Dr. Gunnar Myrdal, a Nobel laureate in economics, is known for this assertion: “It is in the agricultural sector that the battle for long-term economic development will be won or lost.” A previous Eagle Watch article written by Ms. Clarice Manuel featured small-scale corn farmers’ misfortunes, which illustrate the dire implications of Myrdal’s view. Perhaps, further reflection is warranted, since current events appear to be intimately linked with the pitiful state of Philippine agriculture.
Why is it pitiful? Naturally, having wrong priorities often leads to poor outcomes. In a recent presentation at the Asian Development Bank, Dr. Fermin Adriano gave an interesting comparison between two things that drive Filipinos’ obsession: rice self-sufficiency and basketball. As argued by Adriano, just as the Philippines is not agronomically endowed to become self-sufficient in rice production, Filipinos are also not genetically predisposed to excel in basketball. Just as rice production has been generously funded to the neglect of other crops, basketball has also been generously funded to the neglect of other sports. Just as the Philippines experiences rice shortages, it also finds itself nowhere near the top of international basketball rankings.
Even a casual review of data can substantiate such criticism. A comparison of six countries in terms of land use data from the Central Intelligence Agency World Factbook reveals Indonesia as having the largest total land area with 1,811,569 square kilometers, followed by Thailand with 510,890, Malaysia with 328,657, the Philippines with 298,170, South Korea with 96,920 and Singapore with 709. In terms of arable land per capita, however, it is Thailand that places on top with 0.57 acre per capita, followed by Indonesia with 0.22, the Philippines with 0.13, Malaysia with 0.08, South Korea with 0.07 and Singapore with 0.00 (due to rounding). What this suggests is that compared with more affluent economies like South Korea and Singapore, the Philippines seems to be more naturally endowed to produce its own food.
A closer examination of data from the Philippine Statistics Authority reveals how land is being allocated to specific crops. For 2017, in terms of area planted/harvested, among 21 crops, it is palay (rice) that tops the list with 4,811,800 hectares, followed by coconut with 3,612,300, corn with 2,552,600, banana with 446,800, and sugarcane with 437,500. In terms of income generated per hectare, however, it is pineapple that tops the list with P386,189.39 per hectare, followed by banana with P330,453.00, onion with P300,934.43, cabbage with P270,189.87 and garlic with P255,846.15. Palay (rice) places at the bottom half of the list with just about P72,765.29 per hectare. What this suggests is that the Philippines is allocating disproportionately smaller areas of land to high-value crops, while the underperforming palay (rice) takes a lion’s share of area planted/harvested (about 35.62 percent of the total).
Unsurprisingly, poor outcomes are evident in the Global Food Security Index published by the Economist Intelligence Unit. Among the six countries compared earlier in terms of land area, it is Singapore that ranks the highest (4 out of 113 countries included in the GFSI survey), followed by South Korea (24 out of 113), Malaysia (41 out of 113), Thailand (55 out of 113), Indonesia (69 out of 113), and the Philippines (79 out of 113). Despite having a natural disadvantage, South Korea and Singapore have managed to outperform the Philippines in terms of overall food security. Moreover, in terms of the subcomponents, the Philippines places last in “affordability” (77 out of 113), last in “availability” (80 out of 113), second to the last in “quality and safety” (69 out of 113 versus 86 out of 113 for Indonesia), and third from the bottom in “natural resources and resilience” (101 out of 113 versus 106 out of 113 for Singapore and 109 out of 113 for Indonesia).
Poor outcomes are also evident in the recent inflationary episode. As reported by ABS-CBN, in August 2018, the inflation rate hit 6.4 percent, which is the highest in almost 10 years. Food inflation was the main driver, with vegetable prices rising by 19.2 percent, corn prices rising by 12.6 percent, fish prices rising by 12.4 percent, meat prices rising by 7.6 percent, rice prices rising by 7.1 percent, and fruit prices rising by 6.2 percent.
Thus, with respect to Myrdal’s assertion, two insights are worth mentioning. One, the Philippines must choose its battles wisely. The agricultural sector is where heavy fighting has been taking place all these years, and yet policy responses have been wrongheaded and reactionary rather than wise and proactive. Two, the nature of the battle is more internal than external. With inflation taking a toll on day-to-day living, Filipinos are challenged to confront their own worst fears and tendencies. Focus and grit are two weapons that will hopefully change the tide of battle in favor of the Philippine economy.
Ser Percival K. Peña-Reyes, Ph.D. teaches economics at the Ateneo de Manila University.
