How PH can win with its agri exports
In view of the dismal performance of our exports, the Department of Agriculture (DA) must take immediate action.
It should at once create an export unit—a key takeaway from the praiseworthy national conference of the Philippine Council of Agriculture and Fisheries (PCAF) held in Baguio last November 21 to 23. The PCAF is “an advisory body to the [DA] to ensure the success of [its] programs and projects. It initiates the development of a private sector-led nationwide network of Agriculture and Fisheries Councils (AFCs) and sectoral committees.”
Sixteen regional councils and 13 sectoral committees met during the conference to discuss agriculture development, where poor export performance was identified.
The years 2018 to 2022 saw the number of exporters decrease from 8,575 to 4,619. Based on the product diversification (as measured by the Inverse Herfindahl-Hirschman index) in terms of successful exports, we ranked eighth out of 10 Asean nations, just ahead of Laos and Myanmar.
The agriculture export picture is bleak. Last year, our agriculture trade deposit worsened by 33 percent to $11.8 billion. Our agriculture export of only P7.1 billion was the lowest compared to our Asean neighbors: Indonesia ($51.5 billion), Thailand ($42.3 billion), Malaysia (33.4 billion), Vietnam ($29.1 billion), and Singapore ($14.7 billion).
Our export markets are also very limited. The top five are: United States ($1.30 billion), Netherlands ($0.94 billion), China ($0.87 billion), Japan ($0.85 billion), and Republic of Korea ($0.44 billion).
In the four quarters from July 2022 to June 2023, instead of meeting our government target growth of 6.4 percent, exports decreased by 12.5 percent.
A main reason for this poor performance is that the value chain approach necessary in business is not being sufficiently used for agriculture exports. The DA works on production, while the Department of Trade and Industry (DTI) concentrates on marketing. The two should work more closely together.
It is also absolutely necessary to supplement this by creating a unit especially for exports. The job begins by giving significant marketing support to our winning export products and promising new entries.
Even an excellent export marketing initiative will only be successful if there is a parallel effort to strengthen and develop the products so they will be superior and truly globally competitive. We can start with our major exports such as coconut, pineapple, banana, tuna, selected seafood, fruits and vegetables.
Delegates at the conference also pitched a total export approach. Identified here are three conditionalities of the Regional Comprehensive Economic Partnership (RCEP) the Senate approved last Feb. 21, 2023, which have yet to be adequately implemented.
The first is the agriculture market information and intelligence network mandated under the 1977 Agriculture and Fisheries Modernization Act. Our neighboring countries have had one for a long time, which is largely why they have left us so far behind.
The second is an effective plan and adequate budget for the consolidation and clustering of our small farm sizes, which today averages 1.29 hectares each. How can we succeed if we have no economies of scale?
The third is very important. Agriculture must get a budget to enable our farmers and fisherfolk to export and be globally competitive.
This can be achieved via private sector monitoring of the DA budget. The department’s allocation has increased to 3 percent of our total budget, but it is still a far cry from Vietnam’s 7-percent share.
To add to the disappointment, one-third of the DA’s expenses in the last three years remained unliquidated and unexplained. Until now, a complete list of the DA-funded projects has not been turned over to the private-led regional agriculture and fisheries councils for monitoring.
If one-third of the limited DA budget is wasted, how can we successfully export?
It is time that we turn our exports from losers to winners, the way our neighboring countries have successfully done through good agriculture governance.