New Thinking: 2020 agricultural outlook and beyond

Jaime Jimenez, Ph.D, Deputy Executive Director for Research of the Stratbase ADR Institute

The third quarter performance of the agricultural sector provides a glimmer of hope for the irregular growth pattern of the industry.

In the four quarters of 2018, the sector performed as follows: up by 1.47% in the first quarter; up by 0.07% in the second; it contracted by 0.83% in the third; and went up by 1.80% in the fourth quarter (Philippine Statistics Authority).

In the first quarter of 2019, it grew by 0.67% then contracted by 1.27% in the second quarter. For the most recent quarter with data, July to September 2019, the total value of agricultural production at current prices amounted to P395.3 billion. In comparison with the third quarter of 2018, the agricultural sector in terms of production grew by 2.87%.

Agricultural growth is attributed to the increases that were recorded for crops, livestock, poultry and fisheries. Crop production, which accounted for 45.19% of the total agricultural output, went up by 2.01%. While rice production decreased by 4.53%, production of corn increased by 23.47%.

Livestock production also increased by 1.63% in the third quarter of 2019, contributing 18.67% to the total agricultural output. Hog production was up by 1.96% while dairy production was also up by 6.48%.

While all poultry commodities recorded increases in production, the growth in the poultry sub-sector registered at 8.41% in the third quarter, representing a 19.44% share in the total agricultural output. Lastly, fisheries production incrementally increased by 0.56%, representing a 16.7% share in the total output.

Under a new leadership, the Department of Agriculture (DA) seeks to overcome its sickly condition. As Secretary William D. Dar expresses, such condition could be attributed to “low farm productivity; lack of labor; unaffordable and inaccessible credit; limited use of technology; limited farmland diversification; undeveloped agri-manufacturing and export; severe deforestation/land degradation; aging farmers and fisherfolk; and climate change.”

With the aforesaid challenges, Mr. Dar promotes a so-called “New Thinking” for the department. This outlook aims to double the income or earning of farmers and fisherfolks in the next five years, making them prosperous under a food secure Philippines. It also tasks the department to collectively empower the farmers and fisherfolk and the private sector in order to increase agricultural productivity and profitability, taking into account sustainability and resilience. Under “Agriculture 4.0,” farming and agribusiness would be digitized.

Specifically, Mr. Dar’s “new thinking” subsumes the following eight paradigms (Sure 8/8-Point Program) to put into place the required policies, programs, projects, and funding:

  • Modernization must continue;
  • Industrialization of agriculture is key;
  • Promotion of exports is a necessity;
  • Consolidation of small-and medium-sized farms;
  • Infrastructure development would be critical;
  • Higher budget and investment for Philippine agriculture;
  • Legislative support is needed; and
  • Roadmap development is paramount in terms of increased productivity, profitability, competitiveness, sustainability and resilience.

The said “new thinking,” however, needs to be contextualized in a risk matrix. Threats and negative conditions that continue to challenge the sector should be considered so as to make such thinking more appropriate for 2020 and beyond, and thus, sustaining the current momentum.

The first rule of thumb is devoting more resources and political support to agriculture. In particular, support services such as access to credit and irrigation services should be beefed up alongside providing direct support to research and development and information technology. These services would surely pump-prime the agricultural sector in general.

Secondly, the impact of the Rice Tariffication Law or R.A. No. 11203 should be ascertained. In as much as various claims about the adverse effects on farmers have been made since its enactment on Feb. 19, 2019, Mr. Dar pronounced the need to review its implementation while President Rodrigo R. Duterte “ordered” a temporary suspension of its implementation.

Moreover, the liberalization of rice importation sends a direct signal to other agricultural crops and livestock and poultry products sectors. Obviously, liberalizing the sugar, corn, and other agricultural products would pose serious challenges to the farmers, stakeholders, and the sector. What we need is a balanced policy that would provide clear direction for both the industry and investors. Lest we forget, pronouncements are only as good as failed promises.

Another serious challenge to the sector would obviously be the hoarders, rice cartel, and market manipulators. Their interference in the chain of supply and demand naturally necessitates government intervention, which, if not judiciously, undertaken could be more disastrous in the process.

Dovetailing Mr. Dar’s “new thinking” entails a renewed mentality to make agriculture a significant contributor, rather than dismal, to the country’s gross domestic product. Sustained agricultural growth is automatically inclusive as millions of Filipinos either directly or indirectly engage in and rely on the industry.

And, last but not the least, a good starting point is to provide sufficient funds to the Department of Agriculture. “Putting your money where your mouth is” is still the golden rule.

 

 

This article was originally published in BusinessWorld. Image Source: UNSPLASH/GABRIEL JIMENEZ

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