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Long-term agri productivity gap: The major cause of poverty

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Rolando T. Dy

MAP Insights

Long-term agri productivity gap: The major cause of poverty

Why is national poverty incidence in the Philippines more than twice that of ASEAN peers — Indonesia, Malaysia, Thailand and Vietnam? It is even magnified in the farmers’ and fishers’ poverty of 34%. Thesis: it is due to broad-based low productivity and concentration on few products.

Benchmarking compares yield parameters with “best-in-class” in the ASEAN.

To provide empirical evidence, the productivity of key crops over the past 36 years were compared and gaps determined using data from the Food and Agriculture Organization (FAO). Ten major crops were covered, namely: rice, corn, coconut, sugarcane, banana, coffee, pineapple, cassava, sweet potato, and rubber.

A key finding is that the Philippines trails its peers in all crops, except pineapple and banana. Thanks to the private sector for these competitive industries. The gaps even widened over time in most crops.

There are nuances that are not revealed by the FAO data:

• Rice: Vietnam yields are higher with the help of the all-year irrigation drawn from the Mekong River. About a third of Philippine rice harvested areas are rainfed. Irrigated rice yield was 4.3tons/ha in 2016. Caveat. Before some sectors advocate irrigating the remaining irrigable area of 1.3 million hectares, they must consider water supply availability and project cost.




seedling

The landmark DA-Philrice-IRRI study (2016), Competitiveness of Philippine Rice in Asia, found that, even at high yields, the Philippine cost of production is higher than Thailand and Vietnam because of high labor cost due to low mechanization.

• Maize. Philippine yellow corn yield at 4.2 tons/ha in 2016 is not far from Indonesia’s, Thailand’s and Vietnam’s. Credit goes to local seed companies. It is the low white corn yield (1.8 tons/ha) that depresses total yield.

• Coffee. Philippine farms are multi-cropped versus Vietnam’s monocrop. The latter’s yield per tree at 1.5 kilos is three times that of the Philippines.

Yields and Yield Gaps

• Banana yield is slightly lower than Thailand’s. It is the native varieties (i.e., lakatan and saba) that depress the overall yield. Cavendish yield is 2.5 times the national yield.

• Rubber is a consistent underperformer due to uncertified seedlings and poor management.

The persistent low farm productivity severely affects the local agri manufacturing industry: low capacity utilization and limited new investments because of raw material constraints. These, in turn, affect job creation and processed exports. A major unintended consequence is the import of goods, such as coffee, cocoa paste, cassava, palm oil and rubber.

Altogether, the low yields affect impact on the competitiveness of agribusiness from farming, processing and exports. They heavily exacerbate rural and national poverty incidence. The compression of potential of consumer markets is enormous with limited buying power of the masses.

The solutions to address low yield levels and costs include: research and development, provincial extension hubs, farm credit, irrigation, market intelligence, land access rural infrastructure as well as private sector driven commodity road maps. These are known to experts in the academia, the private sector, the donor community and government.

Farm consolidation to achieve scale, and more favorable business climate for investors are equally important. There are millions of hectares of idle or low-yield lands. They cry for modern management, investments and consistent government policy support.

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 chair of the MAP AgriBusiness and Countryside Development Committee, and the executive director of the Center for Food and AgriBusiness of the University of Asia & the Pacific.

map@map.org.ph

rdyster@gmail.com

http://map.org.ph