During the Arangkada Forum on September 14, there was much focus on sectors with substantial growth potential—including agriculture, creative industries, information and communications technology, manufacturing, mining, logistics and tourism.
Although the Philippines is becoming a majority urbanized country at a fast rate, close to half of its citizens still live in rural areas. Significantly from the vantage of development and inclusive growth, 73 percent of the poor are rural residents. Over 12 million Filipinos, close to one-third of the total work force, rely on agriculture for their livelihood.
Despite its size and importance to the economy, the overall agriculture sector contributed less than 10 percent to GDP in 2016; the last year in which it produced more than 20 percent of GDP was 1969.
Among the main challenges to agriculture growth: (1) ability to utilize overseas market access; (2) poor logistics and supply chain; (3) poor access to finance; (4) inadequate crop insurance; (5) land market inefficiencies; and (6) poor extension services.
Philippine agricultural exports are the lowest of the Asean-6 and below 5 percent of the total from the region. A country, such as Vietnam—with a population size close to the Philippines but with less land available for agriculture—exports four times that of the Philippines. Exports of agricultural goods from the Philippines were $6.9 billion in 2014, while imports were $8.7 billion. Vietnam—at $26 billion—has become a leading exporter of rice, coffee, fish, fruits and nuts. Top actual and potential Philippine exports include banana, cacao, coconut products, coffee, mango, marine products, pineapple and sugar.
Quite a number of recommendations were made at the Arangkada Forum to drive agribusiness (I selected a few):
- There is a need to review government programs that distort market competition for land and that potentially affect small farmers’ access to credit and preclude their ability to benefit from economies of scale;
- Create an irrigation master plan to set the direction for irrigation development;
- New agriculture, forestry and fisheries enterprises should be developed, while existing ones will be encouraged to increase production and to go beyond producing merely raw materials through increased value adding of products with higher market value.
- Facilitate the use of appropriate farm and fishery machinery and equipment;
- Strengthen the extension system through the engagement of a pool of professional extension workers that will provide technical and business advisory services;
- Diversify into commodities with high value adding and market potential. Commodities that can be developed based on vulnerability, suitability, and value-chain analyses of the Department of Agriculture (DA) include mango for coffee, dairy cattle, abaca, rubber, banana and cacao;
- Expand agribusiness enterprises through new and innovative production and marketing schemes. New forms of linkages, such as contract farming and corporate farming, that will connect farms to markets and other upstream services should be established;
- Farm-to-market roads, bridges, and railways should be constructed to connect small farmers to the agricultural value chain. Interisland water transport (e.g., roll-on roll-off nautical highway);
- Raise investments in research and development for production and postharvest technologies;
- Pursue bold initiatives on crop insurance that reaches a large swath of an underserved market segment;
- Improve market information, technology transfer, marketing, export promotion and broader trade facilitation measures.
- Give priority to high-value, export-winner crops, such as avocado, banana, cacao, coffee, mango, marine products, mongo beans, peanuts, pineapple, red hot chilli, squash and tobacco.
- Integrate small farmers into larger enterprises, such as cooperatives; and
- Improve agricultural support infrastructure and services, such as farm-to-market roads, cold storage and irrigation, to facilitate the distribution of agricultural products and increase farmer income.
In other words, we need to deliver support services to farmers and fishermen, such as financing, incentives, technology, irrigation, postharvest facilities, farm-to-market roads, improved logistics and integration in the supply chain to fully develop the potential of the agricultural industry to develop rural areas and the countryside.
What would justify a heavy budget allocation for agricultural productivity and profit? There will be more investments in agriculture, farmers will get easier access to finance, there will be lower unemployment and supply/value chains will be created. As a consequence, some 20 million rural Filipinos can be lifted out of poverty. And the children of farmers will stop moving from rural areas to urban centers, or become overseas Filipino workers. Isn’t this what the 10-point socioeconomic agenda of the Duterte administration had in mind? Fighting poverty in agriculture? If the DA budget allocation is properly implemented, millions can be given dignified lives.
For more information, contact Schumacher@mcasia.org.