APART from ensuring that the Philippine economy will be able to grow faster at around 7 percent to 9 percent every year, the national government also needs to institute policies that will boost farm and nonfarm income, and put in place safety nets like health and crop insurance to curb poverty.

These prescriptions were embodied in a recently released policy note, titled “Understanding the Recent Rise in Poverty Incidence: A Look at Growth and Income Distribution Effects,” released by state-owned think tank Philippine Institute of Development Studies (PIDS).

The think tank said the unequal distribution of income and the lack of safety nets in previous antipoverty programs were among the reasons for the significant increase of poverty incidence in the country, particularly between 2000 and 2006.

“Increasing rural incomes by improving nonfarm income opportunities is a key to reducing poverty in the rural areas. And provision of safety nets like health and crop insurance will help the poor from falling deeper into the poverty trap and the nonpoor into becoming poor in times of crises,” PIDS said.

“What matters in poverty reduction is not just economic growth per se but the nature of expansion that takes place,” it said.

PIDS suggested that health and crop insurance be included on the list of policies the government will implement in future antipoverty programs in order to help poor households cope with rising medical expenses and prices of farm inputs.

The government think tank said 14.5 percent of those classified as nonpoor in 2003 became poor in 2006. This means that one-third of those classified as poor in 2006 were previously nonpoor.

This, the policy note said, highlighted the importance of safety nets. These safety nets will prevent nonpoor people from falling into poverty, as well as help improve the plight of the chronic and transient poor.

“The rise in the poverty rate, despite the fast economic growth, indicates that, indeed, poverty-reduction programs have a long way to go. As population continues to grow and more challenging events unfold, poverty-reduction strategies have to work double time in bringing the poor out of poverty,” the PIDS said.

The PIDS said real incomes, at least between 2003 and 2006, contracted. This means that incomes shrank during this period, contributing to the inability of Filipino families to spend for their food and nonfood needs.

The state-owned think tank also said income distribution became more unequal by making the poor even worse off. The inequality in income distribution was particularly observed in rural areas where 71 percent of the poor in the country lived.

“The analysis points out that to reduce poverty, an inclusive growth, coupled with effective redistributive efforts, is necessary. Ensuring income security of families for them to weather effects of economic shocks is one important policy option,” PIDS said.

The government think tank said the rise in the inequality of incomes in rural areas was due to the fact that the agriculture sector has not been able to grow and increase productivity at levels that would also boost incomes.

The PIDS said in 2006 alone, around 45 percent of poor households were headed by farmers, forestry workers and fisherfolk. This proved to be a problem since the agriculture sector, between 2000 and 2003, only grew at an average of 3.8 percent a year and the sector only grew at an average of 3.7 percent a year between 2003 and 2006.

From 2000 to 2003, the industry and services sectors grew at an average rate of 1.8 percent and 5.2 percent, respectively. From 2003 to 2006, industry and services surged to 4.5 percent and 7.1 percent per year, respectively

PIDS said the slowest growth rate of the agriculture sector within 2000 to 2006 was in 2005, at only 2 percent.

“The slower growth rate in the agriculture sector resulted in lower per-capita income among crop growers, animal farmers, foresters and loggers, and fishermen,” PIDS said.

These strategies will be needed since the country’s population growth rate continues to increase. In fact, the PIDS said at a rate of 2.04 percent, an estimated 1.7 million mouths to feed are added to the population every year.

PIDS said as the population continues to increase, efforts in reducing poverty will not be that effective and improving the lives of the poor will remain just a goal.