Getting the agri act right

The initial comments of President Noynoy Aquino on the state of Philippine agriculture should lighten the hearts of those who have persistently called for a meaningful program that will advance reforms to boost the sector and make it a significant contributor to the country’s economy.

He seems to be genuinely disheartened about how we have failed where countries that invested in their agriculture sectors have succeeded. Vietnam and Thailand, for example, had sent some of their experts to be educated in the Philippines, and our now reaping success from what they learned.

DA clean up

Aquino has talked about doing a complete review of all programs in the Department of Agriculture. Undoubtedly, it is one of the biggest bureaucracies and commands a sizeable slice of the annual budget, and yet has showed so little in terms of accomplishment.

The department is also no stranger to a string of controversies. Billions of pesos are being spent yearly to import rice even as stories of bodegas full of rotting sacks of the grain circulate. And yes, let’s not forget the fertilizer distribution scams and the non-existent irrigation projects.

Then, there is the question of leadership in the department, of having someone who knows what the real deal is, who would know how to craft policies that would address the basic issues of food security, productivity and the global competitiveness of our farmers.

Policy changes

Policy changes should aim to encourage farmers to improve their yields, including raising the quality of their produce if they ever aspire to become a major player in the agricultural export trade.

It would be good if we could learn from others’ success stories. Indonesia nearly 20 years ago granted incentives for its agricultural producers. Its government invested heavily in agricultural research focusing on “green revolution” seed-fertilizer technology and provided subsidies to boost agricultural yields. By the mid-1980s, it was nearly self-sufficient in rice production although still heavily dependent on oil and natural gas for export earnings.

Its government then boldly shifted toward an industrial and export-led development strategy. Between 1998 and 2007, its agricultural exports grew by an average of 11 percent yearly.

In contrast, the Philippine agricultural sector is burdened with low productivity for most of its crops. Even if previous policy makers knew it was worthwhile to invest in research and development, the last 10 years showed that investments in agricultural research was a measly 0.1 percent of the country’s gross value added.

This is way below the one percent level recommended for developing countries, and lower than the two percent to three percent observed in many countries.

So, is it any wonder why the export values of some of our traditional agricultural exports like coconut oil and coconut products are declining? Indonesia has beaten us with its aggressive bid to expand its palm oil plantations. In contrast, our coconut hectareage is decreasing. And those still standing are suffering from low yields, no major replanting has taken place for decades.

Productivity and related issues

A frightening prospect is if there is any truth at all to talks that Nestle, one of the world’s largest food companies, plans to pull out its factories in the Philippines and Malaysia, and relocate to Indonesia.

The local unit, Nestle Philippines Inc., has denied this, but its Indonesian counterpart is quite emphatic that such a move will be happening before the end of the year.

The reason stated is that Nestle wants to be closer to its raw materials. In other words, Indonesia is in a competitive position, while the Philippines and Malaysia are not.

This should serve as a wake-up call for the agriculture department to invest in agriculture infrastructure that would serve as tools for our farmers to raise their productivity.

For so long, the same issues hound the farm sector: lack of irrigation, lack of high-yielding seeds and pest resistant crops, inadequate postharvest and food processing facilities, poor transportation system. 

Farmers have limited access to credit, and I wonder if there is a real and working crop guarantee system. All of these make our farmers uncompetitive in the bigger sphere of global trade.

It’s time that the new administration also reviews the Agricultural Fisheries and Modernization Act. It failed quite miserably because there was no budgetary support. There were also several loopholes in the program that made it impossible for local farmers to compete on an even keel in the global arena. 

Food security and environmental challenge

Food security is a must. We cannot solely depend on importations to feed the growing population.

Rice trade, for one, is highly volatile with only seven percent of world supply being traded. Even the largest producers and exporters like China, Vietnam, Thailand and India, tend to keep their produce for domestic consumption first before meeting export demands.

Of course, there is also the challenge of the environment and climate change which are adversely affecting the farm and fisheries landscapes. There is so much coral reef damage, dumping of wastes and other effluents in our coastal and marine resources, mangrove forest destruction, and siltation of brackish waters.

In the fisheries sector, there should be more research done on sustainable fish farming, and enough incentives for investors to venture into environment-friendly marine culture.

Clearer direction and effective implementation

The new government cannot give up on the millions of farmers and fisherfolks; it cannot afford to fail in trying to feed a growing population.

One thing that we all hope to see, is that the new administration does not lose itself altogether in its “out with corruption” mode. It is right to stop giving agricultural loans to pseudo farmer groups. It is right to go after those who buy non-existent equipment, and if there is, overpriced ice machines. Good governance will certainly do us a lot of good. 

However, the “out with corruption” mode is not enough to overcome the myriad problems in the agri sector. There is more to lose if P-Noy’s choice of agri officials will not get their act together to set clearer directions and implement more effective programs.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.