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No Free Lunch

Funding agriculture right

/ 04:06 AM September 28, 2021

Why has the Department of Agriculture (DA) perennially received much less than it asks from the Development Budget Coordination Committee (DBCC) composed of government’s top economic managers, which finalizes the national budget proposed to Congress? Fellow Inquirer columnist Ernie Ordoñez recently noted that in 2020 and 2021, the DA got only 22 and 30 percent, respectively, of what it originally requested, and got even less in 2022. What gives? Don’t the economic managers believe in the importance of agriculture to our economy?

I am certain that they do. After all, the secretary of finance, usually considered the primus inter pares among them, was once secretary of agriculture himself under President Cory Aquino. A key member (Dr. Bruce Tolentino) of the Monetary Board of the Bangko Sentral was also undersecretary to then Agriculture Secretary Sonny Dominguez, and Governor Ben Diokno, a seasoned economist, surely sees agriculture’s critical role as well. And Socioeconomic Planning Secretary Karl Chua’s past work as World Bank economist had him leading a multi-year jobs program that had agriculture as a critical focus. So what makes them seem so “harsh” on the agriculture budget?

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My own informed guess is that they don’t see practical sense in dramatically raising the DA budget when it has perennially failed to demonstrate the absorptive capacity to utilize its budget effectively and efficiently. I had a first-hand sense of this in the 1990s, when as then head of Neda, I would receive reports from my staff that the DA typically managed to spend only about 60 percent of its annual budget by the end of November. And because the DBCC would not entrust a larger budget to those who can’t even spend what they already have, it would be in a mad rush to spend the remainder within the final month of the year—and the easiest way would usually be to grant all sorts of bonuses and “incentive allowances” to employees, to utilize the “savings.” The DA was by no means alone in this, and having been out of government for over two decades now, I couldn’t help wonder if the problem persists to this day.

Well, it turns out that it does. I examined the DA’s recent annual audit reports, which anyone can view on the Commission on Audit website (thank God for COA transparency!). I found that the DA managed to spend only 61.2 percent of its allotted budget in 2017, 62 percent in 2018, and 60.4 percent in 2019 (never mind the abnormal year of 2020). At least they outdid the Department of Public Works and Highways, which has consistently managed to spend less than 40 percent of its annual budget since 2017, and even worse, the Department of Transportation, which spent less than 30 percent. Should we then fault our economic managers for finding it hard to believe that the DA can actually spend 3-4 times more than what it has been getting?

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Still, I’d argue that agriculture needs a far bigger budget than what it has been getting. Ordoñez points out that our agriculture budget’s 2 percent share in the total budget pales in comparison to Thailand’s 3.5 percent and Vietnam’s 5.5 percent. And after decades of a rice-dominated agriculture budget, it’s time to substantially boost budget support to other important farm products, even as we cannot drastically slash the rice budget in the process, especially after liberalizing rice trade. The DA’s limited absorptive capacity need not get in the way if it works through the local government units (LGUs) and actually spends money through them. After all, LGUs must do the rowing while the DA confines itself to steering. The expected LGU “windfall” from the implementation of the Mandanas ruling next year would hardly help, as it will only make up for longstanding “unfunded mandates” passed on to LGUs by the 1991 Local Government Code.

I’d like to see Secretary Willie Dar’s resolve to work through provincial LGUs translate into DA funds being passed on via memorandums of agreement to LGUs for program implementation, a mechanism that has already worked well for other agencies. If we can show that such managed devolution could serve our farmers well, then the DA can better convince the DBCC that it deserves the budget boost the sector has always needed.

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TAGS: Cielito F. Habito, department of agriculture, funding agriculture, No Free Lunch, William Dar
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