December 5, 2022

Agendas for the Philippine agricultural sector

Last of two parts

LAST week’s essay argued that providing substantial fertilizer subsidies to our farmers is essential if a drastic decline in our agricultural productivity is to be halted across all crops. Further, he postulated that it is equally vital to maintain the implementation of the Rice Pricing Act (RTL) as it provides guaranteed funding to improve the efficiency of our palate farmers from the proceeds of the rice tariffs (about 47 billion pesos have been collected). Resurrecting the former National Food Authority (NFA) will mean pouring billions of pesos into the agency, which the economy cannot afford given our difficult fiscal situation due to the dramatic increase in our debt during the pandemic.

In addition to the rising prices of gasoline, fertilizers and agricultural raw materials caused by the Russian-Ukrainian war, there are still pressing challenges that the next leadership of the Ministry of Agriculture (DA) will have to face. As a result, new leaders are not afforded the luxury of a learning curve, as it is imperative that they are immediately operational if the country is able to weather the looming global food disaster.

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Chief among them is preventing further outbreaks of African Swine Fever (ASF) which has wiped out almost a quarter of the local pig population. The pig restocking effort must be continued in earnest if we are to reach the pre-ASF pig population of nearly 13 million in 2019. However, animal experts estimate that with an additional 500,000 pigs per year, we will need at least five years to recover our pre-pandemic hog inventory.

The performance of the fishing sector decreased by -5.8% during the first quarter of 2022. Our coastal resources are much larger than our land area. There is huge potential for growth in the fishing sector, but we don’t seem to be able to develop it. One hectare of aquaculture business will yield more than five times the investment made for one hectare of land planted with palay (unmilled rice). Yet we have never unleashed the full potential of our fisheries sector due to our focus on land-based agricultural activities.

Another product waiting to be fully developed is the coconut sector. Coconut is planted on approximately 3.4 million hectares of our agricultural land. However, the contribution of the gross value added (GVA) of this sector to the total agricultural GVA over the last 20 years is slightly above 4% per year. It is no wonder that the poorest of the poor in our households end up in the coconut business.

Corn, especially the yellow variety, is used as animal feed. Our maize production covers only about 59% of the total demand of our animal feed millers. The rest of the animal feed will have to be supplemented with fodder wheat (of poor quality). Unfortunately, there is now a severe shortage of wheat due to the Russian-Ukrainian conflict, with the two producing 28% of the world’s total wheat supply. Barley is another feed ingredient substitute, but again there is a severe shortage as Russia and Ukraine together produce 29% of the world’s total barley production.

The shortages of wheat and barley force us to increase the productivity of the corn sector and if not, the prices of corn will skyrocket and, necessarily, the prices of pork, chicken and fish.

We are also experiencing shortages of sugar and cooking oil. No wonder refined sugar prices are now hovering around 70 pesos per kilo while cooking oil is over 110 pesos per litre!

Climate change

In addition to the rising prices of all foodstuffs which exert enormous upward pressure on our inflation rate, there is the challenge of climate change. It has been estimated by climate change experts that damages and losses to agriculture now average between 20 and 25 billion pesos per year, depending on the destruction from the typhoons that regularly visit the country and the intensity of the El Niño and La Niña phenomena.

Our agricultural sector is still not resilient to climate change, as evidenced by the fact that its growth performance is highly dependent on whether or not severe typhoons hit the country during the year in question. Using satellite technology to measure moisture content, track weather disturbances and estimate damage and loss still needs a lot of improvement due to the usual excuse that we don’t have enough money for it. . Rather than viewing investment in satellite technology as a cost, our policy makers should treat it as an investment for better results in the future.

Institutional issues

And there are a range of non-agricultural issues that impede the rapid growth of the agricultural sector. This is what we call institutional issues.

Most important is the protracted implementation of land reform that has resulted in the fragmentation of our farmlands into tiny sizes. They are not economically viable due to the inability to apply modern agricultural machinery and technology as the agricultural plots are too small. We need to consolidate these small agricultural plots into a size that will allow the application of modern machinery and technology.

In addition, the ceiling for land ownership should be raised from 3 hectares to at least 20 to 25 hectares to encourage the emergence of middle-class farmers. In countries with developed agricultural sectors, middle class farmers are the backbone of modern agriculture as they are fairly educated and have access to credit and capital which they can use to purchase machinery and technology. modern agriculture. Unfortunately, the way we have implemented land reform here has practically killed our middle class farmers (because of the low hectare cap) and condemned our land reform beneficiaries to poverty due to the size tiny farms.

Another critical institutional bottleneck is the relationship between the DA and local government units (LGUs). Under the Local Government Code 1991, all DA extension workers were devolved to LGUs. This means that the provision of agricultural services should now be the primary responsibility of LGUs. Unfortunately, only a few places in the country that have this arrangement work. As a result, it is always the central office of the DA that is blamed for any failure in local agricultural production and marketing, which are supposed to be the main responsibilities of LGUs under the law.

The importance of delineating responsibilities between DAs and LGUs has become doubly important given the Mandanas-Garcia decision, which provides larger funds to LGUs (in addition to the over 800 billion peso IRA (internal revenue allocation) , an additional 235 billion pesos will be granted ). Therefore, the funds allocated to the DA are expected to decrease in the future because the law expects the LGUs to perform their task of providing agricultural services to their local farmers and fishermen.

But if the LGUs do not perform the functions expected of them, the prospects for agricultural development are bleak. And with the threat of a food crisis looming, so is the grave threat to national security in the very near future due to the increasing incidence of hunger, malnutrition and even starvation.

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