Down to Earth Growth in Philippine Agriculture

If overall performance at the national level is the gauge, the 3.69% reported growth in production achieved in agriculture in 2002 should be cause for optimism, if short of celebration.

A closer analysis, however, into the factors which brought in such a promising overall performance would bring out the reality that the country still has a lot to do if its performance is to pass global grades, and not just an improvement over that of the preceding year. The reality is that there remains a lot of room for the sector to improve itself in terms of growth.

Still, the figures are promising — if these can be taken as indicators for things to come. The gross value that Philippine agriculture accumulated in 2002, estimated at Php 617.9 billion at current prices, is a hefty 7.38 percent increase over that of 2001. Of that, rice, with a growth of 2.44 percent, brought in almost half, its Php 305.4 billion in gross value saving the day for the major crops sub-sector. Rice’s performance offset the downward pull exerted by others, which posted negative growth, with the help of other players in the major crops sub-sector.

Mango grew by 8.66 percent, tobacco 4.15 percent, banana 4.05 percent, coconut 3.59 percent, and pineapple 1.11 percent. Abaca, corn, sugarcane, coffee went down by more than negative 4 percent.

The more exciting agriculture sub-sectors have been fishery, which was reported to have expanded by 6.77 percent last year, and livestock, which registered a 4.39 percent increase in output. Fisheries, with aquaculture as the major player, brought in Php 113.1 billion, while livestock, with poultry as the bigger contributor, posted Php 110.8 billion in gross value.

In the other crops sub-sector, onion with 16.44 percent, garlic with 5.79 percent, and eggplant with 5.73 percent growths, look promising. Tomato (2.21 percent) and cabbage (2.04 percent) follow these. But the rest are too small to cause an uptick in overall gross value as to create excitement.

Agriculture being the mainstay of the Philippine economy, with industry and services as the other sectors, the performance level of the first in any year is a major indicator of the general economic health and potential of the whole country.

Productivity. As the way of life in the country’s rural areas, where the farms are and where the majority of the population live, agriculture has not, however, developed despite present-day technological advances and rising levels of demand resulting from increase in population.

In a word, the Philippines is not sufficient in staple food supplies, despite the fact that it has the land, the technology and the manpower. For rice alone, in a span of five years from 1997 to 2001, the country had had to import it, 722.4 thousand metric tons in 1997, 2.1 million metric tons in 1998, and 808.23 thousand metric tons in 2001.

The main reason for this, setting aside El NiƱo or drought, would be poor productivity.

“The sad reality,” according to Dr. Rolando T. Dy, executive director of the Center for Food and Agri-Business of the University of Asia and the Pacific, and consultant to the World Bank and other international agencies, “is that our farms are not performing up to par.”

He said rain-fed farms in the Philippines produce about 2.2 tons a year per hectare per cropping, and irrigated farms come up only with 3.3 tons (about 70 cavans), while China was getting as much as 6 tons (about 120 cavans) per hectare per cropping. The global benchmark is 3.7 tons.

Yet, ironically, there are good farms in the Philippines that produce as much as 7 to 8 tons. We have the technology in this country, he said, but it is not widely disseminated or practiced.

Implication. When true to rice production, poor productivity can likewise be said of the other crops such as coconuts and vegetables, as well as livestock and fishery. With an inadequacy or total lack of supports such as irrigation, technology, credit facilities, farm-to-market roads, poor productivity further exacerbates the living conditions of the poor in rural areas. It translates to food insufficiency, inadequate income, and social unrest.

And what happens in Philippine rural areas may easily be the situation in other places in Asia where 75 percent of the world’s poor live.

A study undertaken in 2000 by the Asian Development Bank projected the population of Asia to increase from 3 billion to 4.5 billion, and “the demand for food is predicted to increase, in the next 25 years, by about 40 percent from the present level of 650 million tons.”

To meet this gargantuan challenge, the study presented strategies to increase food supply: 1) sustainable productivity increases in food, feed and fiber crops: 2) reduce chemical inputs of fertilizers and pesticides, and replacing them with biologically-based products; 3) integrate soil water and nutrient management; 4) improve the nutrition and productivity of livestock and control livestock diseases; 5) achieve sustainable increases in fisheries and aquaculture production; and 6) increase trade and competitiveness in global markets.

Potential. The Philippines, being at the forefront of technological advance in agriculture in the last 30 years in the Asian region, is positioned to fare well in the strategy areas mentioned, except perhaps only in the area of trade increase and global competitiveness.

As mentioned earlier, the country has the land. In a 1997 report, the combined area devoted to agriculture in the Philippines was 10.3 million hectares. In 2000, the area has increased to almost 12 million hectares.

Coconut, which had 4 million hectares in 1997, was followed by rice with 3.5 million hectares. By 2000, rice has displaced coconut as the most widely planted crop. Rice had 4 million hectares, while coconut only 3.2 million hectares. One reason that can be advanced for the shift is the aging of coconut farms and felling of old trees for their lumber value.

At an average of 3.3 tons per hectare per cropping on an irrigated rice farm, rice production could easily reach 12.2 million tons per harvest — which it did in 2000, the country hitting 12,389,400 metric tons that year.

From that level, the 3.7 tons per hectare global benchmark is within arm’s reach, improving the national harvest to 14.8 million tons. After the global mark, with technical inputs, as mentioned by Dr. Dy, rice farms can rise dramatically to 7 to 8 tons per hectare — with amazing socio-economic results.

First, there will be sufficient food for everyone, without resorting to importation and its costs. Hopefully this will be followed by a reduction in the price of clean rice for the end-user. Next, higher revenue should cause a corresponding increase in the real wages farmers and farm workers receive. This will make agriculture, the mainstay in the Philippine economy, stabilize. Then, as the economy gains world-class competitiveness in at least this crop, it will open and increase trade wide with foreign buyers.

The Swiss food giant Nestle S.A. seems to believe that “soon the Philippines and Asean will most likely emerge among China’s main supplier of food in the future.”

In a recent interview with Nestle’s executive vice president Michael W. Garrett, published by the Philippine Daily Inquirer, he is quoted as having said: “The math behind our thinking is that China has 22 percent of the world population but it has only 7 percent of the world’s arable land. China will continue to depend on imports to feed its people.”

Garrett was reported further saying that Nestle considers the Philippines one of its most important bases, and has poured billions of dollars in putting up regional centers of production in the country and Asean that would serve not only their home markets.

Factors. But to position the country to greater productivity and global competitiveness, certain factors have to be set in place, according to the World Bank consultant, Dr. Dy.

He cited rural investment in infrastructure such as transport, storage, telecommunications, and investment in productivity. “We can be competitive at the farm level, but we lose our competitiveness in the logistics level of bringing the product from the farm all the way to the ports and trading centers,” he said. Cited also were the setting up of credit policies and credit institutions, and the development of informal financial lenders such as credit unions and coops, local money lenders, savings and loan associations, village banks, and micro finance organizations.

The Philippines may be classified among the world class exporters of agriculture products, especially in terms of pineapples, bananas, asparagus and tuna. But, according to Dr. Dy, that is only 5 percent of the farmland of the country. The rest of farmed areas, 90 percent of them, are planted to rice, corn, sugar and coconut — and these are practically not yet world class.

Already, privatization schemes are underway for the development of bulk handling facilities for the grains sector. Based on precedents, private sector investments are being considered in capital-intensive infrastructure projects like irrigation systems, and possibly farm roads, to boost agricultural production in rural areas.

In terms of credit services, soft loans are being siphoned under the Small and Medium Enterprises program to front-line local conduits like rural banks, cooperatives and people organizations as one means of serving the funding requirements of small entrepreneurs and rural farmers.