INCREASED government investments in agricultural and rural infrastructure are crucial to slash poverty and create more jobs, according to Economic Planning Secretary Arsenio M. Balisacan.
“Agricultural development remains a critical area for poverty reduction in many parts of the country, particularly in areas with high potentials for irrigation development but are remote or isolated from rapidly developing growth centers.”
Balisacan said this in a forum dubbed “Land Governance and Climate-Smart Agriculture” held during the World Bank-International Monetary Fund 2015 Spring Meetings in Washington, D.C. on April 17 to 19.
Balisacan, who is also the director general of the National Economic and Development Authority (Neda), said rural communities could not grow as fast due to “inefficient land markets and poor infrastructure,” adding that “there are serious land management and administration problems.”
He admitted that land administration had been poorly managed. The government, he noted, had created many institutions for land administration but their functions were overlapping resulting in higher costs of operating rural markets, Balisacan explained.
“As a result, the cost of doing business in rural areas is quite high,” he added.
Also, the country’s chief economist lamented that the country’s land reform program, which he described as “protracted,” had brought “uncertainty” in the credit markets.
“The country probably has the world’s longest land reform program—40 years, which remains an unfinished business. Until now, many of the beneficiaries of the program are restricted from transferring their lands and even if these lands are with the banks for credit, the banks could not dispose of them. As a result, many of the farmers are holding land titles that have low collateral values. As a consequence, credit was not flowing to rural areas and, therefore, investments suffered,” Balisacan said.
He said “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. Likewise, increased agricultural production without access to growth/urban centers … may actually work against the farmers. Investments have to flow to agriculture and rural areas and that’s what we have been working on lately,” he said.
For this year, the government has earmarked only P89.1 billion, out of the P2.606-trillion 2015 national budget, to support agricultural programs.