FEF calls for agri sector upgrades to ease inflation

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AN organization of retired economic managers said the government needs to make upgrades to the agriculture sector in order to ease inflation.

“Low agricultural productivity and anemic agricultural growth will increase the risk of a return to high inflation and will drag down the economy as it did in 2018,” the Foundation for Economic Freedom (FEF) said in a statement on Monday.

The agriculture sector posted output growth of 0.56% in 2018 due to adverse weather and inadequate irrigation.

However, the FEF said the drop in the agriculture sector’s growth should not be blamed on the weather as other ASEAN countries also experience the same disruptions.

“Climate change and weather disturbances cannot be blamed because our ASEAN neighbors are posting healthy growth rates despite similar weather disturbances,” FEF said.

The Philippine Statistics Authority said Tuesday, that inflation declined to 4.4% in January from December’s 5.1%.

FEF, whose fellows include technocrats like former Prime Minister Cesar E. A. Virata and Gerardo P. Sicat, the first director-general of the National Economic and Development Authority (NEDA), noted that poor agricultural activity will also drag down the economy.

“High food costs translate into high wages and uncompetitiveness of our manufacturing and export sectors. Agricultural products also serve as inputs into food manufacturing,” the FEF said.

“Therefore, high agricultural input costs mean high manufacturing costs and poor competitiveness.”

To enhance agricultural productivity, FEF proposed the amendment of the Comprehensive Agrarian Reform Law “to reverse the fragmentation of farmlands, make CARP lands bankable, and enable efficient farmers to expand beyond the legal ownership limit of five hectares.”

The FEF also noted that there should be a budget increase for research into climate-change resistant crops.

The group also proposed to liberalize sugar imports in order to force the sugar industry to become more competitive and to lower the input costs of the food export manufacturing sector.

The FEF also called for the proper use of the P10 billion competitiveness fund for rice farmers under the Rice Tariffication Law to increase their productivity.

FEF added that the government should make rural infrastructure a significant component of its flagship construction program and attract more foreign investment in shipping and ports to lower logistics costs for farmers. — Vince Angelo C. Ferreras