Trade centers and Asean integration
With the Asean integration comes a mixed blessing of opportunity and danger.
The opportunity comes in the form of more exports, which means more jobs to produce additional goods. The danger lies in the flow of more imports, which may replace our products and cause the loss of jobs.
In agriculture, trade centers can spell the difference between the Asean integration becoming a blessing or a curse.
A look at the table above shows the positive international trade performance under the Aquino administration and Agriculture Secretary Proceso Alcala’s stewardship.
From 2010 to 2013, agriculture imports have increased by a minimum of 7 percent from P7.4 billion to P7.9 billion. On the other hand, exports have increased by a significant 56 percent from P4.1 billion to P6.4 billion. As a result, our trade deficit shows a welcome 46 percent improvement from P3.3 billion to P1.5 billion.
We should, however, not rest on this achievement. Instead, we should strive for a trade surplus as our Asean neighbors are doing.
Integration
Make no mistake. Some say the Asean integration in December 2015 will result in practically the same situation we are in today.
They correctly say that, aside from a few products, agriculture tariffs will be the same. However, the Asean integration is not limited to tariff adjustments. More importantly, it is a new paradigm that treats the entire Asean as just one market. It involves measures such as trade facilitation, standards harmonization, and a new mind-set that encourages an Asean member to sell aggressively to other countries.
This is where the Department of Agriculture’s (DA) trading centers come into play. In its promotional brochure, the DA states: “The Trading Center is an alternative marketing system and business model where small farmers and fisherfolk can sell their products directly at rationalized prices. The Center will be co-owned by the government and the private sector (farmers and fishers).”
The trading facilities, according to the DA, “are designed to enable the basic producers to skip the necessity of going through the layers of traders, especially those who dictate farm and market prices…. These centers shall have the following facilities: trading areas, processing plant, refrigeration facilities/cold storage, packing chambers, dormitories, parking spaces, etc.”
Two recommendations
With the Asean integration already at our doorstep, we make two recommendations. The first is to have the trading center serve as our first line of offense, as well as defense, in the trading area.
In our book “From Seed to Shelf” published by the United Nations Development Programme, we showed that the Philippines had the biggest difference between the farm gate and retail prices among all Asean countries. Decreasing the middlemen and making the marketing channels more efficient would achieve the two objectives of decreasing consumer prices and increasing farmer farm gate prices.
Because marketing is a major problem of our agriculture, more trading centers must be given the highest priority. If funds are limited, the need for streamlined agriculture trade centers is more important than the desire for the resulting fewer centers equipped with less urgent components. Examples are processing plants and dormitories which can be put up by other entities.
The second recommendation is to partly reallocate the funds budgeted for the trading centers’ non-urgent needs to fill a critical gap we have today. It is a market advisory component that will hire agricultural market specialists to advise farmers what the existing markets are during the relevant periods of the year. This will include suggesting what products to produce, as well as the most appropriate technologies to implement. It may also link markets to producers and help formulate market and buy-back contracts.
Intelligence, promotion, assistance
Consideration will be given not only to addressing potential Asean export markets, but also to help formulate strategies to produce more competitive agricultural products that are under threat from new Asean product entries.
To address Asean integration in December 2015, we must fund and build more streamlined DA Agriculture Trading Centers jointly owned and managed by the private sector and government.
These centers will not just serve as drop-off points, but also as sources of market intelligence, promotion and assistance.
Only in this way can Asean be an opportunity rather than a danger for our farmers and fisherfolk. We will have more exports and less imports, more job gains than losses, and inclusive growth will become a reality rather than a fantasy.
(The author is chair of Agriwatch, former Secretary for Presidential Flagship Programs and Projects, and former undersecretary for agriculture, trade and industry. For inquiries and suggestions, e-mail [email protected] or telefax (02) 8522112.)
