Effects of Rice Liberalization Law on Rice Production, Farmers’ Wages and Government Budgets

This article estimated the effect of Rice Liberalization Law on rice production, farmers' wages, and government budgets in Nueva Ecija, Philippines. The quantitative research design was utilized in this study using the time series data. The results found out that the government budget has a significant role and a positive effect on Philippine rice productions. Finding also suggests that low rice production affects farmers’ wages and income, tantamount to a high price of rice due to the demand and leads to high rice importation. Therefore,it is necessary to increase rice production at a lower cost that will give a positive effect on farmers ' wages and rice market prices. This could result in enticing the younger generation or unemployed citizens to be engaged in farming that will eventually result in to increase in rice production. Keywords— Export, Import, Green Revolution, Rice Liberalization Law, Trade Deficits, Tariffication.


INTRODUCTION
In the statement of the World Bank in 2007 composed on rice production, the announcement stated that the rice total expenditures are 16% while 30% is from the poorest. In fact, the leading factor in food spending is rice. As a result, if the prices of rice increase the cost of Filipinos living will be increased that will lessen poverty.
According to the World Bank in 2007, the most harvested crop in every country is rice. They also added that the rice was planted in about 30% of the total agricultural area. Rice farming is the main source of almost two million families and half of the household income. There are millions of landless farm workers and thousands of merchants depend on rice for a living.
Consequently, the Philippines is an agrarian economy in which rice is its main crop, and rice production was hard to meet the needs of a growing population, rising at 2.5 percent yearly (Philrice 2011). It will never be easy for the government of the Philippines to increase the production of rice. The government has often in resorting to importation in securing the availability of rice in every household.
In this way, when there is an actual or projected shortage of rice as a result of a production shortfall, the government resorts to rice import.
However, Riza Bernabe of the Philippine Peasant Institute said that apart from the need to import rice to supply all Filipinos, importation of rice becomes mandatory in order to offer customers sole rights toward more affordable rice (Philrice, August 2011).
That is why the Government has declared the law on the Liberalization of Rice, entitled "An Act on the Liberalization of the Import, Export and Rice Trading, which removes quantitative restrictions on rice for the purposes, to be signed by President Rodrigo Roa Duterte on 14 February 2019.
It is also known as the Rice Liberalization Act or the Republic Act No. 11203, which reforms the Agricultural Tariffication Act of 1996 by enforcing a tariff on imports agricultural products except rice. In particular, the objective of the law is to remove the quantitative restriction (QR) on imports of rice and replace it with a general tariff.
It is in this regard that this research was conceptualized. It aimed to describe the effect of rice liberalization law on rice production, farmers' wages, and government budgets in Nueva Ecija, Philippines.
The time-series data was used in the study and its annual frequency spanned the period of 2010-2019. Rice production, farmers' wages, and government budget were all taken from the Philippine Statistics Authority while El Niño and Rice Liberalization Law are taken from the news.
The paper covers the country's historical yearly economic performance, rice production, farmers' income, and Nueva Ecija government budget from the year 2010-2019.    was implemented amounted to P8.2 billion, refuting reports that they lost as much as P68 billion in profit(The Manila Times, 2020).

Econometric Model: Factors affecting rice production
Based on the statistical results using the ordinary least squares estimation procedure for parameters which inferences can be drawn through the model equation specified as: To measure the performance of the rice liberalization law in the Philippines' economic output, linear regression analysis was utilized. In order to measure and quantify the results for the analysis the researcher based on the econometric model provided above. F-Test is a measure of the overall significance of the estimated regression line. It is used to test multiple hypotheses about the parameters in an econometric model (Gujarati, 2013).
The model suggests that on average the growth of rice production in terms of annual performance (volume) decreased by -4.84e+06 percentage points if all the independent variables specified herein remain unchanged. This infers that for Rice production annual performance (volume) to expand, it should be driven by strong farmers' wages growth, government budget growth, and decline of El Niño and Rice Liberalization.
Rice production annual performance (volume) will increase by 1.01e+05 percentage points for every percent change in the farmers' wages. Moreover, rice production will expand by 38.6 percentage points for every increase in the government budget. The El Niño and Rice Liberalization affect also the performance of rice production. Rice production annual performance (volume) will decrease by -1.38e+06 percentage points for every percent change in the El Niño and Rice Liberalization. "The production is increasing historically and generally because before we didn't raise hybrid rice. Hybrid seeds only began in 2005. But in 1998, there was an El Niño, so production dropped. In 2009, there was Typhoon Ondoy (Ketsana) so production was also low," Jacinta Estrada, Bureau of Agricultural Statistics (BAS) statistician, explained. (Danao, 2014) Table 2.1 presents the regression results for the factors affecting rice production from 1987 to 2014, for a total of 28 observations. The rice production series as illustrated in Figure 2.1 exhibited sustained moderate growth. To inspect if the series is stationary the unit root exercise the following results are obtained: o Carrying out the unit root tests, we obtained the following statistics: -0.028 (no intercept, no trend, one-lagged difference) and -0.030 (intercept, onelagged difference).
o Each of these statistics at a 5 percent confidence level, in absolute value, was less than the critical tvalue confirming the graphical impression that the Rice production series is non-stationary.
In terms of the variability, Rice production growth pattern can be explained bythe movements of the variables by 94.84%. The computed Durbin -Watson value of the model lies between the upper and lower limit (1.181 1.59 1.65) that indicates no evidence of serial correlation. With a 95% degree of confidence, p-values indicate that all the variables are statistically significant.
This tends to lead to the approval of the alternative hypothesis Farmers' Incomes, Government Budget, and El Niño, Rice Liberalization are important and have an impact on the production volume of rice. To test if the non-linear combinations of the fitted values help to seek the outcome variable of the Ramsey Reset model.  Test for the null hypothesis of the normal distribution: Chi-square (2) = 2.772 with p-value 0.25011 The Jarque -Bera (JB) Test of Normality is considered as an asymptotic or large-sample test which is also based on the residuals of the Ordinary Least Squares (OLS). The test primarily computes the scenes and kurtosis measures of the OLS residuals (Gujarati, 2004). Table 2.3 presents the Normality test of Residual result that indicates residuals are not normally distributed since the results reject the null hypothesis due to P-value exceeds the level of significance 5%.
The Breusch-Pagan test was used to check whether the estimated variance of residues from regression is dependent on the values of the independent variables.
There is a presence of Heteroskedasticity if the variance of the error term is constant for all observations do not hold which is an assumption of the Ordinary Least Squares (OLS) (Salvatore & Reagle, 2002). The test of White -Heteroskedasticity was used to test if the regression residuals have unequal variances.
The general test of Heteroskedasticity as proposed by White does not rely on the normality assumption and is much easier to implement (Gujarati, 2004). In other words, if the chi-square exceeds the critical chi-square value at the chosen level of significance, there is a presence of heteroskedasticity otherwise, there is no presenceof heteroskedasticity in the model (Gujarati, 2004). To check whether the coefficients in two linear regressions on different data sets are equal, the Chow test was utilized. Structural changes possibly caused by differences in the intercept or the slope coefficient or both are characterized by the Chow Test (Gujarati, 2014). The model uses F-test in order to test which of the two regression is more efficient: single regression and two separate regressions which involve splitting the data into two sub-samples Wherein, if the calculated f-ratio exceeds the critical value, the null hypothesis structural stability can be ruled out, otherwise, the null hypothesis is accepted. Table 2.5 presents the Chow test result that indicates there is no structural break in data since the results fail to reject the null hypothesis due to the P-value exceeds the level of significance 5%.
Multicollinearity exists in multiple linear regression. The predictor variables are highly correlated. To find out to what extent that the regressand or outcome can be predicted by the regressors or independent variable is one of the purposes of regression. The R2 measures the strength of the prediction which is also known as variance explained wherein, multicollinearity increases the standard errors of the coefficients. (Ranjit, 2015) To measure the presence of The Variable Inflation Factor (VIF) by each independent variable is substantially less than 10 and, as a rule of thumb, the independent variables are available from any autocorrelation problem problems.
Subia, Ermita, 2020) andtechniques used in the Nueva Ecija farm so that a Nueva Ecija farmer can succeed in meeting the challenge. Aside from this, there is a need to help farmers gain access to modernize machines like rice threshers, combine harvesters, rice transplanter and many more modernize technologies to improve rice production. Through this movement, rice self-sufficiency could be achieved at a lower price and the country can even start to export again and minimize imports.
Some farmers should seek to plant other crops in order to increase their profits. Perhaps there should be more trading centers around the country to enable farmers to sell directly on the market. Lastly, is to hire farmers by the government during planting season to provide more income.These actions are crucial for the country's economic growth and poverty reduction (Ignacio, et.al., 2019).