Bernardo M. Villegas
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Rebalancing Strategy
published: Mar 31, 2017



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Agriculture in the PDP 2011- 2016

          If there is only one chapter one has the time to read in the Philippine Development Plan 2011-2016, it should be Chapter 4 entitled Competitive and Sustainable Agriculture and Fisheries Sector.  It details what we have to do in the next five to ten years or more to compensate for what we have failed to do over the last thirty years.  As I have said ad nauseam, our having become the sick man of Asia by the end of the last century is due mainly to our utter neglect of agricultural and rural development.  That is why all our leaders, in government, business and civil society must take very seriously the following introductory paragraphs of Chapter 4 of the PDP.

          "The agriculture and fisheries sector provides food and vital raw materials for the rest of the economy.  It is itself a significant market for the products and services of the non-agricultural economy.   As the sector grows and modernizes, it releases surplus labor to the industry and services sector.  Rising productivity and efficiency in the sector are critical in maintaining the affordability of food and purchasing power, especially among the poor. The sector's development is therefore vital in achieving inclusive growth and poverty reduction as well as attaining the targets under the MDGs.

          "The country, however, exhibits a slower structural transformation than other East Asian countries.  The shares of agriculture in GDP and total employment have continued to decline, but the transfer of the labor released from this sector to higher-productivity jobs in industry and services has lagged owing to low skill levels among agriculture workers and distortions in other economic sectors.

          "Increasing demands on the sector's output have also put pressure on its natural resource base.  Unsustainable practices employed to improve yields have resulted in land degradation and problems of water availability.  Climate change has exacerbated the inherent vulnerabilities of the sector.  Development efforts need to focus on transforming the sector into one that is not only highly productive but also climate-resilient, environment-friendly, and sustainable."

          The Government has spoken.  In the spirit of public-private partnership, let me detail here the microeconomic response of one of the leading agribusiness economists in the country, Dr. Rolando Dy of the Center for Food ad Agribusiness (CFA) of the University of Asia and the Pacific.  In an issue of the Food and Agribusiness Monitor, a monthly magazine of the CFA, Dr. Dy presents an agriculture blueprint that is inclusive (all farmers, landless workers and fishers) and market-driven.  The plan is geared towards increasing farmers' incomes that will lead to the reduction of rural poverty (75% of the poor live in rural areas and 50% of the rural population falls below the poverty line in contrast with the national average of only 30%).  Equally important is penetrating new markets, as measured by export growth and diversification.  He cites three key result areas:  productivity increase of all crops; market-led diversification; and non-farm and off-farm job creation through private investments and public-private partnerships.

          In brief, the blueprint includes the following main strategies:

          1.  Expand production of coconut, rubber, oil palm and coffee

          Coconut and rubber have expanding export markets but production is severely limited.  This capacity utilization of coconut mills is only at 50 to 60%.  Little replanting has been done for the senile coconuts while fertilization has been inadequate.  There are no data on rubber processing plants, but utilization must be low, too.  Meanwhile, the country imports 30 to 50% of palm oil demand.  Mindanao and Palawan have potentials of 500,000 has. but today only about 40,000 has. are planted.  The country also imports half of the coffee beans.

          2.  Expand aquaculture and seaweed production

          The country imports seaweeds from Indonesia as the country is short of supply for processing.  The Seaweed Industry Association of the Philippines has indicated that the total capacity is about 130,000 tons a year versus domestic supply of 85,000 to 90,000 tons a year.

          3.  Explore production of other fruits

          A leading fruit processor in Cebu revealed that there are competitive suppliers of banana, pineapple, papaya and mango.  But other fruits are either scarce or costly, such as passion fruit, jackfruit and guyabano.

          4.  Improve mariculture research and production

          ASEAN countries are very strong in seafood export.  Where are we today?  We need to  put more resources in mariculture research and production.

          Exporting is an important tool for market expansion.  Given that half of the rural folk are poor, and there are external market potentials for many products, it would be a sound strategy to export our high-value agribusiness produce from both the large plantations and small farms.

          Dr. Dy has an answer to those who fear that exporting our food will prejudice the local population.  His answer to them is:  "Certainly not.  In fact, we are improving the lives of the rural poor by increasing their incomes.  Having more money in their pockets makes a vibrant domestic consumer market.  That is the common experience of the ASEAN.  There is no need for us to reinvent the wheel.   The rising middle classes, especially in populous countries like Indonesia, Vietnam and the Philippines, will significantly increase the demand for fruits, vegetables, livestock and other high-value products from the agriculture sector.  Our farmers should target both the domestic and export markets.  This is what has been called the double-track strategy that makes a lot of sense in the agricultural sector.  Those who want to consult Dr. Dy may get in touch with him at rdy@uap.edu.ph.   For comments, my email address is bvillegas@uap.edu.ph.