“Agriculture is my culture.” – Jean Pierre Yato
The second half of the year is about to commence after a tumultuous couple of recent years, which bombarded most of the agriculture sector. The Philippines being a “fast developing country” driven by major factors such as goods and services, OFW remittances, BPO industry, yet agriculture still contributes significantly to our economy. Despite natural calamities year in and year out, the agriculture sector provides one of the biggest potentials in economic recovery as one of the economic drivers.
MARKET DRIVER
In the next six months, the potential of agriculture only increases as the population grows and massive urbanization is quite unabated. This phenomena proportionally demands food products, including their by-products, that encourages agriculture to advance and modernize to meet this ever-increasing consumption needs. It does not take a genius to see that government must pursue re-investment in agriculture by undertaking more research and financial investment and eventually pursue agricultural and rural industrialization. This will also boost exports of major agricultural products and propel jobs creation.
REALITY CHECK
But what is the economic outlook for the rest of 2024 and how does agriculture play a role in it?
An economic analysis was undertaken by Moody’s and forecasts a slight improvement in the Philippine economy in the second half of this year. The analysis concludes that inflation will slow down but the Bangko Sentral will slow down its interest rate, inviting various businesses, including investment in the sector.
The agriculture sector is projected to contribute to the overall economy for the entire year at about 9 percent, including forestry and fishery. This is quite a sharp fall and one major factor cited is the budget allocation that despite it increased compared to last year it is still inadequate as far as the need for mechanization and modernization in order to meet the market demands and the consumption needs. The 2024 budget for agriculture of 198 billion with a 6 percent increase from last year focused more on rice, corn, and water security. But while it increased, it is still insufficient as far as the actual need for the sector’s modernization is concerned.
The agricultural exports in the first quarter rose by 2.6 percent with an estimated 6 billion dollars revenue, and imports, on the other hand, was at 4.5 billion. This yielded almost 2 billion surplus, according to the agriculture department. The revenue must have provided the national leadership a supposed major shift for the sector’s reinvestment and focus. Major fruits topped the list of our major agricultural exports, notably bananas.
Just recently the government announced it will reduce tariffs on rice imports. According to the agriculture department this move plans to avert the sharp increase of milled rice prices in the market that brings additional burden to Filipinos, especially our rice farmers. Other national leaders argued that this lacked consultation among rice farmers but Malacañang, for its part, assured that government will continue to buy farmers’ rice products at prices favorable to them. The Philippines remains the top importer of rice all over the world. Consumers on the other hand hope for a reduced price, as a major consumption good and staple.
OUTLOOK AND CHALLENGES
Overall, this year the agriculture sector exhibited a slow growth and limited contribution to the whole economy. In the second half it will again contribute about 9 percent to the gross domestic product (GDP). Its economic contribution is 50 percent below its historical performance because in the past couple of years major factors have impacted the sector. These are the El Niño phenomenon, the importation policy of the government on major agricultural products such as rice, and the crucial decision-making reflected on budget allocations.
The second half of 2024 is forecasted to bring La Niña and worsened storms are expected to impact the sector’s production. To this day, policies on land tenure have affected agricultural practices because productive agricultural lands are fragmented, distorting economies of scale and full-swing modernization.
TAKEAWAY
Filipino farmers suffer from lack of technology and credit access, losing their market opportunities and adequate technologies are elusive making them less competitive. And supply chains of major products are defective, resulting in losses and wastage until products are sold and consumed.
Sustainable practices in agriculture must provide three major elements, not only for the rest of the year but beyond. Make agriculture a major economic driver, ensure food security not dependent on import but sustained and improved production, and adequate budget allocation.*
