects were required to put in an additional PHP 2 million per site as part of the working capital for these RPCs.

PIDS Consultants Drs. Nerlita Manalili, Kevin Yaptenco, and Alessandro Manilay, who conducted the study, noted that overall, the PHFs assessed were found to have a positive impact in addressing postharvest losses and improving the marketing system for rice and high-value crops.

Farmers are assured of competitive prices for their wet paddies even during periods of oversupply since RPCs offer higher buying prices compared to private traders and millers, the authors noted.

The authors computed the total gain in farmers` income due to higher buying prices at around PHP13.9 million. Without these facilities, farmers could easily lose some PHP 286.96 million.

The PHFs also helped in reducing losses during the drying and milling processes.

The use of flatbed dryers reduces grain deterioration or yellowing of rice grain during the rainy season as well as prevents physical losses from sun drying. The modern milling facilities at the RPCs also improve milling recovery, resulting in increased quantity of milled rice, the authors stated.

Food terminals in these four provinces where RPCs are located were also found to be effective in helping provide agro suppliers with access to markets. As a result, availability of commodities and basic goods has improved. Likewise, the increased economic activities brought about by these food terminals have created more employment and business opportunities.

The PIDS paper, however, argued that benefits from these facilities can still be improved if the operating capital for these RPCs is increased and if issues related to the management, operation, viability, and sustainability of these PHFs are addressed.

Based on their design capacities, each RPC can service 1,000 hectares of production area. But in order for these facilities to operate at full capacity, the authors suggested an investment of around PHP 80 million for each site.

Increasing the investment in RPCS will allow them to buy more rice paddies from farmers. To achieve this, RPCs should also invest in more cargo trucks for timely pickup of harvested paddy and delivery of milled rice, the authors proposed.

Additional investments in RCPs, however, should be subject to performance evaluation of factors such as the ability of an RPC to produce good-quality milled rice products, maintain healthy financial standing, and have a positive impact on farmers, the paper suggested.

In addition to lack of operating capital, other problems were also identified in the operational aspect of these RPCs. Farmers, for example, are unable to supply RPCs with their produce because they are tied up with traders, whom they are indebted for inputs and marketing. Also, some RPCs are not profitable due to management issues, lack of proper oversight, and local politics like delays in operational turnover to recipient farmer organization.

Thus, the study recommended for government to provide appropriate financing and crop insurance services for farmers to reduce their dependence on private traders who charge high interest rates.

This study titled "Rapid Appraisal of Selected Postharvest Facilities in the Philippines", commissioned by the PIDS and the National Economic and Development Authority to NEXUS Agribusiness Solutions, aims to assess the effectiveness of the government's postharvest loss reduction programs. Given the significant amount of public investments to these programs, their impact needs to be determined. ###

You may download the full report here.
A related Policy Note may also be downloaded here.

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The conduct of impact evaluation is a key to solving many of the country's problems. This was stressed by Education Secretary Bro. Armin Luistro on December 16 at the Policy Forum on Impact Evaluation organized by state think tank Philippine Institute for Development Studies (PIDS), National Economic and Development Authority (NEDA), and International Initiative for Impact Evaluation (3ie). Luistro, who closed the event, urged representatives from various government agencies to adopt the practice of evaluating the impact of their programs and projects.

"Unless you are able to say that a particular program is successful or that it needs to be enhanced and improved, it is just another activity," he said.

Impact evaluation can help improve government services by providing a deeper understanding of their effectiveness and by assisting leaders and policymakers make informed decisions.

NEDA Deputy Director-General Emmanuel Esguerra who represented Planning Secretary Arsenio Balisacan stressed the importance of institutionalizing impact evaluation across the government bureaucracy. Related to this, Australian Aid Counsellor Robyn Biti said her office awarded three research grants that will help some government agencies assess the impact of their programs. The 3ie administers one of these grants, aiming to conduct an impact evaluation of the Department of Social Welfare and Development's Sustainable Livelihood Program. The other grants are for the impact evaluation of the programs of the Office of the President Adviser on the Peace Process, the Department of Labor and Employment, and the Supreme Court.

Impact evaluation provides evidence of effectiveness

The forum also featured presentations of impact evaluation cases in the Philippines presented by PIDS Visiting Research Fellow and former World Bank Lead Expert Vicente Paqueo.

Three major government programs have been subject to impact evaluation, namely the Pantawid Pamilya Program (4Ps), the Legal Minimum Wage Policy, and the Kapit-Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services (KALAHI-CIDSS) program.

The 4Ps was designed to assist poor households through conditional cash transfers tied to education and health objectives. Grants are given on the condition that their children will attend school and visit health centers regularly.

Throughout the implementation of the program, critics panned the 4Ps saying it was not effective at all. They claimed that it promoted dependency and laziness among the household beneficiaries.

Paqueo argued, however, that impact evaluation studies conducted so far show the program is, in fact, effective. It has improved key education and health indicators. Criticisms that it encouraged laziness and dependency proved to be unfounded. The hours of labor that people put in work did not change. The number of hours that children put in work declined but this is because they were going to school instead.

Paqueo said that despite these results, it is important to emphasize that the 4Ps is not a panacea. Necessary adjustments still have to be made to improve the program to make it more effective and sustainable.

In another case study Paqueo cited, impact evaluation was able to demonstrate the risk and cost of adopting policies without appropriate empirical evidence, and the fact that what might work in other countries may not always have the same effect locally.

The objective of the legal minimum wage policy (LMW) was to raise the household minimum wage of low-wage earners. But after evaluating the policy's real impacts in the Philippine setting, it turned out that it was doing more harm than good.

By raising the LMW, employment and work hours were reduced especially in small firms in order to cope with increased operating expenses. The rise in wages significantly decreased average household income by 20 percent.

In short, the policy negatively affected the very people it wanted to help.

Paqueo said the case study underscored the value of evaluating government policies to determine their unintended consequences and to think of more effective alternative policies.

In the last case study presented by Paqueo, he again demonstrated the importance of impact evaluation in producing new knowledge from unintended consequences. The study on the impact of the KALAHI-CIDSS program in conflict areas has shed new light on the mechanisms that link aid and conflict. The results showed that KALAHI-CIDSS led to an increase in violent conflict contrary to the popular belief that development aid helped reduce conflict. A development program threatens to reduce local support for insurgents' cause, creating a backlash from insurgent groups to try and sabotage the program.

The future of impact evaluation in Philippine governance

Impact evaluation is crucial to improving the way the government facilitates development but its importance needs to be widely appreciated for successful take-up by leaders and policymakers.

PIDS has started the groundwork by undertaking an impact evaluation project in 2014. The project involves the conduct of process evaluation and impact assessment of key government programs as well as capacitating the monitoring and evaluation staff of the NEDA, the Department of Budget and Management, and other key agencies in conducting impact evaluation. The project consists of 23 impact evaluation studies and several technical trainings on how to conduct impact evaluation.

For PIDS President Gilberto Llanto, these efforts are not enough. "To sustain what we started, we need to bring the importance of impact evaluation to the consciousness of other officials."

The policy forum was conducted to further raise awareness and appreciation of the importance of impact evaluation. On January 4-15, 2016, a two-week training course on impact evaluation methods organized by PIDS and 3ie will be held at the new PIDS' office in Quezon City. Thirty participants from selected regional universities and government agencies are expected to attend. The course will teach participants commonly used econometric and statistical methods to evaluate the impacts of social and other programs in developing countries.

Institutionalizing the practice of impact evaluation in government requires promoting a culture of evaluation, according to 3ie Executive Director Emmanuel Jimenez. Successful take-up, he said, needs the presence of certain factors, such as credible research, buy-in from key champions, continued engagement between researchers and policymakers across all stages of conducting impact evaluation, and timely and effective communication of impact evaluation results.

The cost of conducting impact evaluation may be substantial but Luistro countered that making it a regular activity will help government do a better job of serving the Filipino people, and in compelling the different agencies to work more in sync with one another in the areas of research, implementation, and evaluation. ###

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The Regional Comprehensive Economic Partnership (RCEP) will have varying impacts on the different sectors of the Philippines economy, but overall, it will be beneficial in the long term, especially to those in the lower income bracket.

This was announced by Dr. Caesar Cororaton, consultant of state think tank Philippine Institute for Development Studies (PIDS), in a study sponsored by the Institute. Cororaton released the findings in a PIDS policy note and in a Pulong Saliksikan on December 1.

The RCEP is a free trade agreement that involves the 10 members-states of the Association of Southeast Asia Nations and six of their current free trade agreement (FTA) partners--Australia, China, India, Japan, South Korea, and New Zealand.

Cororaton concluded that once enforced, the RCEP will help reduce poverty incidence in the country over time and increase the governments welfare at USD 4.5 billion in 10 years. The Philippines would also see an increase in the income of poor households, a reduction in commodity process, and increased returns on wages and land rent.

Talks about the RCEP began in 2012. Its objectives are to achieve deeper economic integration in the region and to enable equitable economic development and cooperation among the signatory countries.

RCEP negotiations are underway toward eliminating tariff and nontariff barriers (NTBs) on goods and services, facilitating investment flows, protecting intellectual property rights, promoting competition and technical cooperation, and establishing a dispute settlement mechanism.

Varying impacts across sectors

Cororaton's study is part of a larger PIDS project being coordinated by Senior Research Fellow Erlinda Medalla focusing on the impacts of FTAs on the Philippines. Cororaton applied several models to conduct his research, including gravity-border effect model, global CGE model, and poverty microsimulation to determine poverty and distribution effects.

The models looked at a 10-year projection, from 2014 to 2023, and simulated how the RCEP would transform the Philippine economy. The results yielded a projected 90-percent reduction in applied tariffs in RCEP, a 10-percent reduction in NTBs in the RCEP region, and an increase of USD 2.4 billion in foreign direct investments (FDIs) in the Philippines.

Once tariffs are significantly reduced, imports coming in will have varying effects depending on certain factors.

For example, if the domestically produced goods are more expensive than their imported alternatives, they are more likely to be displaced. But in the long run, interaction effects in the market would enable other sectors to produce more efficiently.

Rice and textile sectors will have to adjust the most

The Philippine sectors that would grow the most in an RCEP scenario are construction, transport and machinery equipment, and services. Construction would benefit from higher FDIs, positively affecting the growth of transport and machinery equipment sectors, and the services sector.

The rice and textile sectors were singled out as least likely to benefit, if not elbowed out completely by the influx of cheaper goods. However, the cheaper imports would certainly benefit everyone else.

According to data, 22.5 percent of poor households income is spent on rice. The flow of cheaper imported rice will not only reduce this percentage of income spent, but it would enable at least 800,000 poor families to climb out of poverty.

Furthermore, wages will rise, and rent will rise as well, while returns to capital will probably decline.

Bright prospects for the Philippines

During the Pulong's open forum, PIDS Senior Fellow Vic Pacqueo recommended that the government should prepare a compensation mechanism, like re-employment or re-tooling programs, to buoy the negative impacts on the rice and textile sectors.

Cororaton, nevertheless, argued that, "These effects are considered progressive because they favor lower-income household groups."

He also underscored one of the most important contributions of the RCEP--the dispute settlement mechanism. It binds the countries to cooperate to the strict terms of the agreement, and encourages discipline and incentivizes reforms for members to become competitive.

"Significant reforms in investment and corporate taxation are required to make the Philippines an attractive destination for foreign investments," concluded the study. But all of these adjustments are sure to pay off because the Philippines has the potential to gain a lot from the RCEP.

"The Philippine economy has a large absorptive capacity for foreign capital," explained Cororaton. "Likewise, the Philippines has large amounts of untapped natural resources. A huge part of its labor force is composed of young professionals with a high level of education who can benefit from higher wages as result of the RCEP." ###

Thumbnail picture retrieved from Wikipedia.org

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The global budget payment (GBP) system, wherein hospitals are given a certain amount that will cover all inpatient services for members of the Philippine Health Insurance Corp. (PhilHealth) for the entire year, is found to be more efficient than the current case-based payment (CBP) scheme.

In 2011, PhilHealth started implementing the case-based payment system in lieu of the traditional fee-for-service in paying hospitals for a group of materials and services required for the treatment of certain conditions. Currently, the CBP covers 23 of the most common conditions and procedures, which represent 50 percent of total claims to PhilHealth. The goal of the CBP is to increase cost efficiency and transparency in provider payment mechanisms.

However, the possible increase in reimbursement efficiency of CBP as envisioned by PhilHealth did not seem to be translated in hospitals.

In a study commissioned by state think tank Philippine Institute for Development Studies (PIDS), it was noted that the CBP works as a retrospective payment mechanism where hospitals are reimbursed a given amount after filing a claim for a given case, with reimbursement time spanning within 4 to 5 months. Hilton Lam, author of the study, also noted that CBP scheme resulted in an increase of out-of-pocket expense.

"As CBP replaced the fee-for-service, it was found out that the amount reimbursed by PhilHealth from the case rates was not sufficient to cover hospital expenses. Majority of the admissions in which patients shoulder the remaining expenses not covered by the CBP scheme goes to balance billing," he explained.

Lam pointed out additional drawbacks of the CBP scheme such as high administrative cost of screening cases and potential decrease in quality of care due to providers avoiding complex cases or not giving the appropriate level of care.

The PIDS study is therefore recommending for PhilHealth to consider the GBP as an alternative payment mechanism for improving efficiency and decreasing transaction costs. This should be implemented together with an efficient and improved CBP and strict implementation of the no balance billing (NBB).

The global budget payment system was formulated in 2012 and covers all PhilHealth members in nonprivate accommodations. However, it has not been implemented due to lack of hospital capacity particularly on information systems. Nevertheless, Lam believes this scheme is a potential cost-containment mechanism that can be used to support the Department of Healths Kalusugan Pangkalahatan or Universal Health Care program, which has the goal of ensuring that all Filipinos especially the poor receive the benefits of health reform.

Under the GBP scheme, government hospitals should submit their applications to be considered under the program with priority given to facilities that meet certain criteria, such as those with at least 90 percent bed capacity dedicated to nonprivate accommodations, centers of quality and referral hospitals, hospitals connected to eClaims facility, and local government unit hospitals implementing province-wide programs to ensure high PhilHealth enrolment.

Unlike the CBP, GBP would be a prospective payment mechanism in which hospitals would be given funds to cover future claims. This prospective mechanism could cut administrative costs and make payment to providers more efficient by giving funds in advance to avoid reimbursement delays.

The study also stressed the need to update the costing of case rates by determining their approximate fair market prices and to monitor indicators of hospital performance and quality of care.

"This should be determined through a costing study that can be outsourced by PhilHealth. Since the case rates will be the basis of calculating the global budget, adequate funds should be provided to hospitals to avoid patient dumping or skimping on services. Consultations between PhilHealth and involved hospitals should also be included in the annual budgeting process," Lam suggested.

Likewise, the study proposed that PhilHealth look into the investment needs of hospitals to comply with the global budget requirements.

"There should be an analysis of the investment needs of hospitals to comply with the global budget requirements. Based on the assessment of PhilHealth, hospitals cannot comply with the technology requirements of the GBPP. If PhilHealth still plans to implement GBPP, hospitals should be given adequate preparation time and resources to meet these requirements," Lam noted.

Lastly, the study recommended that PhilHealth should monitor indicators for efficiency and quality of care under the GBP. Possible indicators include bed occupancy rate, readmission rate, length of stay, frequency of complications, and compliance to CPGs. The electronic database can be used for real-time monitoring aside from the planned biannual facility assessments. ###

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A study released by state think tank Philippine Institute for Development Studies (PIDS) said the Department of Health (DOH) can improve its information dissemination capacity by using e-learning.

Author Ayedee Ace Domingo, a PIDS consultant, recommends to the DOH to explore creating a virtual learning environment for its Resource Center for Health Systems Development (RCHSD), a research site launched in 2009 to serve as a "repository of knowledge products on health system reforms". The site aims to keep the public informed about the country's health system policies and programs.

The advantages of educating people through the internet is well known. But with an e-learning feature, the DOH would be able to reach those who cannot physically access the RCHSD. It can engage a wider audience and eliminate restrictions of geographic distance, time, and lack of resources, limitations to mobility, and other limiting factors.

The type of e-learning Domingo recommends is the asynchronous self-paced approach. Unlike other e-learning approaches, this type does not require administrators once the courseware is developed, and it is less rigid with its syllabus and timeline.

To make it functional, however, the DOH would need to organize a developing group for the programs it intends to offer. The group should consist of a program manager, instructional designer, subject matter expert, programmers, course administrator, online facilitators and tutors, and technical support.

The development of programs has five stages " analysis and identification of goals; design of the course; development of the programs content, storyboard, and courseware; implementation; and evaluation.

With an e-learning feature on the RCHSD, the DOH would help the public become more informed about the countrys health system policies and programs. This could foster greater understanding and engagement among stakeholders toward a healthier Filipino society. ###