Impact of tariff reduction of vegetable oil on Philippine coconut oil industry.

Date

4-2013

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Gordoncillo, Prudencio U.

Committee Member

Quicoy, Cesar B. Pabuayon, Isabelita M.

Abstract

The study aimed to analyze the impact of reduced tariff on vegetable oil imports on the Philippine coconut oil industry. Specifically, the objectives were to analyze the situation of coconut oil production from 1985-2011; to analyze the impact of tariff on the demand for coconut oil and its substitutes; to differentiate a tariff reduction era from a non-tariff reduction era and; to determine the effects of tariff reduction on Philippine coconut oil industry. The study employed the t-test and piecewise regression analysis. Results showed that reduction on tariff of vegetable oils favors the consumers because of the lower price of the commodity in the market. Consumers will tend to buy the substitute vegetable oils which have lower prices as a result of reduced tariff on vegetable oils compared to Philippine coconut oil products. Previous studies also showed that Coconut oil products continue to be export competitive with the help of export promotion. Based on the results of the study, world production of coconut oil increased from the pre GATT-WTO to post GATT-WTO. As for the prices, there had been large increases in the domestic prices of coconut oil. The average domestic price during the post-tariff reduction era was higher than the mean domestic price during the pre-tariff reduction era. World prices of CNO, soybean oil and palm oil showed an increasing trend from 1985-2011 but based on the data and graph, coconut oil has the lowest growth rate of increase in world prices. The piecewise regression analysis was used to analyze the impact of vegetable oil tariff reduction on production, domestic supply, domestic price and domestic consumption of Philippine coconut oil. Results showed that for production, there had been an increase in production of CNO during the post-tariff reduction era. The graph showed that there has been a positive change in the slope of the trend line of export after the imposition of GATT-WTO. The full impact of tariff reduction in our economy was believed to happen in the long run. Generally, it can be said that the impact of tariff reduction on Philippine coconut oil industry is not yet so visible at the moment. Its effects can be better observed in the long run. But based on this study, tariff reduction on vegetable oils benefits the local consumers in a way that they have choices on what vegetable oil to use depending on their willingness to spend for that particular commodity. On the other hand, it did not severely affect the Philippine coconut oil industry since large amount produced in the country were for export purposes. As for recommendations, the government must still keep an eye on the trend of the production and consumption because the effect might be seen in the long run. It is strongly recommended to conduct a long run study about the impact of tariff reduction on the coconut industry so that we will be able to determine the real effect of this policy to the industry and our economy.

Language

English

Location

UPLB College of Economics and Management

Call Number

Thesis

Document Type

Thesis

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