 |
|
Betting
on Agriculture With some genuine commitment and support from government, the agriculture sector could save the country from so much of its economic and social stresses and worries. Despite not getting the expected full government assistance and the occurrence of a series of typhoons that assaulted the country's farmlands towards yearend, the projected annual growth rate of five percent in the agriculture sector happily will be reached. The main growth drivers are still the rice and corn, although aquaculture contributed substantially in the total agricultural output. The gross value of agriculture reached P557 billion at current prices while farmgate prices went up by an average of 11.58 percent, especially in livestock and poultry. Agricultural trade also improved with export receipts up 17 percent; share to total exports was also up by 13.2 percent. Statistics not helping farmers and fishermen Despite the rosy numbers, some facts are hard to ignore. For instance, even as the sector grew in the last three years, growth has not trickled down to farmers and fisherfolks. To this day, they remain marginalized. If there have been increases or improvements in their incomes, these have been eaten up by inflation and higher cost of production inputs. It's not surprising that many continue to suffer from disheartening poverty and sleep hungry every night. Farmers and fisherfolks, wanting of support from the government, are also having difficulty coping with trade liberalization. Agriculture economics expert Walden Bello noted that eight years after the country joined the WTO, the fate of our agriculture sector workers remains, at best, nebulous. Two million rice farmers who make up nearly 20 per cent of the labor force are threatened by massive rice imports. Corn farmers, while producing enough, similarly have to contend with imports. The meat and poultry industry continue to slug it out as imports from the United States continue. The once-thriving commercial vegetable industry is now in danger of extinction. Well-meaning intentions, but no funds Thankfully, this ugly reality seems not to have been lost on government. The agriculture department seems set out to complete in the next six years the identification and development of two million hectares of agribusiness lands that will generate more jobs and revenue in the countryside. The objective will be to make the country self-sufficient in rice and increase overall food production. More importantly, the government seems bent on getting the agriculture sector out of its boom and bust cycle, which is mostly weather-driven. All of these grand plans, however, must be supported with funds. If the Arroyo administration is true to its word of wanting to spur economic activity in the countryside, it should start with a re-assessment of the budget allocation for the sector. While the agriculture department originally asked for a P25.9 billion budget for 2005, it only got less than 60 percent or P14.53 billion of what it requested. This is even less than the supposed annual allocation of P17 billion under the Agriculture and Fisheries Modernization Act (AFMA). The AFMA budget should be separate from the agriculture department's regular budget. But this is not happening because the regular budget has been integrated with AFMA. Thus, out of the allocated budget of P14.53 billion, 29 percent goes to the department's regular operating budget, e.g. salaries and other bureaucracy costs, and 71 percent is for AFMA. Clearly, the AFMA allocation of about P10 million is not enough for the construction and rehabilitation of adequate infrastructure that includes irrigation facilities, farm-to-market roads, and badly needed post-harvest amenities. Declining agricultural production The government has to increase resources allocated to the agri sector. As a result of government's under-investment in agriculture, the country has become a net agricultural produce importer. Moreover, the country's share in the world market for banana, coconut and pineapple continues to decline. Again, the rising cost of farm inputs and poor access to new technology are seen as culprits. Currently, local farmers' fertilizer overheads are nearly double that of other countries; the prohibitive expenditure on certified high-yield rice seed varieties, for instance, prevents farmers from upgrading their seedlings. The inconsistent application of the land reform program is not helping too, as gleaned from the hostility that arose between the farm workers and owners of Hacienda Luisita in Tarlac. The program flaws have discouraged investments in farming and farm-related activities. Wary and unwilling bankers Commercial banks are wary about lending to the agriculture sector. Except perhaps for the Quedan Rural Credit and Guarantee Corporation, Land Bank of the Philippines, and the Philippine Crop Insurance Corporation, hardly any other lending institution has shown willingness to lend to the agri sector. Not even the Agri-Agra Law which requires bank to set aside at least 25 percent of their loanable funds to the sector, have led to increased lending for agri-based ventures. Apparently, banking authorities recognizing the aversion of banks to extend agri credit have allowed commercial banks to "reinvest" in government securities as a way of complying with the provisions of the Agri-Agra Law. Prospects The agri sector faces a tough year in 2005 especially with an El Nino looming in the horizon. However, I believe we should place our bets on this sector. The gaps and deficiencies are well known, and stronger commitment to allocate more government and private resources is needed. Agriculture must continue to provide sustained contribution to the local economy. Only with more food and livelihood in the countryside, can the eruption of a simmering social volcano be averted. "Breaking Barriers" with DOTC Sec. Leandro Mendoza "Breaking Barriers" on IBC-TV-13 (11 p.m. every Wednesday) will feature Sec. Leandro Mendoza of the Dept. of Transportation and Communications (DOTC) on Wednesday, 5th January 2005. Transportation is a vital cog in the development of the local economy. At the moment, this cog is in dire need of revamp, upgrading and expansion. The grand plan unveiled by the government to rationalize the entire transport system in the country looks good on paper. At least concerted efforts are being exerted to come up with an integrated plan that will hopefully correct the patchwork system that is in place. But funding is a universal concern. Assuming that the plan is feasible and workable, where would our government - currently haunted by the specter of a fiscal crisis - get the money to finance these projects? The obvious answer appears to be the private sector. But this begs another set of questions. What are the assurances that we will not have another PIATCO fiasco? Or another gold-edged Macapagal boulevard? Or another smouldering Smokey Mountain project? Or even another MRT 3 deal where apparently the private investors got so many sweeteners that up to now a government in distress keeps on plowing in subsidies? Watch it. Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reygamboa@linkedge.biz. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz.
| |||
|