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



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Catching Up in ASEAN Agriculture (Part 1)

              Secretary of Agriculture Emmanuel Piñol is facing a great challenge in the next six years as the Philippines faces more intense competition in the field of agriculture within the ASEAN Economic Community.  Because of decades of neglect and unenlightened policies (e.g. the obsession with rice sufficiency), the Philippines lags way behind some of its ASEAN neighbors in agricultural productivity and exports.  No other economist has analyzed the roots of the failure of Philippine agriculture better than Dr. Rolando Dy, Executive Director of the Center for Food and Agribusiness of the University of Asia and the Pacific (one of his most read books is From the Roots to the Fruits:  the Business of Agribusiness, University of Asia and the Pacific with FIDEI Foundation).  Since he came back from a stint in the World Bank in the 1980s, Dr. Dy has done his best to advice one Secretary of Agriculture after another.  His advice was not always heeded.   I hope this time around with Secretary Pinon there will be more positive results.

     As an economist, Dr. Dy always starts with hard evidence.  In an article that appeared in Food and Agribusiness Monitor of UA&P last April 2016, he lamented the poor performance of Philippine agriculture exports over several decades.  In 2013, the Philippines exported only $6.1 billion of agricultural products, compared with $38.9 billion of Indonesia, $37.9 billion of Thailand, $27.8 billion of Malaysia and $17 billion of Vietnam.  In 1980, these five agricultural economies in the ASEAN had similar agricultural exports:  the Philippines had $2.1 billion, Malaysia $4.1 billion, Thailand $3.7 billion, Indonesia $2.9 billion and Vietnam a measly $0.9 billion.  Over 33 years, Philippine agricultural exports posted the slowest growth of 3.2 percent annually as compared to Malaysia’s 5.9 percent, Thailand’s 7.2 percent, Indonesia’s 8.0 percent and Vietnam’s 16.3 percent.  For crops and livestocks, the Philippines registered a growth of 2.5 times, Indonesia 12.7 times, Malaysia 6.8 times, Thailand 9.2 times and Vietnam 102 times.

           Strongly supporting the recent statement of NEDA Director General Ernesto Pernia about the need to devote more resources and attention to our “blue economy,” Dr. Dy presented very disappointing data on our seafood and aqua exports.  Between 1980 and 2013, Vietnam multiplied its “blue economy” exports over 630 times to $6.9 billion, Thailand by 19.7 times to $7.1 billion and Indonesia 19.1 times to $4.0 billion.  Philippine exports (tuna, carrageenan, and shrimps) multiplied only 8.4 times during the same period.  Malaysia was at the bottom at 6.3 times.  Reflecting a neglect of the blue economy is the fact that the seafood export of the Philippines is only 30 percent that of Indonesia even if it has the second longest coastline (36,000 kilometers) in the tropics after Indonesia (55,000 kilometers).  One possible explanation for this lack of performance of the Philippines in agricultural and aquacultural exports is that all governments had inadvisably focused on rice sufficiency, leaving very little resources for product diversification.

          It would be wise for the present leadership in the Department of Agriculture to consider the following strategies suggested by Dr. Dy:

          --Invest in productivity.  This includes productivity in crops, livestock and aquaculture.  Most of our lands, except for a few like banana, pineapple, hybrid rice, and genetically modified corn, have yet to achieve ASEAN levels of productivity.  Among other policies, this accent on productivity would require less emphasis on land fragmentation and greater efforts to consolidate small holders through such systems as the nucleus estate of Malaysia and cooperatives as in Taiwan.

          --Diversify production.  The strongest candidates are coconut intercropping, second cropping of rice lands, and aquaculture.  Coconut occupies the largest farmlands and hosts one of the largest poverty groups.  Given better infrastructures, coconuts can be intercropped with cacao, coffee, papaya and other fruit trees. A robust agri-manufacturing which creates stable non-farm jobs requires a diversified base of products.

   --Shift unproductive lands and fishponds to other products.  Upland corn and cogon lands can be shifted to tree crops and fruit trees.  Crop choice must be based on market demand and profitability.

          Improving the productivity of our agricultural sector is without doubt one of the ways of achieving inclusive growth.  Two of five rural folks (small farmers, subsistence fisher folks, and landless farm workers) live in poverty compared to one out of eight urban folks.  The causes of rural poverty are well known:  low investment which leads to low productivity; lack of non-farm/off-farm jobs; inadequate physical and knowledge infrastructures; and poor governance.  Expectations are high that the Duterte Administration will address these problems with greater political will.   It is providential that our new President and the Secretary of Agriculture are both from the island of Mindanao which shows the greatest promise of improved agricultural productivity and crop diversification. (To be continued).