Greater promotion and support is being given services and manufacturing to raise Philippine global competitiveness, but an equally strong agricultural road map is just as vital an ingredient for sustained economic growth.
“The Philippines is at the cusp of a high and hopefully prolonged growth phase. However, the ability of this growth to deliver sustained creation of jobs and reduction of poverty has been questioned,” noted the paper entitled “Urgent: A Road Map for Agro-Industrial Development in the Philippines.”
“The accelerating pace of economic growth in the Philippines will not translate into inclusive, sustainable growth if agricultural development is neglected,” it added.
After a period of rapid growth in the 1960s and 1970s, the agriculture industry has grown since the 1980s at an annual average of only 2.05 percent, lower than the 3.4 percent average of developing Asia and even lower than the 2.5-percent average of countries in Sub-Saharan Africa.
The study, published in August 2013 by the Philippine Institute for Development Studies, suggests that the industry road map should aim to raise productivity in traditional products and-more important-encourage a shift toward high-value produce.
“High-value crops such as fruits and vegetables are much more profitable than traditional crops such as rice and corn,” the paper noted. “On a per hectare basis, labor cost is also greater, suggesting a greater potential for employment creation for high-value crops.”
The move to diversify beyond traditional crops is crucial for agricultural development, “Philippine agriculture, however, deviates from this stylized pattern,” say study authors Roehlano Briones and Ivory Galang.
In developing Asian countries, the share of cereals has decreased from 40 percent to 24 percent; its share for the Philippines has increased from 22 percent to 23 percent.
Diversification requires rapid technological change, improved rural infrastructure, and changes in food demand patterns that encourage increasing demand for more expensive foods such as meat, fish, fruits, and vegetables.
The industry road map can address the major constraints to transitioning to a more diversified agricultural sector. It can promote the global competitiveness of products that currently have high demand, such as rubber, coconut oil, mango and banana, as well as open up the market potentials of crops with growing demand such as cacao and palm oil.
Farmers opting to shift to high-value products must also be assured of a market through closer integration between agriculture and related manufacturing and services.
There are many examples of successful supply chains in the Philippines. Widespread replication of these chains will transform the Philippine countryside, the study recommends.
“Agricultural development in the Philippine context involves a transition from farming to agribusiness,” the authors continue. “Rural transformation is far from complete. Such transformation can only happen if Philippine agriculture upgrades and restructures supply chains to attain competitive advantage in high-value agro-industrial products.”