A strategic plan for the Philippine economy
(Last of a series)
A very crucial strategic move in the coming years to attain both improvement in the productivity of our farming and fisheries sector and to reduce poverty has to do with addressing the problem of the ageing of Filipino farmers whose average age is reaching 60 years.
Much attention and effort should be devoted to human resources development, both of existing farmers and future ones. The farmers of today should be helped to improve their individual knowledge and skills and to build strong producers’ organizations. There is no way agriculture will survive unless the spirit of cooperativism is widely developed. The Government, business, and civil society should put their resources together to give continuous education and training to farmers through nonformal and informal means of education. What are immediately needed are TESDA-type technical schools that can upskill, reskill, and retool potential young farmers outside of the formal educational system. There should be a campaign to convince those in their senior year of high school to choose agribusiness as a career path, eschewing the traditional route towards a college diploma which has resulted in a mismatch between the products of our tertiary educational system and the actual demand of the economy for industrial or agri-tech appropriate skills.
There should be a pause in the further fragmentation of land through agrarian reform. Without necessarily removing individual ownership of land from the beneficiaries of the agrarian reform program of the past, there should be a recognition that the failure of the Government to deliver the indispensable support to the small farmers, such as farm-to-market roads, irrigation facilities, post-harvest and other services, agrarian reform actually led to increasing poverty of the farmers who did not have the wherewithal to productively cultivate the small farms they received.
The reversal of the policy of land fragmentation and allowing free market forces to prevail are especially required in the sugar industry, which will not survive competition from Thailand, for example, as imports of sugar are increasingly liberalized under AFTA (ASEAN Free Trade Area) agreements. Different modes of reconsolidating land in the sugar industry must be found or else it will face extinction. It can be recalled here that the government of Taiwan, which had the strictest land redistribution program during the leadership of Chiang Kai-shek, had enough common sense to exempt the sugar industry from fragmentation.
One of the most cogent advocates for allowing free market forces in the utilization of farm lands is Calixto V. Chikiamko, a member of the board of Institute for Development and Econometric Analysis (IDEA). In his regular column in this paper (Aug. 2, 2021) entitled “Small Is Not Beautiful,” quoting hard evidence from recent international economic literature, he stressed the importance of recognizing that it should not be government law but the market that ought to determine the desirable allocation of land. As a specific example, he observes that the land market in the Philippines is distorted because of the land retention limit of five hectares. Successful farmers are prohibited from expanding via ownership of land beyond five hectares. He rightly observes that if farmers are not allowed to expand, they have no incentive to mechanize and increase efficiency. Because of the restrictions in land transfer, inefficient farms will forever be inefficient, condemning their owner-cultivators to perpetual poverty.
Another regular columnist in this paper, Andrew Masigan, whom I cited previously, echoed the views of Mr. Chikiamko and I quote, “The average farm size today is below one hectare with a maximum holding of five. The maximum size of land holdings must be increased to permit industrial farming. Budgetary support for the agricultural sector must also increase from 3% of GDP to 8%. Finally, the Government must lift its restrictions on the free flow of agricultural products, especially the badly considered rule that corn farmers cannot export unless the Department of Agriculture declares a surplus of the crop.”
Special efforts of the relevant government agencies should be exerted to attract private investments in agribusiness, with special emphasis on foreign investments that can bring in large amounts of capital required in commercial plantations (such as coffee and cacao) as well as technology, management, and expertise. Our experiences with Del Monte and Dole have been generally beneficial in which foreign capital dominated at the beginning but through the years, the Filipino partners, having benefited from technology transfer, have been able to eventually acquire majority ownership. The access to foreign markets was not an insignificant contribution of the foreign investors.
The agricultural sector should be a major component of any long-term strategic plan to combat the adverse impacts of climate change. Together with the mining sector, agribusiness should be subjected to the strictest compliance with sustainability reporting. An integrated environmental strategy among the farming, fisheries, and forestry sectors should aim at climate proofing the agricultural sector.
Another strategic measure suggested by Dr. Rolando Dy et al. has to do with “rationalizing the budget to move away from being rice-centric.” The long-term obsession with rice sufficiency should be replaced with a more realistic acceptance of the fact that the Philippines does not have the competitive advantage to produce all the rice its large population needs. It does not have the abundance of water that Vietnam and Thailand have where the Mekong River provides almost unlimited access to water which is an indispensable input in the production of rice. In this regard, despite continuing protest among some sectors still advocating 100% rice sufficiency, the rice tariffication law was a move in the right direction. Moving away from a rice-centric mentality, we may soon see a large increase in our exports of such high-value fruits like mangoes, avocados, coffee, cacao, and many other tropical fruits to the rich markets of Northeast Asian countries like China, Taiwan, South Korea, and Japan.
The final strategic measure recommended by Dr. Dy and his team can apply to other departments of the Executive branch of the Philippine Government. It has to do with installing a meritocratic and restructured bureaucracy. As we have written almost ad nauseam in previous articles, the key to success in economic development is institution building. Because of the primordial need for both technical and management expertise in the Department of Agriculture, it has to be treated with utmost care in the appointment of appropriate managers and technical experts. Fortunately, the present Secretary of the Department of Agriculture under the Duterte Administration epitomizes management ability and technical expertise combined. Secretary William Dar has decades of practical experience, not only within the Philippines, but also with prestigious institutions in many parts of the world. I can only hope that in one position or another, the next Administration can still make use of his services in the public sector.
I would like to end this compilation of views of experts on agricultural policy by seconding the recommendation of Ernesto Ordoñez, Agriwatch chair and former undersecretary of the Departments of Agriculture and Trade and Industry, that we have to demand more details from the “presidentiables” who made motherhood statements about their support for agriculture in recent interviews they gave to heads of five organizations representing different agriculture sectors. The agricultural issue must be kept alive all throughout the pre-election period, not only for the presidential aspirants but also for other national and local candidates.
As I have mentioned in previous parts of this series, we must find out from LGU heads if any of the extra funding they will receive as a consequence of the Mandanas-Garcia ruling will go to agriculture, and what for. As an example of what can be done at the LGU level to address the interconnected problem of low agricultural productivity and mass poverty, let me cite here a communication from a mayor in Ilocos Norte, Eddie Guillen, summarizing what he and fellow officials in the LGU unit of Piddig did to significantly improve farm productivity and reduce poverty in their community. Mayor Guillen was one of the graduates of the Strategic Business Economics Program of the University of Asia and the Pacific.
Based on the experiences of Piddig in improving farm productivity, the Consolidated Farming System project was a sustainable production system designed to provide productivity enhancement services. These included assistance in technology, capital investment, people’s participation through public-private partnership, farmer’s enterprise development, and better extension services. The pooled resources under the Convergence Initiative Program supported the LGU in its vital role in creating important enablers, i.e., physical infrastructures such as farm-to-market roads, farm machinery, processing facilities, strengthening and capability building of cooperatives and farmers’ technical education and skills improvement. Strengthening and capability building of cooperatives is of the utmost importance. Cooperatives are the most effective partners of the LGU in promoting peoples’ participation and in developing farmer’s enterprises. The Cooperative Development Authority must include among its functions, in addition to registration and regulation, the nurturing of entrepreneurial ability among the cooperatives.
The agricultural crisis has been with us for the longest time. It must be given the highest priority by our next public officials, whether at the national or local levels.
Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.
