Agriculture key to inclusive growth

We cannot have inclusive growth unless we address agriculture.

We will show why agriculture must be addressed, and identify two strategic actions that must be carried out.

Definitions

Last May 27, Dr. Rolando Dy (02-6342819) gave an insightful presentation during the general meeting of Management Association of the Philippines (MAP). He cited five definitions for inclusive growth:

United Nations Development Program: “Participation and benefit sharing;”

World Bank: “Focuses on economic growth, which is necessary and crucial condition for poverty reduction;”

Asian Development Bank: “Three Pillars—high sustainable growth, broader access to opportunities and safety nets;”

Organization for Economic Cooperation and Development: “Allows people to contribute to, and benefit from, economic growth;” and,

United States Agency for International Development: “Broad-based growth is growth that includes all major income groups, ethnic groups and women, and that significantly reduces poverty.”

At the World Economic Forum held earlier, the Philippines’ 7.2-percent economic growth last year was widely praised. However, the weak spot was inclusive growth. While manufacturing posted 10.5 percent growth, agriculture only showed 1.1 percent.

In the first quarter of this year, agriculture further declined to 0.9 percent.

It is in the rural agricultural areas that you will find 70 percent of our poor.

The agribusiness chain contributes 35-40 percent of our gross domestic product (GDP). This starts with agriculture at 12 percent, proceeds to food manufacturing at 10 percent, and includes agri-services at 13-18 percent. Without agriculture, the rest of the agribusiness chain collapses.

Asean Integration

At the same World Economic Forum, Manuel Pangilinan stated that our agriculture is the least prepared for the Asean integration. A multi-awarded agribusiness leader who arrived from Thailand two weeks ago described to me how the Thai government and its agri-businessmen were working closely together to penetrate more aggressively the Asean market, especially the Philippines.

“We are asked not to emphasize the downside Asean risks, but to concentrate on the Asean agriculture export opportunities,” the Thai businessman said.

“But if we are not competitive, how can we export? More importantly, how can we even survive? It is imperative and urgent that our government and agri-businessmen must start working closely together as the Thais are doing. Believe me, I have not seen this. If we do not act soon, much of our agriculture will perish, poverty will increase, and we will have the opposite of the government-proclaimed goal of inclusive growth.”

Two actions

During the MAP meeting, the Alyansa Agrikultura cited two key actions to promote agriculture:

The first is to rush the completion of agriculture subsector roadmaps. The Department of Trade and Industry (DTI) has already submitted 26 roadmaps to the Philippine Institute of Development studies (PIDS), the government think tank. The Department of Agriculture (DA) has not submitted even one.

When the agriculture private sector leaders asked to see even the draft copies, they were told to wait for the roadmaps’ completion.

This is the opposite of what the DTI does. The private sector leaders are the main formulators of the roadmaps. They work with government on their formulation from start to finish. This contributes to the roadmaps’ practicality and realism, as well as the commitment from both the private sector and government.

In addition, there is one DTI point person for each sector, who then gets the appropriate government agencies to form a team that will support the private sector. This system may account for the 10.5-percent manufacturing growth last year, while the 1.1-percent agriculture growth is handicapped without this system.

The second recommendation is to support the reformed Bureau of Customs (BOC) leadership, which has already achieved a 20-percent increase in revenue collections. Any rumored change in leadership because of partisan political considerations “in aid of the coming 2016 elections” should be vigorously opposed. The BOC’s successes, done with the National Competitiveness Council’s support in decreasing smuggling have significantly improved farmers’ incomes.

The higher farmgate prices have resulted in less poverty and improved inclusive growth indicators in these sectors.

Agriculture is obviously the key to inclusive growth. If not addressed immediately, it will instead lead to a rise in poverty incidence.

(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, email [email protected] or telefax (02) 8522112).