Paramount barriers in inclusive growth: time to act

Poverty remains scandalously high at a third of rural residents, almost 18 million out of the total poor of 21.6 million in 2015. The comparison is grim. Our poverty picture pales in comparison with our Asean neighbors. Poverty is an agriculture phenomenon.

The Department of Agriculture (DA) Secretary has the right priorities. He needs full support.

What are the actions that need to be done soon? Admittedly, a lot has to be done but this article will focus on just two key action points: agriculture extension and amending the agrarian reform law.

Agriculture extension

The Coalition for Agriculture Modernization in the Philippines (CAMP) hit the bull’s-eye advocating for provincial extension centers, a radical departure from the feeble municipal-based extension system. CAMP is a group led by Dr. Emil Javier, former Department of Science and Technology secretary, and composed of retired UPLB professors and international experts.

The Local Government Code (Republic Act No. 7160) of 1991 provided autonomy to local governments, and devolved agriculture extension to the municipalities.

The law states that: “For a municipality, extension and on-site research services and facilities related to agriculture and fishery activities which include dispersal of livestock and poultry, fingerlings, and other seeding materials for aquaculture; palay, corn, … fruit tree, coconut,…” It was a tall order.

After almost 30 years, the devolution failed miserably. Low farm productivity is widespread, and rural poverty is stuck at high levels.

What has happened since 1991? The productivity of key crops from 1990 to 2017 as compared to Indonesia, Thailand and Vietnam, paints a distressing picture.

The Philippines trails Indonesia and Vietnam in rice, and corn; Indonesia, Thailand and Vietnam in banana, cassava, coffee, coconut and coffee; Thailand and Vietnam in sugarcane and pepper.

Agrarian Reform Law

The Comprehensive Agrarian Reform Program (CARP) limits land retention to five hectares. This discourages investors from attaining economies of scale, building packing houses and processing plants and creating jobs.

What happened post-CARP? Similar low productivity story. Productivity growth is notable in Vietnam (rice, corn, coffee, cassava, pepper, coconut, pepper and sugarcane); in Indonesia (corn, cassava, banana); and in Thailand (rice, cassava, banana, sugarcane). The Philippines remains a laggard. The country owes it to the private sector for its productive cavendish banana and pineapple farms that are world-class export-competitive.

Meanwhile, Indonesia is a global player in rubber, palm oil, cocoa, and coffee; Thailand in rice, sugar, cassava, fruits; and Vietnam in rice, coffee, cashew, pepper, and rubber.

Philippine dismal productivity record had cascading effects: weak food industry, lack of export competitiveness, low job-creation and recurring food trade deficits.

The 30-year lessons are regrettable:

1. The agricultural extension system failed to deliver productivity and agri-processing investments.

The instruction of DA Secretary Dar to jump-start nationwide extension centers is a game changer. It is important to note though that the bridge from extension to productivity also includes accessible inputs, access to credit and a fair and equitable market.

2. CARP discouraged private investments and resulted in low productivity and agri diversification. Time to amend the land retention limit and increase the allowable farm size to allow for economies of scale.

3. Program/project execution at the national and local levels need a cadre of good middle level managers. This is a clarion call for professional bureaucracy based on merits, and not on political appointments which change with every change in administration.

These interventions to address poverty will take time, but they need to be initiated now. Further, the DA cannot do it alone. There has to be concerted efforts on the part of other government agencies and the private sector.

Poverty has worsened over the years. Rural consumer markets lack purchasing power. Without a notable epiphany, rural poverty will persist. President Duterte’s intended legacy to reduce poverty is in jeopardy. INQ