Starving the agri sector

The agriculture sector faces another demoralizing year. And it’s not just because of the chicken shortage (artificial or induced?), the mad cow disease, the specter of a water shortage, and the high costs of feeds that have caused agitation of those involved in this sector of the economy.

Government, despite its avowed devotion to our farmers and fishermen, has failed again. And Agriculture Secretary Cito Lorenzo is not a happy man; likewise the farmers and fishermen. It’s the pits once again for them.

Starvation budget

For 2004, Congress appropriated only P15.4 billion for the agriculture department. This is 26 percent lower than the proposal submitted by DA of P20.9 billion. This year’s budget is also 35 percent lower than what the Agricultural Fisheries and Modernization Act (AFMA) provides for, and eight percent lower than the 2003 allocation.

The agriculture secretary pointed out that the 2004 DA budget is at its lowest in real terms if one takes into account inflation. The Department of Agriculture (DA) will allot 28 percent or P4.2 billion of its budget for regular expenses, while the remaining 72 percent equivalent to about P11.2 billion will be for the implementation of AFMA.

AFMA without funding is inutile

Under Republic Act 8435 or AFMA, an additional P25 billion must be appropriated over and above the regular appropriations of the DA in its first year of implementation and no less than P17 billion annually for the next years.

This was never realized. Since 1998, a year after AFMA became law, the regular DA budget was just P15.73 billion. If AFMA was strictly observed, DA should have gotten P35.73 billion.

The DA is now pressing Congress to fast track legislation of its proposal to extend the lifespan of the AFMA, the key DA program to sustain growth in the agriculture sector, for another five years when it expires in 2005.

But what good is the AFMA extension if the much needed funding is not made available?

No preparation of global competition

It is not only Congress that lacks conviction to ensure our poor farmers and fisher folks get out of the rut they are in. Past administrations, including this one, failed to respond to a World Trade Organization (WTO) directive for governments to provide domestic support to their respective agricultural sector by as much as 10 percent of the gross value added (GVA) contribution of the sector to the country’s economy.

If only government heeded this WTO measure meant to enhance our agricultural global competitiveness, the DA should have gotten P51 billion in 1999, as the GVA contribution of the agri-fishery sector totaled P506 billion.

Instead, DA was allocated just P15 billion in 1999 which was 58 percent leaner as per AFMA, and only three percent of the farm sector’s GVA.

What happened to the P36 billion that should have been used to provide support to the agricultural sector and prepare it for global competition?

Since AFMA’s implementation, the sector has yet to receive an additional P20 billion in order to modernize the agriculture and fishery sectors.

Kulelat again in ASEAN region

Little wonder then why our agriculture sector is lagging behind our ASEAN neighbors. In the last five years, Malaysia, for instance, allocated $9 billion or about $1.8 billion yearly, the equivalent of P100 billion, for its agriculture sector. This translates to a subsidy of $1,800 per farmer.

Thailand also invests heavily in the agriculture sector, appropriating a regular budget of 55 billion baht and another 25 billion baht for farm enterprises and infrastructure. This translates to about P111.2 billion.

Furthermore, another 200 billion baht is set aside for debt moratorium that provides relief for farmers for at least three years. This does not even include revolving funds put up to prop up Thailand’s agriculture in the rural sector.

In contrast, the Philippine agriculture sector gets approximately $305 million yearly (P15.4 billion this year) that translate to a pitiful $10 to each Filipino farmer. Mendicants in the streets would probably get more in a year.

Woes of agri sector beckon attention

Trade globalization is raging on. Cheaper imported (and smuggled) agricultural products are flooding the market. The current response of blocking inflow of cheaper products and create supply shortage to artificially raise prices of local produce is not sustainable. Consumers are angry and those who cannot afford are getting hungrier.

And worse of all, the government is short-changing the agri sector of funds committed by law for its use to develop and be more productive and competitive. Our farmers and fishermen are, therefore, deprived of opportunities to break out of the bondage of poverty.

Calling the attention of candidates aspiring to be leaders of our country: heed the call for more attention to the agriculture sector woes, or we’ll have millions of hungrier Filipinos at the core of a social volcanic eruption.

Economic outlook on TV

"Isyung Kalakalan at Iba Pa" on IBC News (4:30 p.m. and 10:30 p.m., Monday to Friday) starts today a discussion of how the country is expected to fare this year. Most government planners waxed optimism about the country’s potential for growth. Will agriculture really continue to grow, given the starvation treatment it is receiving from government? Likewise, exports are being projected to balloon. But is this realistic knowing well that no new big investments have come in? Cost of doing business in the Philippines is escalating and the recent series of oil price increases and the Meralco electricity rates hike are just for starters. So what do we do? Watch it.

‘Breaking Barriers’ with Shell country chairman

"Breaking Barriers" on IBC-TV13 (11 p.m. every Wednesday) will feature Edgar O. Chua, newly appointed country chairman of Shell companies in the Philippines, on Wednesday, 21st January 2004.

Is too much politics making Shell ambivalent about its plans in the Philippines? Is the closure of another refinery, that of Shell in Tabangao, Batangas, imminent? What is the impact of the much-ballyhooed Malampaya natural gas in the Philippine energy sector? What is holding back Shell’s plans to pursue development of the oil deposits found in the Malampaya natural gas field?

Join us break barriers and gain insights into the views of the country chairman of the Shell companies in the Philippines on the varied issues affecting the oil industry and Philippines business in general. Watch it.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Villa

ge, 1227 Makati City. Or e-mail me at reygamboa@linkedge.biz. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz