The presentation was disturbing. It was extremely revealing. It was shocking, nearly pornographic.
No, I am not talking about Panfilo Lacson’s Powerpoint presentation before the Senate. I am talking about something vastly more important: agricultural economist Arsenio Balisacan’s Powerpoint presentation before the fellows of the Foundation for Economic Freedom (FEF).
The fellows of the FEF get together as often as our schedules allow, or as often as any one of us is willing to buy dinner, to discuss the latest research findings or confront a burning policy issue. This is a group that does not lack in enthusiasm. The FEF roster includes some of the most prominent economic and finance policymakers around: Cesar Virata, Roberto de Ocampo, Mahar Mangahas, Ernest Leung, Philip Medalla, Cayetano Paderangga, Romulo Neri, Dante Canlas, Emilia Boncodin, Romeo Bernardo and two dozen others.
I manage the backroom for this eminent gang. The work involves mainly scheduling the meetings, maintaining the research files and preparing the position papers.
This is a group that strongly suspects the political class has betrayed the nation. While this might resemble the suspicion that animated the Magdalo mutineers, we have no plans of barging into the Oakwood – except as paying customers. We do not have sniper rifles. We merely issue policy papers.
Last Wednesday, almost as an act of self-flagellation, we gathered to listen to Arsi Balisacan’s presentation on "Philippine Agriculture: Are we Ready for Competition?" Transco’s Allan Ortiz generously provided the venue and the nourishment.
The subject is particularly timely. Next month, the Philippines will be participating in the World Trade Organization meeting at Cancun, Mexico. The prospects for a new trade agriculture agreement emerging from this round of talks are not clear.
In our midst, there are ideological Neanderthals who are agitating against even participating in the Cancun meeting. But the facts ague loudly against the inward-looking, anti-trade position these Neanderthals have taken.
Balisacan, the country’s foremost expert on agricultural economics, began his presentation by presenting the numbers on the globalization process.
Because of WTO agreements, the developed countries have yielded about twice more tariff concessions than the developing countries. Comparative GDP data shows that the globalizing economies grew more than twice the rate of the non-globalizing economies.
Because of the increasing liberalization of trade, especially of agricultural products, all countries now operate on a new paradigm of competitiveness.
In this new situation, developing countries that have liberalized their agriculture quickly now have factor productivity, lower food prices, efficient and modern agricultural methods. Their populations are better-fed and poverty rates are lower.
On this aspect, the Philippines’ performance has been appalling and horribly disturbing. Our agricultural productivity has remained stagnant for decades. This explains rural poverty and an unsustainable rural-to-urban migration and all the social stresses this implies.
Growth of total factor productivity, from 1980 to 2000, averaged 4.7 percent for China, 1.5 percent for Indonesia, 1.2 percent for Thailand and only 0.1 percent for the Philippines.
The Philippines has the lowest rice yield per hectare in all of East Asia. We harvest only 3 tons per hectare compared to China’s 6.
Our corn yield is even more miserable. We harvest less than two tons per hectare compared to China’s 5.
Our entire agriculture grows at only 1.7 percent annually while our population growth rate is about 2.4 percent – one of the highest population growth rates anywhere in the world. That condemns us to food importation and makes necessary a fair environment for agricultural trade – something the only WTO can provide.
Only the Philippines and South Korea, in the East Asian region, maintains quantitative restrictions on rice – even if we are a net importer of this staple commodity. South Korea will likely lift its restrictions soon, since it has become more costly to maintain it.
In the WTO framework, we are able to maintain our quantitative restrictions on rice only by trading it off with lower tariffs on other items of trade. By insisting on rice trade restrictions, we penalize our consumers two ways: we inflict expensive rice on them and we remove protection for more efficient sectors of our agriculture.
Our rice prices, the figures show, are significantly higher than world prices. The difference will likely grow as we demonstrate inability to radically reconfigure our agriculture.
Should we continue on the present ìbusiness as usualî approach to the problems of our agriculture, the gaps will continue to widen. We will be importing more and more of the food we need, and then exporting more and more of our people to earn the revenues to pay for that. A high food price regime will create upward pressure on wages, making our economy uncompetitive for investments in other areas.
We need a ìstrong reformî agenda for our agriculture, Balisacan concludes. Short of that, we will be doomed to poverty, stagnation and political turbulence. I might add: from The Sick Man of Asia, we could become Asia’s Liberia.
The problem is even graver. Phillip Medalla notes that the problems of our agriculture also characterize all sectors of our economy. Political and special interest groups stand in the way of urgent reform measures we must undertake. Reforms will require short-term costs that our political system seems unable to take.
Worse, the articulate and raucous leftwing and populist groups are clamoring for more protectionism – and therefore more inefficiency. While the numbers show that greater liberalization – and yes, greater globalization – is the way forward to ensure the development of our vital agriculture sector, the anti-trade groups are arguing for more barriers to trade.
They would rather blame other countries rather than recognize that the problem is within our economy.
Bayantel’s Gary Olivar concluded this session with an even more painful note. Among the generally over-performing Asian-Americans, he observes, Filipino-Americans are the poorest. The problem, therefore, might be us.