Input Policy in Philipines- Marites Tiongco

Editor's Notes

• #4: Several decades ago, the country’s economy and employment have been dependent on agriculture. In recent years, however, the population has become less dependent on farming. In terms of share to the total economy, the agriculture sector’s importance has continuously dropped over the past decades. In 1946, about a third of the economy (29.7 percent) was agricultural, but the share of agriculture to the economy has declined over the In the early 1970s, rapid growth in agricultural production was experienced, averaging 7.7 percent, but started to decline in the 1980s (except for corn which was in growing demand) due to low world commodity prices combined with high costs of inputs such as fertilizers.The agricultural sector employs about one-third of the work force but contributes less than a fifth of GDP. In 1990, it was contributing 15.4%; Agricultural output declined by 0.5% during 2010 due to the adverse effects of drought during the first 9 months of the year, but grew by 4.5% during the first nine months of 2011. in 2012, it was contributing merely 11.1 percent to the economy
• #5: Share of ag in total employment in 2011==33% (has been declining from 2009 to 2011)It is also in the agriculture sector that labor wage rate is lowest compared to manufacturing and services sectors. Farmers are paid an average daily wage and salary of Php 156.8 in 2011 (LFS, Bureau of Labor and Employment Statistics, 2012). Given the low wage rates, it can also be seen from recent official poverty statistics that the concentration of the poor has been highest among farmers at 36.7% in 2009 (way above the national poverty incidence of 26.5%).In terms of share of agriculture to total employment, 33 percent (12.27 million people) out of the 37 million people are employed in the labor force in 2011 (Table 1). This share of the labor force engaged in agriculture has been declining since early 1980s, at 52 percent, down to 41 percent in 1990s to 36 percent in late 2000s, but agriculture remains a very important sector in providing employment and livelihoods especially for people living in the rural areas. The diminishing trend could be attributed to migration from the agriculture to non-agriculture sectors, which has been driven by wage differentials across sectors.
• #6: The Philippines, like other ASEAN economies, has likewise experienced changing structure of agriculture sector. For instance, the shares of Agriculture to the economy of most countries in the Association of South East Asian (ASEAN) have also been declining, especially in the case Vietnam, which was 40.2 percent agricultural in 1985, with this share reduced to almost half in 2011 (at 22.02 percent). Note that even if the share of agriculture to the economy has been declining, the Gross Value Added of Agriculture in 2011 for ASEAN countries has still been a considerable amount: leading are Indonesia (37,252 million US$), Philippines (15,397 million US$), and Thailand (14,182 million US$). In terms of employment, Thailand has the most number of persons in ASEAN employed in agriculture at 41.5 percent. But employment in agriculture has also declining, especially in Thailand from 70.8 percent in 1980 to only 41.5 percent in 2009.
• #7: WEAKNESSES (Scores less than 25)Corruption0.02.2) Public expenditure on agricultural R&D0.0Gross domestic product per capita (PPP)5.8While this profile of the agriculture sector may give more bullets for prophets of doom to point to the lackluster performance in boosting the sector, it is important to recognize that government has a number of policies and programs toward uplifting the lives of the Filipino farmers and fishermen. The budget allocation of the government to the agriculture sector, as indicated in the General Appropriations Act 2012, may seem meager but it has been continuously increasing from a share of 0.5 percent in 2007 to 4.7 percent of the total budget in 2013.
• #8: Incentives to producers raised domestic price above the world price
• #9: The policy focus of the government within agriculture is on rice as it remains an important food staple in the Philippines. The trend in the production and consumption of rice (Figure 4) is continuously increasing in accordance with the goal of the government towards self-sufficiency. On the demand side, per capita consumption has been rising along with modest improvements in incomes. On the supply side, rice yields are up but poverty among small producers persists at unacceptable levels. While the rice import is at 3% of the net availability of rice paddies in 2012, it has been confirmed that the self-sufficiency ratio of the Philippines is 98%, which is significantly higher than the 94% in 2011. Moreover, the government further seeks to improve the self-sufficiency ratio of the Philippines in 2013 and onwards.This goal was strengthened after the 2007/2008 food price crisis when some food exporting countries imposed restrictions on their food exports. According to Timmer (2012), national self-sufficiency in food staples will be achieved by raising productivity and competitiveness of Filipino farmers, by providing adequate economic incentives and enabling mechanisms, and by managing food demand including promoting diversification towards other traditional staples.
• #10: Food security is achieved if people have access at all times to sufficient and nutritious food that meets their dietary needs for a healthy and active life (1996 World Food SummitOne of the indicators of food security is the prevalence of food inadequacy, which captures an outcome of food insecurity due to inadequate food access. The table shows the food inadequacy across Southeast Asian countries from 2005-2012. The figures indicate that the Philippines ranks midway compared to its Southeast Asian neighbors. Brunei Darussalam has the least prevalence of food inadequacy, and Timor Leste has the highest prevalence of food inadequacy
• #11: Using household level data, Table above shows four measures of food security, namely: per capita real value of food consumption; non-staples as a share of food consumption; animal products as a share of food consumption; and reported number of months per year that the household has sufficient food.Table 3 shows the average values of the measures of self-sufficiency, food security, and standard of living in urban and rural areas in the Philippines. On average, rural households produce 14.4% (compared to 15.2% in 2006) of the cereals they consume (and buy the remaining 86%), and 14.6% of the rice they consume (Table 3). As expected, the urban figures are lower than the rural figures (except for the animal products and non-staples as share of food consumption), while the national averages lie between the two.
• #13: This regime is characterized with a growth in participation of the private sector, reduced public sector roles, market interventions, and protection of local industries from imports through tariff or non-tariff policy such as the tax exemption for fertilizer import.
• #31: Sustained investment in agricultureR & D : increasing incomes and profits, improving yield and quality, technologies in marginal areas /overcome CC Human resource capacity improvement: education, training and extensionIrrigation (e.g. critical for the rainfed areas)Infrastructure (transport, communication, power, etc) - lower transaction costs, facilitate info sharing (challenge for the remote areas, esp. upland/hilly areas)Leveraging public investment through private sector participation: strong public participation where market failure is evident, coherent programs with development partners
• #32: Land policy/land fragmentation: safeguard rights of farmers esp to land Managing natural resource: legal, institutional, valuationImproving incentives for efficient resource allocation within and outside the agricultural economy Reducing institutional obstacles to least-cost input supply and output marketing/trade: SOEsNew paradigm in rural credit which combines state agency (and regulation) with private actors