BETTER land governance and increased infrastructure investments in agriculture and rural areas remain critical for productivity, job generation, and poverty reduction in many parts of the Philippines.
This was emphasized by Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) Director General Arsenio Balisacan at the recently concluded World Bank-International Monetary Fund 2015 Spring Meetings held last April 17 to 19, 2015 in Washington, D.C.
During the session on Land Governance and Climate-Smart Agriculture, Balisacan said agricultural development remains a critical area for poverty reduction in many parts of the country, particularly in areas with high potential for irrigation development but are remote or isolated from rapidly developing growth centers.
Balisacan noted that among the binding constraints to growth in rural areas were the inefficient land markets and poor infrastructure, which he viewed as “serious” land management and administration problems.
“Throughout the years, we have created so many institutions that administer and manage lands. Their functions are overlapping and they have made the operation of rural markets more costly. As a result, the cost of doing business in rural areas is quite high,” he said.
The NEDA chief also said that the country’s protracted land reform program has created uncertainty in rural markets, especially in credit markets.
He said the country probably has the world’s longest land reform program–40 years and it is still an unfinished business.
Until now, many of the beneficiaries of the program are restricted from transferring their lands, and even if these lands are held by the banks for credit, the banks could not dispose of them, Balisacan noted.
“As a result, many of the farmers are holding land titles that have low collateral values. And as a consequence, credit was not flowing to rural areas and investments therefore suffered,” he explained.
Balisacan emphasized that the demand for credit in rural areas is very much dependent on the profitability of agriculture, which in turn is directly affected by the quality of infrastructure. If there are no profitable agricultural projects or activities, credit will not flow to agriculture, he said.
Also, increased agricultural production without access to growth or to urban centers where the produce can be transported to markets, can actually work against the farmers, he added.
“Investments have to flow to agriculture and rural areas and that’s what we have been working on lately,” said Balisacan.
The NEDA chief mentioned that of the approved P2.606 trillion 2015 Philippine national budget, P89.1 billion was allocated to support agricultural programs, while infrastructure investment will be increased to the equivalent of 4 percent of projected gross domestic product for the year.
Balisacan also pointed out that connectivity is the key to getting the rural communities to participate in the growth process.