The country’s socioeconomic planning agency is pushing for three key policy reforms that will serve as the structural framework kick-starting development in the agricultural sector.
Socioeconomic Planning Secretary Arsenio Balisacan said during his presentation in an agricultural forum on Friday that the National Economic and Development Authority (NEDA) is scouting for “reform champions” in the legislative and executive departments of the government to push for the three policy reforms in legislation mentioned for the sector.
The move came amid weak agricultural output, accounting for a meager 10 percent of the country’s overall growth as of end-2014, compared with its 20-percent share in the 1970s.
The agricultural sector is “critical to poverty reduction,” Balisacan said, as one third of the total employment falls under this sector, bulk of which is classified as highly vulnerable groups in the overall population.
Balisacan said that since 2000, his team has been pushing for the three reforms, but they are likely to start choosing potential political advocates only after the elections in May next year.
The first of the three agricultural policy reforms proposed is the promotion of trade domestically and internationally through pushing increased competition and encouraging economic diversification
“The key element in this is the reduction of transaction costs. Wages of farmers in the Philippines are very high compared to its Asean counterparts…We should have regulatory measures through this reform to influence the cost of doing business in the country, particularly in the agricultural sector.”
The second measure is the “use of predictable, transparent and market-friendly instruments to control prices” of commodities.
Balisacan cited rice crops as an example, saying NEDA is advocating the ease of “quantitative restrictions” (QR) in rice imports and replacing them with tariffication measures to have a more transparent and predictable market.
This will push for the reform of the QR agreement between the Philippines and the World Trade Organization that limits or restricts importation of rice in the country and is only valid until 2017.
Before 2017, Balisacan said, the tariffication measures should be in place to support local farmers from future foreign players coming in, which is much more transparent and predictable than the practices of QR at present that opens possibility of monopolistic deeds of local farmers by imposing higher prices to consumers.
Balisacan, also NEDA’s director-general, said the safe tariffs for rice will be at 30 percent, which can be a “much better regime” and can be possibly negotiated with the Asean neighbors than the 40-percent tariff indicated within the WTO agreement.
“Nothing can happen unless the law is reformed. This is the challenge for the next administration. From now on to 2017, we can prepare legislators, farmers and ourselves to advocate the reform from QR to tariff,” he added.
The third measure is to boost research and development (R&D) in the sector, advocating a spending of 0.5 percent to 1 percent of the country’s gross domestic product (GDP) from the 0.1 percent at present.
“We should invest more in innovations in R&D. Unfortunately, as we have done improvement in budget, what is required is greater than what we have [allocated]there. If there is a need, then we will increase appropriations,” Balisacan said.
“We need to deepen these reforms to achieve sustainability [in growth],” he added.
Aside from the three key reforms, Balisacan said the government should entice the private sector to invest in the agricultural segment. He added that investments should be done “massively” in infrastructure such as transportation, flood control and irrigation that could
help the sector.
The government is targeting infrastructure spending to reach 5 percent of the total GDP next year, which is still far behind than the average spending of Asean peers at 7 percent to 8 percent of their GDP.
“The strongest agricultural commodities are the ones where government has no presence in. Crops like banana, pineapple, coffee and cacao are much more growing, which are mostly handled by the private sector… So I think we should encourage the private sector to invest in agriculture,” Balisacan said.
The DA [Department of Agriculture] is targeting a 3 percent to 3.5 percent growth in agriculture this year, which is unattainable, according to Balisacan, as the country saw a negative growth in the sector for the first half of the year.
“If we can grow 3 to 4 percent, which is the world average, we should be able to substantially reduce poverty. Our growth is only 1.7 percent in the last five years, but 5 percent is still doable if we can diversify our agri production toward crops, double irrigation areas or invest more in irrigations resistance to drought and climate- change effects,” he said.
“This year, the sector is yet again confronted with another climate-change phenomenon, the El Niño, which is likely to primarily affect agricultural production,” Ba;isacan added, noting that the effect of the El Niño is likely to peak by November and December this year and January next year.
Historical data from the DA showed that agricultural productivity has been hit by yearly supertyphoons like Pepeng or Parma in 2009, Sendong or Washi in 2011, Pablo or Bopha in 2012, Yolanda or Haiyan in 2013 and Glenda or Rammasun in 2014.