July 25, 2024


World Business Inquiries

Agriculture budget and economic growth

4 min read

For substantial sustainable economic growth, we must significantly increase the Department of Agriculture’s (DA) budget. We now have a possible additional P56 billion because of the Stimulus Fund triggered by COVID-19. But this is still only 5 percent of the total fund, and should be increased.

The pandemic has focused much more attention on food. Even leaders from industry point out that agriculture should get badly needed support. George Barcelon, president emeritus of Philippine Chamber of Commerce and Industry (PCCI) and the private sector representative to the Legislative-Executive Development Advisory Council, said: “Our importation of food is almost 50 percent. So if you look at what sectors we should really focus on for long-term sustainability, it is really agriculture.” PCCI president Benedicto Yujuico added: “Given the importance of farming and industry to our economy, the P6-billion allocation is miniscule compared with the assistance given to other industries—P43 billion for tourism…” Consider this, from 2011 to 2017, industry recorded an average 6.8 percent growth while agriculture had only 1.6 percent. The last two years have been worse: Industry expanded by 6.7 percent and 4.9 percent in 2018 and 2019, respectively, while agriculture grew by only 0.6 percent and 0.7 percent in the same period (based on Philippine Statistics Authority data).

Two areas stand out as needing immediate attention. One is infrastructure (“Build, Build, Build”), which has a significant multiplier effect. This has had more results in the last three years than the 10 prior to that. The other is agriculture (“Plant, Plant, Plant”), which can best address poverty. But unlike infrastructure, agriculture has gotten worse because of unforeseen events. University of the Philippines-Los Baños professor Ted Mendoza reported the results of his 20-year study on agriculture budget support among of Asean countries that showed that the Philippines had supported agriculture the least.

For example, Malaysia has spent more than five times than us on a per capita basis. In addition to significantly achieving better agriculture growth is its impact on poverty. Malaysia and the Philippines both started with rural poverty above 30 percent.

Today, the Philippines has a 31-percent poverty rate, more than double that of Vietnam, Thailand and Indonesia, while Malaysia’s is less than 2 percent.

The budget must come with a systematic progressive path to increase growth and minimize poverty.

Malaysia did this, we did not. Malaysia resisted World Trade Organization pressure for too rapid industrialization, consolidated their farms through strong political will, economies of scale, and emphasized technology. We did the opposite. We followed an unadjusted neoliberal policy and favored free rather than fair trade. We witnessed the fragmentation of our already small farms, without serious attempt to consolidate them. We allowed good technologies in our universities and research institutes to remain untapped by an ineffective agriculture extension system. Worse, other countries learned these technologies from us and they surpassed us. First, Congress should hear the needs of agriculture stakeholders directly on the P56-billion DA budget. On June 4, these stakeholders were scheduled to submit both support and specific recommendations to Secretary Dar, and hope Congress will likewise listen.

Second, since we are at a crossroads in agriculture, we must work with and support Secretary Dar on the “new normal.” The Malaysian model is just one example to study for increased agriculture growth and reduced poverty. Malaysia made extensive use of private sector partici­pation. At one time, there was a private sector adviser for each minister, so that needs actually felt by the people are not overshadowed by possible mistaken bureaucratic perceptions.

Third, and most importantly, we must significantly change our agriculture approach. Alyansa Agrikultura president Arsenio Tanchuling believes we can benefit from the first few weeks of the pandemic. This was when we learned alternatives forced by necessity to implement creative new approaches. Examples are using new production methods, sourcing products from the community instead of outside, and putting up decentralized trading posts.

Local government and private sector empowerment in developing agriculture and reducing poverty must now focus on the provinces, municipalities, and barangays. The larger agriculture budget, when used with this new normal approach, will add significantly in achieving our “bayanihan as one” objective of a better life for our people. INQ

The author is Agriwatch chair, former Secretary of Presidential Programs and Projects and former undersecretary of Agriculture and Trade and Industry. Contact him via [email protected]

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