.::. BAR Chronicle .::. A monthly publication of the Bureau of Agricultural Research

Vol. 5 No. 5
May. 1-31, 2004
Woes and chances of the agriculture sector
by Ma. Lizbeth J. Baroña

Economic stability. Poverty reduction. Strong republic. Do we know what it needs to steer this country to the direction that points to these elusive ends?

A study conducted by the SEAMEO-Regional Center for Graduate Study and Research in Agriculture (SEAMEO-SEARCA), commissioned by the Bureau of Agricultural Research (BAR) developed a long term-policy framework as an indicative investment plan for agriculture and fisheries research, development, and extension (AFRDE). The study indicated agricultural growth as a result of a robust increase in productivity as the key to development.

Productivity, or the lack of it
Productivity is a crucial measure to gauge the performance of a sector or an economy. The study identified the country’s low productivity as a vital factor in the low agricultural growth, in the same way as the study identified a robust productivity as a key to a revitalized agricultural industry, an over-all economic growth and ultimately, poverty reduction.

Our corn, sugar, rice, vegetables, coffee and cacao, and citrus annual yield per hectare all lag behind our neighboring countries like Malaysia and Taiwan. To surmount this productivity problem is not only to be competitive with our neighboring countries, but also to meet a rising domestic demand. This is because the Philippine also has the second-highest population growth in the region.

The huge productivity shortfall and the growing demand for these products made us a net importer in a wide range of agricultural products.

This crisis points to one reason: insufficient investment on the agriculture sector, particularly in agriculture research.

What do we do?
The country’s agriculture research intensity (ARI) ratio (the ratio of R&D expenses versus value of agriculture value added or gross value added) needs to be raised to at least 0.75% by 2010, and to 1.5% by 2020, the study suggested.

While Malaysia’s and Thailand’s agricultural research intensity or ARI ratio is at 1.1 and 1.45 %, respectively, the Philippines’ is at 0.4% - way below the standard ARI ratio set by the World Bank, which is at 1%. China’s ARI ratio is at 2% - and it is the fastest growing economy in the region.

The study also said the government and the private sector should forge a partnership in funding and directing agricultural R&D. All countries, whether developed or developing have the government as the biggest source of funding for agriculture research, development, and extension (RD&E).

Still, the private sector cannot be discounted from the equation. The fate of a new technology – and its diffusion to the clientele lies greatly in their interests. While the government funds agricultural research, it is an undertaking that the private sector tends to underinvest in, precisely because the firm or institution conducting the study cannot obtain the benefits of the research sooner. Instead, the private sector should be left to technology development, it being familiar with the demands of the market, and the interest in diffusing of the technology to their clientele.

Meantime, with the meager budget that we have…
The study gave a list of priority commodities where the government can invest the limited money that it has. The prioritization is based on the importance of consumption and food security, and comparative advantage.

The study gave high priority to coconut, tropical fruits, and fisheries. These commodities have high export potential, and are also enjoying huge demand in the home front. Rice and white corn – the basic food grains that are developed for food security reasons are the second priority. Import substituting goods that are also hugely demanded by the market, like sugar, livestock and poultry, root crops, and yellow corn are the third priority. Less dominant commodities that have export potential are fourth priority, and commodities like cotton and soybean are placed last.

The study also recommended for the R&D system to be thought of as an “enterprise” that seeks not only to develop technologies but also to produce products that gives high rates of returns. The study also hoped to help the cash-strapped agriculture research industry in justifying the appeal for increased R&D investments.

Sources:
Formulation of an investment policy framework and indicative plan for agriculture and fisheries research, development and extension for 2001-2010, Dr. Ponciano Intal, Team Leader, SEAMEO-SEARCA, November 2003