ASour economy reeled under the severest lockdown imposed anywhere in response to Covid-19, few probably realize that our agriculture sector actually demonstrated strength and resilience. Philippine Statistics Authority (PSA) data show that at the economy’s worst contraction in the second quarter last year, agriculture actually grew by 1.6 percent when both the industry and services sectors suffered double-digit declines of 21.8 and 17.1 percent, respectively. The sector also continued to provide more jobs, actually absorbing workers displaced from industry and services. As the pandemic raged on in Q3-2020, agriculture continued to grow positively (by 1.2 percent) while industry and services continued double-digit declines.
This innate strength that agriculture showed would not be evident if one looks only at the sector’s aggregate growth rate for the full year 2020 (-0.2 percent) and the first three quarters of 2021 so far (-1.0 percent). But drilling down into specific crop industries reveals the sector’s resilience. Remarkably, rice production grew well during the worst of the pandemic, i.e., in Q2 and Q3 of 2020, by 7.2 and 15.4 percent, respectively; in 2021, it has grown by 5.2 percent so far. This defies doomsayers’ alarmist claims that the Rice Tariffication Law that ended government monopoly and control over rice trade would discourage production and kill the industry. Instead, what appears to be unfolding is the intended effect of that long-delayed reform: induce greater productivity, lower production costs, and improve competitiveness in the industry—and push government to make that happen. Meanwhile, sugarcane grew by 25.3 percent in 2020, and zoomed 100.9 percent in Q3-2020. Important crops like corn, pineapple, cacao, rubber, and coffee likewise defied the pandemic recession last year, and even more so this year, based on data for the first nine months.
In fact, the only reason full year growth was slightly negative last year was that in the first quarter, the Taal volcano eruption wrought damage to crops in CALABARZON, the fourth largest agricultural region of the country. Then in the fourth quarter, Typhoons Rolly and Ulysses wreaked their havoc. Without those calamities, agriculture would have posted positive growth throughout last year. On top of the calamities, the rampaging African swine fever killed a large segment of the country’s swine population, pushing livestock into significant negative growth. The swine pandemic persists in 2021 and has led to even deeper contraction (-19.7 percent) in livestock so far. Omitting livestock, the rest of agriculture actually grew by 2.2 percent this year so far.
Further back, agriculture had actually grown even faster than the industry sector in the early part of the century (2000-2005), at 3.6 percent annual average versus the latter’s 3.5 percent. Unfortunately, the sector had since become a drag on overall economic growth, with its average annual growth rate slowing down successively in the next five-year periods to 2.2 percent (2006-2010), 1.4 percent (2011-2015), and 1.2 percent (2016-2020). Still, it should be noted that domestic production remains the dominant source of food for Filipinos, with sufficiency ratios for various farm products ranging from 60-156 percent (80-156 percent if beef is excluded). In fact, PSA data show that per capita food availability has increased since the 1990s for major food crops including rice, vegetables, meat, and fish, even as we hear claims that the country has become more dependent on imports. The data indicate that even as agricultural imports rose in absolute terms, these have actually not dislodged domestic production on a per capita basis. But Food and Agriculture Organization data show that Philippine agricultural productivity remains low compared to its Asean peers and lacks diversification. All together, these observations tell us that there remains great scope for improving agricultural performance in the Philippines.
Apart from having shown innate resilience and wide scope for faster growth, there are other reasons why agriculture is crucial. It is the economic sector that is most inclusive, both sectorally and geographically. It directly contributes a fifth of all jobs in the economy, or even up to two-thirds if we count other closely linked industries. It has wide backward and forward linkages in the domestic economy. It is present in every region of the country, including the National Capital Region, especially now that the pandemic has highlighted opportunities in urban agriculture. And unlike industry and services that are dominated by Metro Manila and its surrounding provinces, agriculture production is much more evenly distributed across the country’s regions.
All told, we must look to agriculture as our economy’s ultimate backbone as we chart our path to economic recovery and post-pandemic growth. It is the sector whose growth would be the tide that truly lifts all boats.
Cielito F. Habito is a Professor of Economics at the Ateneo de Manila University and Director of the Ateneo Center for Economic Research and Development.