Back to basics

Ben D. Kritz

Ben D. Kritz

An e-mail correspondent, one who I surmised from the tone of his message is a little disappointed that I have been “neglecting” a number of issues, posed the following non-question to me this week: “Over the past few weeks, you seem to have become an agricultural advocate. I wish we could read more of your views on some of the other things that are going on in the country right now.”

I would not say that I am an “agricultural advocate” beyond whatever extent is necessary to be an advocate for a strong and sustainable economy in general, but on the other hand I am not going to apologize if some of my readers have a different impression—as this is the third such column in two weeks, they might actually be right.

Where readers like my recent correspondent may be wrong, however, is if the implication that “agriculture doesn’t deserve so much attention” is actually a fair reflection of their point of view. If anything, agriculture demands far more attention than it actually receives from anybody—whether the government, the media, or the public at large.

Although there are enormous social factors involved, being an “advocate” for a strong agricultural sector is really a matter of economics at its most fundamental level.
Any economy comprises three basic levels. The primary level consists of activities that produce or gather basic resources; the secondary level consists of activities that process those resources into consumable products; and the tertiary level consists of the economic activities involved in consuming those products. The production method of recording gross domestic product approximately follows this overall division of the economy; the Philippine Statistics Authority, for example, divides the economy into “agriculture, hunting, forestry and fishing,” “industry,” and “services” sectors. The only discrepancy between this and the primary-secondary-tertiary arrangement is that “mining & quarrying” should be grouped with agriculture, whereas it is included with the industry sector by the PSA.

There is not an ideal formula for how much of a country’s economy should be generated by each of the three levels, because obviously countries have different physical and social characteristics. Tiny Singapore, with practically no natural resources or open space to devote to agriculture, comfortably exists without a primary economic level at all, for example. The important thing is that every level of the economy, in whatever proportion it exists, should be productively maximized, contributing no less to the economy (and preferably more, obviously) than the inputs it draws from it. For example, the primary economic level of the United States—the combination of agriculture (which includes fisheries) and mining (which includes forestry and oil and gas extraction)—accounts for about 1.8 percent of the country’s employment, but contributes roughly 3 percent of its GDP. That does not sound all that impressive, except that that very small percentage represents an amount which, in constant terms, is a little more than 3.5 times the size of the Philippines’ entire GDP. And that very small part of the economy also makes the US the world’s largest agricultural exporter, and a net exporter of petroleum products (despite also being the world’s largest importer, oil has been the biggest export from the US since 2011).

By contrast, the Philippines’ primary economic level contributes about 10 percent to the country’s GDP, and of that 10 percent, slightly more than 90 percent is contributed by agriculture. The primary economic level also accounts for 33.95 percent of the country’s employment, all but 0.5 percent of which comes from agriculture. And yet the country is not only a net agricultural importer, it is a net importer of the most basic commodities.

Shortages of agricultural products, which result in increasing food prices, seem to be more frequent and persistent. And since this is happening in a period in which the contribution of agriculture to GDP is steadily shrinking (from 9.6 percent in 2011, to 9.3 in 2012, to 8.8 percent last year, according to PSA data) while the agricultural workforce is actually gradually increasing (from about 29.5 percent in 2008 to the approximately 33.4 percent it is now), the efficiency of the base level of the Philippine economy is clearly diminishing.

That’s a big problem, one that should be regarded as a serious economic crisis and be subjected to intense, aggressive efforts to solve. Where that solution starts is with changing the national mindset, rather than pronouncing (and then utterly failing to even come close to meeting) unconnected and incomplete goals like “land reform” or “becoming self-sufficient in rice,” while disdainfully continuing to regard the agricultural sector as being populated by people who either can’t or won’t find something more profitable to do for a living. The Philippines might not become a net agricultural exporter, but what it can and should be is economically efficient: Extracting the maximum sustainable yield from cultivated land and fisheries, and maximizing the consumption of the goods produced to provide sustainable incomes for the large agricultural labor sector. Any initiatives, even short-term ideas, which work in the direction of those long-term goals, will be steps in the right direction.


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1 Comment

  1. Only proves the fact that in this country, the simplest and most obvious problems are the hardest to see and the most difficult to solve….