Part One
AS chairman of the Association of Southeast Asian Nations (Asean) this year under the leadership of an unorthodox, foul-mouthed controversial president, the Philippines is now the darling of Asia, more so as it is among those leading the pack in growth rates, although the global limelight and attention also magnify the country’s warts of what’s wrong with our economy that is causing persistent poverty despite robust growth.
High growth but worst poverty?
THE Philippines may brag of posting among the highest growth rates in Asia at 6 percent in 2016, besting Indonesia’s 5.2 percent, Malaysia’s 4.6 percent, Thailand’s 3.1 percent, Vietnam’s 5.9 percent, Singapore’s 2.4 percent and Brunei Darussalam’s 0.5 percent, according to Organisation for Economic Co-operation and Development statistics.
It’s empty braggadocio.
For one, other neighbors are growing faster, with Cambodia at 7.1 percent, Lao PDR at 7 percent and Myanmar at 8.2 percent.
The Asian Development Bank (ADB) reveals in its study on 51 developing countries that for every 1-percent increase in income or gross domestic product (GDP), poverty drops by 1.5 percent or even by 2 percent in some Asian countries, except the Philippines. From 2004 to 2009, for instance, our GDP grew by 4.9 percent, but poverty even increased to 26.5 percent in 2009.
A major reason poverty prevails is dismal performance of agriculture, which needs so much catching up after over three decades of neglect. This explains why 76.1 percent of those living below the poverty reside in the countryside, the
National Statistical Coordination Board said. It also triggers the massive rural-to-urban migration of rural folks escaping the clutches of rural misery only to end up shackled in urban poverty and contributing to social problems like housing backlog, joblessness, drugs, prostitution and criminality.
Asean neighbors are overtaking us? Statistics show that rural poverty only dropped by 14.7 percent over 14 years, from 46.9 percent in 2000 to 40 percent by 2014, making us miss our Millennium Development Goals of halving poverty and still having the worst poverty in Asean.
In contrast, our neighbors reduced poverty remarkably. Thailand pumped massive resources into agriculture, reducing poverty from 67 percent in 1986 to 7.2 percent by 2014. Indonesia similarly reduced poverty to 13.8 percent by 2014; Malaysia, 8.4 percent in 2009 and nil by now. Vietnam reduced extreme poverty from 50 percent in 1993 to 3 percent in 2013; Cambodia, from 48 percent in 2007 to 13 percent in seven years by 2014.
Their common strategy was sustained massive production in agriculture, which is ironic as we were the envy of the same neighbors, particularly Thailand, which sent scholars to University of the Philippines Los Baños decades back to study agriculture.
Farmers, balanced out?
WE partly went wrong when our policy-makers interpreted the pursuit for national interests was balancing “equally” all interests, only to balance out farmers.
They were trapped in their own “intelligent sophistication,” or sophistry, believing their own propaganda that straddling the tightrope balancing act of pleasing all opposing interests was doing the right thing.
Caught in the mediocrity of keeping this “theoretical balance,” their good intentions may have done more harm. One perceived conflict is consumers against farmers and the belief free trade alone will solve all problems, as competition will force producers like farmers to shape up.
Actually, farmers and consumers have symbiotic interests because when give more bias to farmers to produce volume and variety, consumers get lower prices and more choices, although there is a lag-time in-between, albeit manageable. So why pit both in contradictions.
I’m not totally against freer imports per se as a tool to protect consumers, but when you don’t empower farmers to increase their productivity on a sustained and organized manner, then trade will only benefit traders, and even convert our own farmer-producers into consumers.
A powerful book by British-bred Korean Ha-Joon Chang, titled 23 Things They Don’t Tell You About Capitalism discusses extensively that neoliberal “free market,” which we swallowed blindly, has brought more havoc to the world.” His book, however, entails a full discourse altogether.
Invest where they count most
AGRICULTURE needs so much catching up in solid investments, where they count most in sustained productive inclusive growth.
This is neither allowing extreme free market dominated by unscrupulous traders, nor heavy government intervention in costly rice trading of spending billions in support prices of procuring at high prices, but only intervening 2 percent to 3 percent of total production, not enough to influence prices; after which it stores long at a loss, then sells low again, all of which result in mounting financial losses to the National Food Authority (NFA) now saddled with debts of over P160 billion.
Why can’t the NFA shift its buffer management system to buying “rice options” instead, a monetary instrument paid to producers, obliged under contract to deliver certain volume of rice stocks when the NFA urgently needs them for buffer and price management. This way, the NFA need not hold physical stocks that are kept long so as not to flood and dampen the markets, but often end up, unfortunately, damaged unnecessarily.
In short, the billions saved from palay-support procurement, long storage and low-priced retailing, must be spent instead in empowering and organizing farmers into viable cooperatives, equipping them with trucks and postharvest facilities, processing facilities and other marketing and logistical support that will enable organized farmers to capture the full value from the supply chain as they can now deal directly with big markets.
What we have discussed are systemic/structural problems causing stagnation and poverty, and we are not tackling corruption yet, whereby budgets hardly trickle down to intended farmer-beneficiaries, but end up in pockets of bureaucrats in collusion with suppliers. Massive import smuggling is another problem, which only worsen the problems owing to “elite capture” of what economists call “rent income” by a privileged few.
Poor RD&E, irrigation investments
AMONG the solid investments needed are research and development (R&D) as our expenditures here are already the second lowest in Southeast Asia.
On the contrary, instead of increasing investments, our R&D expenditures continuously dipped from its already-meager levels of only 0.15 percent of GDP In 2002 to 0.14 percent of GDP in 2003, and further sliding to 0.12 percent of GDP in 2005. The United Nations Educational, Scientific and Cultural Organization recommends over eight times our levels to a minimum of 1 percent of GDP.
And R&D is not even enough as you need to bring research findings to farmers through extension work that was, unfortunately, scrapped and devolved to the local government units (LGUs) where they were marginalized and lost direct ties with national research efforts.
Another problem is lack of irrigation. To magnify its importance, water is said to be the No. 1 input, the No. 2 input and water again as the No. 3 most vital input. We may have the best rice technologies in the world, but only 35 percent of the Philippines’s 4.7 million hectares of rice lands are irrigated.
Vietnam has 97-percent irrigation for its 7.7 million hectares of rice lands, thanks to its Mekong River and flat lands. Thailand similarly benefits from the Mekong, which irrigates over 60 percent of its 10.9 million hectares of rice lands.
The Philippines’s low-average yields are pulled down by the low yields of our rain-fed upland rice. Records show that, for many years, we spend more on rehabilitating old irrigation facilities instead of building new ones, that could show physical proof where the investments went, as to why this investment ratio, one can only surmise.
More horsepower, not carabao power. As to mechanization, measured in horsepower, we trail behind as many farmers still depend on their old carabao, which is no longer reliable and cannot catch up with rising work demand.
Records some years back show that Japan’s farm mechanization was an average of 7-horsepower per hectare (hp/ha), South Korea was 4.1 hp/ha, China 4.10 hp/ha and Vietnam 1.56 hp/ha. The Philippine trails behind at 1.02 hp/ha.
Traditional spoilage rate in rice production in the Philippines range from 11 percent to 37 percent broken down into harvesting wastage of 1 percent to 3 percent; handling spoilage, 2 percent to 7 percent; drying, 1 percent to 5 percent; threshing, 3 percent to 6 percent; storage, 2 percent to 6 percent; and milling, 2 percent to 10 percent.
At a palay production of about 19 million metric tons (MMT), wiping out only a minimum 11-percent spoilage means an additional rice ouput of 2.09 MMT, thus, raising total inventory to 21.09 MMT and wiping out the need for dollar-draining rice imports.
There are more issues why poverty has prevailed, despite robust growth, which can’t all be tackled here, but the main culprit is neglect for agriculture, where 76.1 percent of people in poverty is based. Problems have accumulated the past decades, and it’s a big challenge how Agriculture Secretary Emmanuel F. Piñol can catch up fast.
To be continued
Image credits: Nonie Reyes
1 comment
Rural Development is the only way forward for our country, the Philippines….
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