Agri sector slumps due to continuous government neglect

October 16, 2019

by IBON Media

Even prior to rice liberalization, the country has become increasingly dependent on food imports

Long-time government neglect and low prioritization has put the agriculture sector in a chronic crisis, said research group IBON. The group said that this is in line with government’s advancement of neoliberal policies favoring local and foreign big business. The Duterte government continues this by giving minimal support to the agriculture sector.

IBON said that declining share in gross domestic product and agricultural productivity per capita, increasing import dependence, rising trade deficit, and widespread rural poverty are signs that this crisis is worsening. 

The agriculture sector’s share in the economy has shrunk from over 40% in the 1960s to less than 10% in 2018.

Agricultural productivity per capita peaked at Php7,862 in 1981, declined, and then was in a period of recovery from 1999-2008. But agricultural productivity per capita again fell to Php7,052 in 2018, noted the group.

IBON also said that the country has become increasingly dependent on food imports even before rice liberalization this year. For instance, garlic imports made up only 1.1% of the country’s consumption in 1990, but this spiked to 90% in 2017. Import dependency ratio also increased significantly with coffee (-7.7% to 56%); beef (8.5% to 36%); tuna (3.7% to 17%); onion (-14.3% to 15%); potato (0% to 15%); and pork (0% to 13%) in the same period. Meanwhile, rice import dependency ratio declined from 9% in 1990 to 5% in 2016. But this rose to 6.6% in 2017 and is expected to be higher due to the influx of rice imports under the Rice Liberalization Law.

The agriculture trade deficit has also increased by 30 times from US$287 million in 1994 to US$8 billion in 2018. In the first quarter of this year, the agriculture trade deficit was a staggering US$2.1 billion, said the group.

IBON said widespread rural poverty is another indicator of agriculture in crisis. Official figures show that the poverty incidence among farmers (34.3%) and fisherfolk (34%) is higher than the national average (21.6%). IBON estimates that, if based on more reasonable standards of poverty measurement, at least 90%, if not all farmers and fisherfolk, are impoverished.

This chronic agriculture crisis is due to government’s chronically low prioritization of the agriculture sector, said IBON. The group noted that from 1981 until 2020, the annual average share of agriculture and agrarian reform was only 4.1% of the national budget.

This low priority of agriculture is being continued under the Duterte administration. The group said that the 3.5% share of agriculture in the proposed 2020 budget is the lowest since 2004 (3.3%). Also, from 2017 to 2020, the annual average share of agriculture in the national budget was only 3.6% – the lowest since the Ramos administration (3.5%). The average share of agriculture was higher under Estrada (4.4%), Arroyo (4.7%), and Aquino (4.2%).

IBON said that immediate steps government should take to arrest the agriculture crisis is to wipe off if not significantly reduce all forms of loans including amortization for awarded lands, and to substantially increase support and subsidies for the agriculture and agrarian reform sectors. It should also suspend, and eventually repeal, policies like the Rice Liberalization Law, that are harming domestic production and farmers’ livelihoods. But to truly strengthen domestic agriculture, government needs to implement long-term policies that prioritize rural development over big business interests. ###

Photo by Lito Ocampo