Higher funding needed to revive PHL agriculture


by Alladin E. Diega

July 21, 2013

Business Mirror




SANS enough investment in the agricultural sector and the “fixation” on rice, rural development will be difficult to realize, according to two noted economists.


“There has been no substantial investment in the agricultural sector; not even machinery to manufacture farm products in the last three years,” said Alvin Ang, president of the Philippine Economic Society.


Ang told the BusinessMirror in a roundtable that recent growth figures skim over the fact that structural problems remain.


“Agriculture remains a weak point; it’s the missing link that until government resolves such disjoint, unemployment levels will remain the same, and we’ll still have a high urban-rural divide.”


Indeed, government statisticians point out that while total employment in the country only declined to 37.82 million in April 2013 from 37.84 million employed in April 2012, agriculture and agriculture-related activities registered a loss of 624,000 workers in the same period.


Visible underemployment is also a persistent problem, according to Socioeconomic Planning Secretary Arsenio M. Balisacan.


“This means that agriculture-sector workers work less than 40 hours a week, perhaps because there is not much demand for labor in their areas; and they are looking for additional work, possibly because the wages they receive are not enough to meet their needs.”


Likewise, with government statisticians saying poverty only slightly dipped from 2009 levels, three years of daang matuwid appears to have left out the country’s main forces of production.


Dr. Gilberto Llanto, president of the Philippine Institute on Development Studies, agreed with Ang on the reason for the “jobless growth” under the three years of the Aquino administration.


According to Llanto, the agricultural sector, which employs an estimated 12 million people or about 33 percent of the country’s labor force, has not benefited in the growth track.


All rice

RICE is not only a politically charged product, the 6-millimeter grain remains ensconced in a mantle of state protection.


“Too much assistance to the rice sector is limiting the potential of other viable sector, like livestock,” Llanto said.


Llanto also cited as example halal products, which, he noted, have seen an increase in global demand, but which the Philippines is missing out.


Ang, who also teaches economics at the University of Santo Tomas, said there is an “overprotection of the Philippines to its rice sector,” to the detriment of other subsectors, such as crops and vegetable farming.


“For the last 60 years, only the Philippines didn’t change its agriculture structure: rice consumption remained high. While our Asian neighbors have diversified, producing high volume of fruits and vegetables, we Filipinos are fixed on rice.”


The irony is government investment in the sector was only 4 percent of the 2011 national budget when agriculture contributes about 11 percent to the country’s gross domestic product at $14.7 billion.


Aside from lack of investment, Ang also blamed the absence of strategies so that agricultural producers can capture the local market.


“I think we can see that in the level of productivity of the agricultural sector, which is low. If we divide the country’s productivity levels according to sector, the lowest would be in agriculture. The state has overly protected [certain commodities] that people no longer venture to other agricultural [products].”


Ang cited organic products as example.


“But who’s going to enter into that? Who’s going to buy these products?”


However, a nongovernmental group disagreed that the government’s subsidy for rice is uncalled for.

Jessica Reyes-Cantos of the Rice Watch and Action Network (R-1) said “calling expenditure on the rice sector as subsidy is not exactly correct.”


“While it is true that the National Food Authority is buying rice from farmers at a losing cost, it is more of a way of ensuring food security,” she told the BusinessMirror.


Cantos said government spending on national rice production is bloated because the expenditure for irrigation is included, but for which other crops and agricultural produce also benefit.


Besides, “rice is a political commodity being the main staple of Filipinos and, as such, all possible protection for the staple grain is welcome,” Cantos said in an interview.


She cited as an example of rice being a volatile commodity the rice crises in 1995 and 1997, under the Ramos administration.


Nonetheless, R-1 agrees that investment in agriculture is needed.


Cantos said the “call to invest in food production, in particular, and agriculture, in general, remains viable in the Philippines when most Filipinos still live in rural areas and depend on agriculture for food and income.”




IN his paper titled “Agriculture, Rural Employment, and Inclusive Growth,” PIDS Research Fellow Roehlano M. Briones argued “that the development of the rural economy is a key factor for achieving inclusive growth, one that creates jobs, draws the majority into the economic and social mainstream, and continuously reduces mass poverty.”


Moribund agricultural growth for the past three decades is linked to structural factors.


“The disparities in growth rates imply structural change, i.e., the declining share of agriculture in output,” Briones wrote in his paper released this month.


He noted that from 1980 to 2010, the share of agriculture fell from one-fourth to just one-twelfth of GDP.


“Services [sector] now contributes the biggest share in output, rising from 42 percent to 55 percent of GDP over the same period. The output share of manufacturing has stagnated at around one-third of GDP.”


Ang proposed a serious review of the agricultural sector, as well as serious investment in manufacturing.


“However, I think the serious review of agriculture has already been done,” Ang said, referring to several studies like Briones’s.


He added that the review requires a “political decision.”


“That’s all there is: political decision. What are you going to do with the perception that only rice has [government] support.”


At the end of the day, Ang said, it all boils down to perception, which the Aquino administration has created for itself as being “corruption-free.”


Translating such perception into reality in the next three years is in the hands of President Aquino.





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