M. A. P. Insights
By Rolando T. Dy
Agriculture: Arroyo and Aquino years and Duterte’s trajectory
Bill Gates of the Gates Foundation supports many initiatives in developing countries. He has espoused the decisive role of agriculture in development. Of the importance of agriculture in poverty reduction he has said: “It’s been proven that of all the interventions to reduce poverty, improving agricultural productivity is the best.” About science and productivity, he said: “I have seen firsthand that agricultural science has enormous potential to increase the yields of small farmers and lift them out of hunger and poverty.”
The Philippine rural poverty incidence of 30% is two times the mean of our ASEAN neighbors Indonesia, Malaysia, Thailand, and Vietnam. The Philippine farmers’ and fishers’ poverty rate was at 34% in 2015. Based on the ASEAN experience, it is mainly a matter of productivity and strategy balance. Add to that the competitiveness of agri-based industries which draw raw materials from local sources.
Here I will compare Arroyo’s and Aquino’s growth records. It will also comment on Duterte’s trajectory.
[Disclosure: The author spent his early years in Davao del Norte, North Cotabato, and Davao City. He spent time in Malaysia and Thailand as agriculture project economist.]
OVERALL METRIC
The Arroyo period (2001-2010) recorded an average annual agricultural growth rate of 2.9% a year while Aquino (2010-2016) recorded a depressing 1.2% a year.Note: a more advanced computing method showed 3% and 0.9% per year growth, respectively.
The Duterte administration is off to a good start with a post-drought pick up of 3.9% in 2017. (see Table 1).
GROWTH CONTRIBUTION ANALYTICS
There are similarities and stark contrasts between the two administrations.
The 10-year Arroyo period recorded a notable growth of almost 3% a year. The drought in 2009 and 2010 led to about 1% contraction in output.
Structurally, growth was relatively diversified. Crops contributed 41.2% to total growth, livestock 7.8%, poultry 10.9%, and fishery 32.1%.
Within crops, palay supplied 14.7% and corn 5.7%. However, coconut, one of the largest if not the largest farm area at 3.5 million hectares, turned in a measly 3.5%. Sugar posted a negative contribution. More notable is the 12.9% contribution of other crops, especially banana and pineapple, to total growth.
Verdict: Good and diversified growth
During the Aquino period, the sector barely grew by slightly over 1% a year. The dry spell in 2015 and 2016 squeezed out 1.2% in output.
The period is considered the “lost” years of agriculture and fishery, despite more than double the annual budget versus the Arroyo years. Growth was half of the ASEAN mean of 2.2% a year (a high of 4% for Indonesia and low of 0.7% for Thailand).
Anemic crop growth contributed 44% to the total. Livestock and poultry grew faster than the rest and made significant additions of 28.6% and 31.8%, respectively. Meanwhile, fishery and aquaculture shrank, and that led to a high negative contribution. An expert said that this was primarily due to the emphasis on fisheries management and regulation over resources which had already plateaued in the first place. The Department of Agriculture had little appreciation for aquaculture.
Within crops, rice, up by an anemic 2% a year, accounted for three-fourths of total growth, followed by corn and sugarcane. Coconut, the largest farm area in physical terms, had a negative contribution. Other crops barely contributed (+1.9%).
Verdict: Sluggish growth.
DUTERTE’S TRAJECTORY
In 2017, the first full year of the Duterte administration, agriculture grew by an impressive 3.9%. Crops contributed close to 80% to the growth, livestock 4%, and poultry 13%. Fishery had a -4.5%.
Within crops, palay contributed 46.2% and corn 13.7%. Surprisingly, sugar posted 15.6%. By contrast, coconut and other crops shared a negligible 0.7% each.
Conclusion: Remarkable growth with a bias towards rice (see Table 2).
Since President Duterte has five years to go, he has time for strategic agility. For broad-based poverty reduction to succeed, it will require good outcomes in many areas. Will the strategy of rice-sufficiency reduce high rural poverty? To a limited extent, yes, by raising irrigated crop yields. However, there are poorer communities in coconut, corn, and other crops sectors as well as fishing that require focused efforts and resources.
A strategic shift to diversified agriculture development will have better benefit-cost returns to society and a commanding legacy for President Duterte. There are low-hanging fruits that can bring in growth contributions like coconut fertilization, coffee, cacao, and aquaculture, among others. Some are for import substitution, the others for export expansion. This is not a “walk-in-the-park” but is doable.
This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.
Rolando T. Dy is the Vice-Chair of the M.A.P. AgriBusiness and Countryside Development Committee, and the Executive Director of the Center for Food and AgriBusiness of the University of Asia & the Pacific.
