Saving agriculture

Something must really be amiss at the agency tasked to oversee the agriculture and fishery sectors. While other departments are being run effectively by their respective secretaries, the economic team of the Duterte administration does not seem to feel the same for the Department of Agriculture.

Thus the plan of the economic team to help the department put the farm sector “in a more sustainable and less volatile growth trajectory.”

As Budget Secretary Ben Diokno pointed out, agriculture has consistently grown at rates lower than overall economic growth, and has failed to reach its potential economic contribution despite the big number of people it employs.

This was bad news, he said, because the poor are concentrated in rural areas where agriculture is the primary livelihood.

Clearly, inadequate policies, vulnerability to natural hazards and bureaucratic mismanagement have all had a hand in the sluggish performance of the agriculture sector through the years.

Historically speaking, the performance of the agriculture, forestry and fisheries sector has indeed been erratic and subpar relative to the Philippine economy.

Across administrations, the farm sector has posted low and inconsistent growth rates, frequently below annual GDP growth.

For instance, had the agriculture sector grown at its potential of 4 percent in 2018, full-year economic growth would have reached 6.5 percent, equal to the low-end of the government’s revised growth target.

However, the sector contributed a mere 0.1 percentage point to the full-year growth rate of 6.2 percent. Simply put, according to Diokno, the farm sector had virtually zero contribution to economic growth last year.

Official data on the employment share and contribution to GDP of the agriculture sector show it is the “laggard industry” of the Philippine economy. As of end-2018, the agriculture sector accounted for a fourth of total employment in the Philippine economy.

However, its share of total GDP was disproportionately low at less than a tenth, or only 8.1 percent. This is even a regression, because in 1992, the agriculture sector accounted for as much as 45 percent of total employment while accounting for 16 percent of GDP.

According to the government, this employment-output mismatch is common for developing countries with less productive agriculture sectors.

It is good to hear, then, that the Duterte administration is intent on prioritizing, finally, the task of fixing the agriculture sector.

That project will require a holistic approach, both in policy formulation and program implementation. The Department of Budget and Management said it is now reviewing a number of studies made by agriculture experts in order to enhance fund flow to the farm sector.

One recommendation cited by Diokno is from the Organization for Economic Cooperation and Development, which calls for directing more resources to improving supply-chain connectivity (such as farm-to-market roads and other infrastructure) and focusing on agricultural research and extension services that will lead to long-term productivity gains, as opposed to emphasizing input subsidies such as fertilizers and seeds.

The budget department has promised to coordinate with the concerned agencies, especially the Department of Agriculture and the National Economic and Development Authority, and says it will share its findings once ready, in hopes of reversing the sector’s poor performance.

With agriculture somehow ending up as a persistent weak link in ensuring sustainable economic growth for the country, it is high time that a concerted effort among the various government agencies be started to look into what truly ails this essential sector, and forge a comprehensive program to improve its productivity. For farmers and fisherfolk in the rural areas, higher productivity will mean higher incomes.

For consumers, it will mean lower prices for staple food items such as rice, vegetables, fish and meat. The whole country stands to benefit from such a critical improvement.