The Covid-19 pandemic has caused the Philippine economy to slip into a recession. The Quarter-2 2020 GDP shows a steep decline of -16.5 percent as economic activities have been hampered to prevent the further spread of the pandemic.
This decline is the lowest quarterly dip in the 1981 series. Almost all of the major economic sectors are down.
However, one bright light was the Agriculture, Forestry and Fishing sector, which was able to post 1.6 percent growth. Thus, it may be a good time to revisit countryside opportunities.
In the Philippine economy, there are three major economic sectors. As of Quarter-1 2020, the biggest sector is the Services sector, which accounts for 60 percent contribution to the GDP. This is followed by the Industry sector, which accounts for 30 percent. The smallest sector is the Agriculture, Forestry and Fishing Sector, which accounts for 10 percent.
From the years 2017 to 2019, the Agriculture, Forestry and Fishing sector exhibited a modest 2.17 percent average annual growth rate. The advent of the “New Normal” is poised to change things.
There are good reasons to invest in Agriculture, Forestry and Fishing.
The Philippine Statistics Authority projects the Philippines to reach a population mark of 142 million Filipinos by 2045. This implies that there will be an average annual population growth rate of 1.21 percent from 2010 to 2045. More Filipinos will mean more mouths to feed.
If the Philippines desires to be a great economy, it must be able to provide the necessary food resources to support the growing population. Food security is a must and not an option.
The demand for the products of Agriculture, Forestry and Fishing is not limited to domestic demand. There are global opportunities represented by exports.
Based on the latest data from the Department of Trade and Industry as of 2019, the top exports of the sector are bananas, coconut oil, pineapples, tuna, tropical fruits, fish, coconut, seaweeds and carrageenan, and forest products. If the government and businesses continue to tap more alternative global markets for our products, export growth can further
accelerate.
Investing in Agriculture, Forestry and Fishing can lead to positive multiplier effects apart from potential profits earned by entrepreneurs and investors. One example would be providing a source of livelihood.
The record-high unemployment rate registered for April 2020 equivalent to 17.7 percent is a problem that can cripple the economy. Livelihood and employment opportunities in the countryside can help soften the blow. Displaced overseas Filipino workers who return for good to the country may also find new hope in the countryside.
Just like any investment, there are considerations that should be noted. In order to mitigate risk and have assured income, product diversification must be explored. One practical example would be multi-cropping where two or more agricultural products are planted in a given farm to address peaks and lows of demand.
The farmers, forestry stakeholders and fisherfolk in the countryside should explore various ways and means to build capacity and be in a better position to match supply with the expected growing demand.
In the countryside, there is really strength in numbers.
According to the latest data from the Cooperative Development Authority, there are around 678 agricultural cooperatives, 637 agrarian reform cooperatives and 39 fishermen cooperatives operating in the country. Joining cooperatives can benefit the countryside stakeholders through the sharing of best practices, financial access and “bayanihan” community synergy.
While there are many benefits in revisiting the countryside, we should all be cognizant that we only have we only have one earth. Therefore, in all cases, sustainable development must be pursued through the prudent use of farming, forestry and fishing methods that are environmentally-sound. If we earn a living and take care of the environment today, in the future, the environment will be the one to take care of us.
Genesis Kelly “Gemmy” S. Lontoc is a registered financial planner of RFP Philippines. To learn more about personal financial planning, attend the 85th RFP program this September. To inquire, e-mail info@rfp.ph or text <name><e-mail> <RFP> at 0917-9689774.