An international food agency has urged government to carry out “structural transformation” by pouring investments into farm research and development (R&D), infrastructure, labor-intensive manufacturing and services, and land distribution in order for rural economies to grow.
The International Food Policy Research Institute (IFPRI) which is co-implementing a $2.5 million Asean market development work, said that policy transformation like those adopted by China will play a huge role in rapidly lifting rural areas into progress.
The Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) is a co-implementor of the Asean project financed by the International Fund for Agricultural Development (IFAD) called “Asean Transformation and Market Integration” or ATMI.
“The design and implementation of institutions, policies and investments [in countries]have influenced the path and speed of rural transformation and … poverty reduction. Land reform, rural investments and sectoral policies have been decisive,” said Kevin Chen, IFAD senior research fellow at the SEARCA ATMI program.
China’s rural development success, according to Chen, is particularly attributable to the following: Land redistribution in 1982, market reform, trade liberalization; huge investment in infrastructure; rapid structural transformation—investments in manufacturing and services through decentralization, foreign direct investment, and regional competition; and substantial agricultural R&D.
The dream toward a “one Asean” through market integration was conceived as a result of the 2007-2008 food crisis when rice price shot up in the market beyond $1,000 per ton. Asean member-nations adopted the Asean Integrated Food Security and Strategic Plan of Action on Food Security that now covers 2015-2020.
Asean is the Association of Southeast Asian Nations.
ATMI aims to integrate small farmers into bigger business systems—called value chain that does the series of business activities from farming to processing, marketing, and distribution. It will make them competitive as numerous small farmers’ production are consolidated into one bigger supply bulk.
For smallholder agriculture
The role of small farmers to rural economic growth is tremendous as small farmers tending one to two hectares make up 85 percent of all land holdings and those holding less than 0.5 hectares make up 70 percent. These suffer the most from poverty and hunger. Philippines itself placed 68 in the 2016 ranking for Global Hunger Index out of 118 countries.
These are among the principles structural transformation is anchored.
Land distribution enhances productivity as farmers have the incentive to work hard if they have security of land tenure. It is also important that they can consolidate farmlands into bigger tracts so they can have economies of scale and be competitive.
With an effective social security system available equally to farmers especially the minorities—women, disabled, or cultural minorities, inequality is reduced, and minorities become productive.
For countries with slow development, investments in more roads, land preparation and post harvest machines, processing machines obviously raise production of value added goods.
Market distortions should be eliminated, private sector investment attracted, financing made available, and centralization/bureaucracy eliminated.
Job creation should be prioritized in rural non-farm economy. In urban and semi-urban areas, the focus of jobs creation should be in services and industry.
Market and pricing policies should be encouraging for investments in agriculture to grow.
Since a significant part of rural population is taken up by women and other minorities, it is important to adopt policies that give them equal access to land, asset ownership, credit, education, health services, and other productive assets.
With rural transformation, poverty in Asean’s developing countries has been successfully reduced from 71 percent in 1981 to 15 percent in 2011 (based on purchasing power). Based on $1.25 a day poverty yardstick, poverty rate in Asean was reduced from 91 percent in 1981 to 40 percent in 2011.