Bongbong Puts a Tenuous Foot Forward on Agriculture

New Filipino president looks to what would help the nation’s poor

Before his term begins, Philippine President-elect Ferdinand Marcos Jr has at least got one thing right: giving priority to agriculture, emphasizing his commitment by naming himself agriculture minister.

Moving from current reality to “food security and food sovereignty,” goals which themselves may be contradictory, is a long road. As he acknowledges, raising productivity in agriculture involves many policy components. In short, it is a much bigger challenge than Duterte’s Build-Build-Build program of high-profile infrastructure projects, often financed by large foreign loans and probably overly focused on the National Capital Region and the regions immediately adjoining Central Luzon and Calabarzon.

Bongbong, as the president is universally known, has at least appeared to take notice that agriculture is at the root of poverty in the Philippines, a poverty of so many of the producers which has its counterpart in the poverty of so many consumers.

Immediate attention to the issue has been enhanced by the sudden increase in wheat prices thanks to the Russian invasion of Ukraine and closure of its grain ports. The Philippines normally imports about five million tonnes of wheat a year, partly for feed and partly to meet tastes for noodles, bread, pizzas, etc borrowed from China, Japan, and the US. But this preference for a grain that doesn’t grow in the Philippines would be irrelevant – or even have nutritional benefits – were it not for the fact that the country also imports some two million tonnes a year of the main staple, rice, and also up to a million tonnes of corn, mostly for feed.

For decades one of the national myths has been that the country should be self-sufficient in rice, a goal which has had negative consequences. In reality, the Philippines has been a net rice importer for most of the past 120 years, the difference in the past being that it was simultaneously a net exporter of food, with sugar, copra, etc more than making up for imports.

What has happened gradually over the years is that agricultural productivity, in general, has failed to keep up either with demand or with neighboring countries Thailand, Vietnam, and Indonesia. Over the 20 years to 2019, agricultural productivity rose only 32 percent compared to 73 percent in Vietnam and 50 percent in Indonesia. Rice productivity per hectare is well below Indonesia and Vietnam as well as China.

As land suitable for rice is in relatively short supply in the Philippines, the need for maximizing productivity, or moving to new crops is clear. Yet at present about half of the Department of Agriculture’s budget is devoted to rice. Meanwhile, the total agriculture allotment in the 2021 budget was just 1.5 percent.

Although there have been some successes, for example in fruit production for export and in corn productivity, the situation in other major traditional crops copra/coconut oil and sugar remains woeful, accounting for much rural poverty. Output of coconuts, mostly produced by small holders but still an important export, has been static for 20 years. Sugar, once a major export, is now in deficit despite a high local price. Fisheries have been hurt by over-exploitation of close waters and the Chinese fishing fleet's invasion of the West Philippine sea.

The net result of production failures has been high prices for consumers which in turn raises costs throughout the manufacturing and distribution chains. The Duterte policy of partly opening the grain trade to competition and lower prices by replacing quotas with tariffs may have had some success in keeping consumer prices more stable. It created a storm among many in the farming community but a tariff of 35 percent on imports from ASEAN countries and 50 percent from elsewhere illustrates just how uncompetitive local agriculture has become.

Remittances and BPO services may have paid for the huge agricultural deficit but their benefits are much less evenly distributed than gains from efficient agriculture, which flow to producers and consumers alike. Meanwhile, the many families who benefit nothing from remittances and BPO have insufficient income for food – hence the shockingly high levels of under-nourishment and poor diet among children which in turn undermines early education.

There are no simple answers. The problems include high prices of inputs such as fertilizer, fragmentation of land holdings, partly a result of years of desultory land reform, lack of government investment in irrigation and local roads, and help for smallholders, for example, to replant old coconut trees with high-yielding varieties, semi-feudal land ownership, and power structures.

But a start could be made with a much bigger budget and a minister with the ambition to address the nation’s single biggest economic issue. Bongbong may even remember that perhaps the most successful of his father’s ministers was Arturo “Bong” Tanco, a high-profile enthusiast as well as a technocrat who delivered several years of rapid growth in agriculture thanks largely to the Green Revolution but partly to his own commitment.

Many mistakes were made which took farmers into debt and many output gains were obliterated by export monopolies and the rape of the coconut industry via a levy which mostly benefited Juan Ponce Enrile and Eduardo Cojuangco. But for a while, agriculture, particularly after the 1973 rice crisis, received the attention it deserved.