The Philippines now brags to be the fastest-growing economy, even beating China in the second quarter of 2016, but it seems that, even with robust growth rates, there were times in the past when poverty even worsened, mainly due to how the country mishandles its agriculture, despite surging budgets poured into the sector.
The Philippines posted growth of 7 percent in the second quarter of 2016, besting China’s growth of 6.7 percent, Vietnam’s 5.6 percent, Indonesia’s 5.2 percent, Malaysia’s 4.0 percent and Thailand’s 3.5 percent.
However, this spurt in growth, attributed mainly to massive election spending, is not sustainable by itself, although it has distributed income to the hoi polloi or masses, thus increasing their purchasing power.
Growth reduces poverty, except in the Philippines. Our stellar economic performance has been bragged about by past administrations, but did not really translate into benefits for the poor. An Asian Development Bank (ADB) study done years back on 51 developing countries noted that for every 1- percent increase in average income, poverty is reduced supposedly by 1.5 percent and even as much as 2 percent among Asian countries.
The only exception, lamentably, is the Philippines, which many experts blame mainly on how our agriculture sector performs dismally, considering the fact almost two-thirds of people living below the poverty line are based in the agriculture and fishery sectors. This means if agriculture falters, poverty worsens and fuels the massive rural-to-urban migration of sons and daughters of rural folks escaping the clutches of rural misery only to end up shackled in urban poverty and contributing to attendant social and urban-poor problems, like housing backlog, joblessness, prostitution, criminality, juvenile delinquency, etc.
Statistics consolidated by Prof. Rolando Dy., PhD, and Leonardo Gonzales, PhD, noted that rural poverty in the Philippines only dropped by 14.7 percent over 14 years, from 46.9 percent in 2000, to about 40 percent by 2014, making us miss our Millennium Development Goals of halving poverty and still having the highest rural- poverty incidence among Asean countries. One can read between the lines and make suspicious deductions, considering that it was during this period that budgets for agriculture were increased steadily and massively.
In stark contrast, Thailand, which gave serious attention to agriculture, reduced rural poverty by 73.2 percent in only 12 years, from 51.5 percent in 2001 to 13.9 percent in 2013. Rural poverty in other Asean countries also made improvements, with Indonesia’s rural poverty now down to 13.8 percent in 2014, Vietnam down to 17.4 percent in 2010 and Malaysia to 8.4 percent as early as 2009.
“Trickle-down” or “Trick and kill” down? Mainstream economics tell us to be patient, as it takes time for benefits of growth to “trickle down” to the poor. We can give it the benefit of the doubt, but there must be a trick hidden somewhere as people are made to take the proverbial bait—hook, line and sinker —without knowing they are headed for a fishkill, because poverty, indeed, kills slowly.
There were instances when GDP grew, but poverty did not improve and even increased. From 2004 to 2009, for instance, GDP grew by 4.9 percent, but poverty even increased to 26.5 percent in 2009.
With agriculture declining by 2.1 percent from April to June this year, which is the fifth consecutive quarter of declines, let’s see how these will be manifested.
Whether it is due to corruption or negligence because of incompetence, the consequences of slumping agriculture have far-reaching catastrophic repercussions that explain why poverty has even worsened in some years. Our robust growth may now be the envy of Asia, but if growth is not inclusive, people will realize we are not worth the envy.
When agricultural productivity is down due to poor investments in agriculture, rural poverty and joblessness worsen. This also means fewer raw materials for industry and exports, and higher prices and fewer choices for consumers.
Poverty also means slow massive death. If you total all mortality from various respiratory diseases, for instance, (i.e., Tuberculosis, bronchitis, lung cancer, pneumonia, etc.), Department of Health (DOH) records show that about 85,000 Filipinos die yearly from these diseases alone, which are all curable and preventable, but they die slowly, nonetheless, mainly because of poverty.
Farmers, balanced out? Three decades back, former Agriculture Secretary Carlos G. Dominguez III, now finance secretary, led the campaign against the “policy biases against agriculture,” but lamentably the issues remain the same.
In trying to balance all opposing interest groups, to please everybody, government ends up, unintentionally, balancing out the farmer from the opportunity equation.
Our policy-makers, led by some economists, trapped in their own intelligent sophistication, or maybe sophistry, are made to believe that making the tightrope balancing act of pleasing all opposing groups is doing the right thing.
Caught by the mediocrity and blunder of keeping the “balance,” their good intentions may actually do more harm. One perceived conflict is the balance between consumers and producers, and there is the belief free trade alone will do the trick. I’m not totally against freer imports as a balancing tool to protect consumers, who want cheaper prices and more choices, but when you do not empower farmers through solid programs to increase their productivity on a sustained and organized manner, then trade will only benefit traders, and even convert our former producers into consumers of imports.
Farm out support where they count. But the interests of consumers and farmers are not really conflicting, but symbiotically intertwined. When you become biased for farmers, which is truly balancing weights for handicaps, you enable farmers to be organized, funded with credits, equipped with technologies, postharvest and logistical support that will allow them to produce volume, which translates to cheaper prices, more variety for consumers and reduced imports.
In the real world, free-market’s “invisible hand” does not correct itself and achieve the optimum “equilibrium” to the benefit of all, solely in response to pricing policy and incentives. What are not captured by the economics of pricing and interest rates are the dynamics of personal relations, culture, social and political factors, and a lot more of other factors that determine investment decisions that will increase production and create physical wealth that generate jobs, value-added earnings and other multiplier effects.
We need to farm out more support to farmers, where they will count most, and not just dole outs. So far, we need so much catching up, as we have the lowest growth in total factor productivity in agriculture in Asia from 1961 to 2012, which explains mainly why poverty prevails amid robust growth.
E-mail: mikealunan@yahoo.com