A report on the Philippine agriculture sector
Introduction
Agriculture has been a very important production sector in many Asian countries. It seems to create an impression, albeit implicitly, that agriculture is more important than other economic sectors. In the Philippines, many residents rely heavily on agriculture as a means of living. Over the years, the agriculture sector has not been static in the country. It has had to adapt to changing prices and costs, changes in demand, and changing technology. It has also been subject of national and international economic policy and the political influences found in policy determination. Agriculture is at the core of the Philippine government policy for economic growth and poverty reduction. However, certain policies pose restrictions and limitations on the agriculture section of the country thereby affecting the economy.
The Philippine government has expressed concern over these trade barriers on agriculture in developing countries. The international market is said to be notoriously volatile and thus countries which are largely agricultural market-oriented have no idea what is in store for them. Aside from the fact that farm production itself is highly weather dependent and extremely variable, this volatility is also partly due to persistent protective policies pervading in global trade (2005).
Aims
The aim of this paper is to present the challenges facing the agriculture sector in the Philippines with reference to socio-economic, legal and policy aspects of both its problems and potential solutions.
Executive summary
The Philippines, being a developing country, needs to become more sustainable and in the process has to face many different challenges. The agriculture sector of the Philippines, which is at the core of its government policy for economic growth and poverty reduction, has become limited in the face of trade restrictions and new policies imposed by the World Trade Organization and the General Agreement on Tariffs and Trade. This challenge faced by the Philippines is actually a challenge also faced by many developing Asian nations that rely on agriculture. The country needs to face this challenge and overcome it if it wants to improve the economy at large. In this paper, the Philippine agricultural sector and the challenges it faces will be discussed along with the problems it faces and the potential solutions for the problems. Strong alliances and unity of the country are basically the main ingredients that can help the country face this challenge.
Results
Agriculture is at the core of the Philippine government policy for economic growth and poverty reduction. However, the agriculture sector is hounded by many issues. Backward practices and subsistence agriculture in the country are the natural products of competition from corporate agribusiness, and of government neglect. For example, corn farmers face high costs of production due to dependence on imported inputs and competition from imported corn. Because cheap, imported crops are available, locally produced ones are displaced in the local market ( 2003).
Various policies in the 1960s and 1970s have perpetuated the increase in poverty in many industries in the Philippines, due to low priority given to agriculture and outright discrimination against labor. There are also fallacies of import-substitution policy in the 1980s, particularly the resulting “policy conflicts between domestic fractions of capital” and the creation of uneven protection structure that further distorted market incentives and misallocation of resources (2004).
Even with the slowly increasing sophistication of the domestic market and the opening of new opportunities through trade liberalization under the World Trade Organization (WTO), the growth of the agriculture sector, employment and income generation in rural areas have been limited, and producers have been increasingly unable to compete with quality imports ( 2004).
Although the Philippines is committed to trade liberalization in agriculture under the WTO Agreement on Agriculture, it is however strongly against the institutionalization of domestic support and subsidization of agriculture in the developed countries to the detriment of its agricultural sector. For the past Doha Rounds (one in Cancun and recently in Geneva) the Philippines has joined forces with other developing countries to achieve agreement on the reduction and eventual elimination of subsidies for the agricultural sector. Unless these subsidies are eliminated, it is perceived that the Philippine agricultural sector will continue to experience substantial competitive disadvantage in its domestic and foreign markets resulting in significant displacement of its local production ( 2005). In the case of Philippine agriculture, the General Agreement of Tariffs and Trade (GATT) agreement on agriculture also breaks down the remaining protection of agricultural products and subjects traditional production to undue competition ( 2003).
Findings
In the Philippines, as in other developing countries, poverty and income inequality is a reflection of deeper structural problems that cannot be simply left to “market forces” to be eliminated. Instead more concrete measures and policies are needed to seriously tackle the problems of land redistribution, corruption, and the continued domination of oligarch elite in major industries. These measures and policies also are designed on the agriculture sector given the fact that it is what many citizens in the Philippines do for a living thus has an effect on the economy of the country.
A number of developed nations, for instance, still carry out policy measures aimed at subsidizing their agriculture sectors in violation of the GATT and WTO rules ( 2005).This obviously puts developing countries at a disadvantage. Developing countries like the Philippines therefore need to design solutions on this.
Strong alliances that will provide positive recommendations to ensure robust mechanisms for developing countries in the WTO agricultural negotiations are therefore needed to improve the condition of the agriculture sector in the Philippines. The timeliness and unity of the country’s response to current issues in world trade is of critical importance. The Philippines must begin the reform process here and now, and together must pursue our common goal vigorously and relentlessly.
Conclusions
Competitive markets exist in a changing world. In the case of the Philippine agriculture, some of those changes have been so great that the market adjustment process has not been able to work smoothly. In particular, the restrictions on trade such as those imposed by GATT and WTO, and very large changes in technology disrupted the industry. The impact of the disruptions was particularly strong because of inelastic demand for farm products and wide fluctuations in the farmers’ incomes. It is possible to reconstruct the agriculture sector of the Philippines but that would probably require a transition period in which land-use planning, income supports for farmers, and other measures are used to substitute for the economic rigors of the market adjustment. Economic growth and poverty reduction in the Philippines might just be achieved by agriculture.
Credit:ivythesis.typepad.com
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