THE agricultural sector of the Philippines is a millstone around the country’s neck.
Despite accounting for more than a third of the country’s workforce the sector contributes less than 15 percent of the total economic output. Poverty incidence among agricultural families is, as a result, much higher than the national average; not only does this impose significant social costs, it reduces productivity.
This, in turn, makes agriculture an unattractive sector to invest in for both agribusiness investors and individuals; because of the rather poor existence farming offers, many potential second- or third-generation farmers instead look for income in urban areas or overseas.
An example of why the Philippines fails in agriculture is the most recent installment of the long-running feud between the government and coconut farmers over the handling of the bloated, Marcos-era Coconut Levy Fund, now worth some P71 billion. In the latest drama, the Confederation of Coconut Farmers Organizations of the Philippines (CCFOP) last week filed a petition at the Supreme Court to block implementation of two executive orders issued by President B.S. Aquino 3rd. One (EO 179) orders an inventory of the coco levy deposits and assets as preparation for privatizing them, while the second (EO 180) authorizes the use of the funds for the benefit of coconut farmers.
The CCFOP would certainly disagree, but the details of their complaint with this pair of directives are not really important; not when wrangling over the coco levy funds has been going on for three decades. The fund was ostensibly created as a way to bankroll coconut sector development, but turned into a slush fund for those during the Marcos era who were well connected to politics but perhaps not so much to ethics.
With proper ownership of the fund finally established (it belongs in full to coconut farmers, under stewardship of the government), one would presume the active management, and more importantly, productive use of the fund would quickly follow. Having grown so suspicious over the years of the government’s intentions with the large and tempting amount of money accumulating in the coco levy fund, the coconut farmers have made doubt a habit, even if the proposal being put forward has some promise.
Philippine agriculture fails because both the government and the agriculture sector’s public advocates have a tendency to look at the issue in primarily social rather than economic terms; this, after all, is the perspective behind the Philippines’ largely disastrous land reform program. Planning for use of the coco levy funds or any other government-controlled resources is almost invariably couched in terms of “inclusiveness,” or “empowerment,” or “uplifting the farmer,” with very few concrete details or targets to define those rosy-sounding aims.
EO 179 and EO 180 might not have raised such a protest if they provided a clear vision with measurable outcomes for the coconut farmers to consider; instead, the two orders were issued according to the bad habit this government has developed of writing the details of laws into the implementing rules and regulations, where they escape virtually all of the scrutiny ordinarily applied to the underlying bill through the legislative process. The coconut farmers quite understandably do not know what to expect, and are not reassured that “all stakeholders will be consulted” during the process to develop the implementation program.
Nearby countries like Japan and Korea that produce an agricultural surplus despite being at a distinct geographic disadvantage achieved that result by treating agriculture as though it were an industry; land reform was carried out swiftly and firmly, and beneficiaries were properly supported to give them the best chance to be productive. Productivity was not, as it is here, considered an inevitable by-product of land ownership.
Within the next few months, the last few remaining barriers to agricultural trade within Asean will practically disappear, putting greater competitive pressure on the Philippines in markets for products that are, for better or worse (coconuts may not be a winner economically, as will be explained in an upcoming column), mainstays of the country’s agricultural economy.
The knowledge that P71 billion which could be used to boost the coconut sector will continue to be unavailable due to court challenges and a lack of implementing instructions is distressing; by the time the positive impact of any application of the coco levy funds is felt—something that would realistically take several months to perhaps, a year or more, if the process began right now with a favorable Supreme Court ruling—countries like Malaysia and Indonesia might very well capture a significant part of the Philippines’ market, including the domestic market.
Agricultural strategy and planning—examples of the so-called “road maps” Philippine bureaucracy is fond of creating—need to be developed more quickly and in much more useful detail. If EO 179 and EO 180 are as legally sound as the government believes them to be, then the Supreme Court should dispense with the challenge to them as quickly as possible, and allow the use of the coco levy funds for their intended purpose.