Public goods are important because their benefits are shared by the community; they yield high social returns on investment and have long-term impacts, and they are not readily provided by the private sector but important to society as a whole. On the other hand, other interventions, such as subsidies on fertilizer have benefits limited to target groups, have impacts which are short-run, are costly to government, and do compete with or crowd out the private sector. The current spending on agricultural research and development (R&D), a public good of demonstrated benefits, is a mere 0.10 percent of agriculture GVA. This is one-tenth of the 1.0 percent benchmark suggested by international practice. In the case of rice (which is indicative of the pattern for other products), the contribution of R&D, infrastructure and extension to rice production is estimated at 2.5 percent 40 percent, and 15 percent respectively, while returns on investments are: (a) 77.1 percent for R&D; (b) 80 percent for extension; and (c) 18 percent for irrigation (Balisacan, 2006).
Public good provision must consider quality. Many infrastructure and postharvest facilities deteriorate rapidly. Field reports document the poor quality of flat bed dryers and rice straw choppers for organic fertilizers. Graft and corruption eat up a large part of the outlays.
In 2004-2010, funds allocated for marketing assistance accounted for only 1.1 percent of the average annual budget of the DA. This is 7 percent lower than the prescribed allocation under the AFMA of 1997. The timely access and dissemination of market and market-related information is critical to making optimal business decisions that in turn impact on revenue, consumer prices, and supply conditions. Likewise, the availability of real-time market intelligence is useful in identifying potential markets as well as information on supply requirements.