The
Posted: 2:57 AM | Jul. 01, 2005
Ernesto M. Ordoñez
Inquirer News Service
Published on page B6 of the July 01, 2005 issue of the Philippine Daily Inquirer
"ALTHOUGH many still think of the
This was according to former socioeconomic planning secretary Cielito Habito and Ateneo de Manila University economics professor Roehlano M. Briones, in a paper presented on June 27 at the "Workshop on Policies to Strengthen Productivity in the Philippines" at the Asian Institute of Management Conference Center in Makati City.
According to the paper, agriculture, fishery and forestry account for just 20 percent of the economy's gross domestic product (GDP).
Since services accounts for 45 percent of the GDP, and industry accounts for 35 percent, it is argued that we really have a services -- not an agricultural -- economy.
The importance of agriculture
However, we do have an agriculture-based economy. If we consider agro processing and agricultural inputs manufacturing, in addition to basic agricultural production, 70 percent of our jobs and 40 percent of our GDP come from agriculture, Dr. Bruce Tolentino said.
Habito and Briones cited the importance of agriculture in our overall economic development: "First, it provides food and vital raw materials for the rest of the economy; second, it provides a significant market for the non agricultural economy, as buyer of farm inputs as well as consumer goods and services produced in the non agricultural economy; and third, it releases surplus labor to the industry and the services sector."
Decreasing labor productivity
Yet in spite of agriculture's importance, our agricultural labor productivity is dismal compared to our neighboring countries.
In the same workshop, Professor Rolando Dy of the University of Asia and the Pacific presented the comparative labor productivity growth rates of five Asian countries as reported in the World Bank-World Development Report 2004.
Comparing the periods 1979-81 and 2000-02, the following were the growth rates:
We end up being the laggards with our growth not even reaching six percent.
There is some good news. In selected areas like bananas and pineapples, which are characterized through an agribusiness strategic approach using economies of scale, we are the leaders.
However, where there is a piecemeal approach with inadequate economies of scale such as in mangoes, we lag behind.
The table below shows information culled from the Food Agricultural Organization.
Agribusiness strategy
Comparing the banana and pineapple sectors with the mango sector, two significant differences are observed: an agribusiness strategy and economies of scale.
Ibarra Malonzo, president of the Kasanyangan Mindanao Foundation and a leader of the Alyansa Agrikultura [Agricultural Alliance], defined agribusiness strategy this way:
"It is applying science and technology to farming, and market solutions to agriculture. It involves organizing and managing the supply chain from production (farm machinery, seeds, breeds, technology, credit), to post harvest (dryers, silos, slaughterhouses, refrigerated vans), to manufacture (flour and feed mill, corn flake factories), to transport (ships, ports, trucks, and roll-on, roll-off vessels), and finally, marketing to deliver the goods to end-users or customers."
This agribusiness strategy is contained in the mango master plan developed in 2002 by the mango industry association and the Department of Agriculture.
But Renato Florencio, a mango industry leader who spearheaded the plan's formulation, says that much more government support is needed.
Economies of scale
Some argue that land reform will automatically decrease agricultural productivity. This is because economies of scale will be lost.
However, the banana and the pineapple lands were subjected to land reform, and their productivity further increased. This is because economies of scale can still be captured by consolidating the lands and having unified management. The same can also be done for mangoes and other agricultural products.
While several studies show land reform benefiting small farmers, there are several experiences where they are worse, rather than better, off. This is when the support services, previously provided by their former landowners, are withdrawn and not replaced by the government.
This is why the Alyansa Agrikultura, in a common agro-fishery agenda adopted by 39 national and local federations, advocates that land reform must always be accompanied by adequate support services. This will also make possible economies of scale.
More support
Though we do not have an agriculture economy in the strict sense, the fact that 70 percent of our labor force is directly dependent on agriculture should motivate us to give this sector the most importance in our economy. But the reverse has happened.
It is now critical that significantly more support be given to the twin thrusts of agribusiness strategy and economies of scale. Only then can we catch up with our Asian neighbors and regain our agricultural leadership in the region.
The author is chairman of Agriwatch, a private sector initiative; former Cabinet secretary for Presidential Flagship Programs and Projects, former undersecretary of agriculture, and former undersecretary of trade and industry. For inquiries and suggestions, e-mail agriwatchphil @ yahoo.com or call or fax +632 8516635.
Annual Productivity Growth from 1995-2004
| COUNTRY | Bananas | Pineapples | Mangoes |
| | 4.1 | (1.4) | 3.2 |
| | 1.2 | (3.7) | 4.3 |
| | 2.2 | 1.9 | (2.6) |
| | 3.2 | 7.8 | (0.1) |
| | (0.0) | (0.8) | 0.2 |
| | (1.3) | 2.0 | (4.4) |
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