To fully transform the agriculture sector, the Department of Agriculture (DA) must be given a higher budget, ideally more than P100 billion, that is proportional to the sector’s contribution to the country’s total gross domestic product (GDP), a top DA official said.
This, as the World Bank released a report that called for transformation of the Philippine agriculture sector amid the COVID-19 pandemic.
Titled “Transforming Philippine Agriculture During Covid-19 and Beyond”, the report said that transforming the country’s farming and food systems is even more important now during the pandemic to ensure strong food value chains and the availability of affordable and nutritious food.
During the virtual launch of the report, DA Undersecretary for Operations Ariel Cayanan said it would have been easier to transform the agriculture sector if the DA would get a budget “bigger than P100 billion” or at least something that is “proportional” to the sector’s contribution to GDP.
Cayanan just basically echoed what Agriculture Secretary William Dar told lawmakers before that while the agriculture sector contributes about 10 percent to GDP, it only gets “a measly share of total national appropriations, at three to five percent, in the last 10 years”.
Right now, the DA is asking the Congress for an annual budget of P280 billion for 2021, more than three times higher than its 2020 budget of P64.7 billion.
Unfortunately, the agency is poised to get only P66.4 billion for next year.
For his part, Eli Weiss, Senior Agriculture Economist at the World Bank, said the ideal percentage of growth for the agriculture sector would be about 2 percent or higher than the country’s population expansion rate, which according to Philippine Statistics Authority (PSA) currently stands at 1.4 percent.
“You definitely want to have agriculture growth higher than the population growth,” Weiss said. “But it should be higher than that and that the sector must be able to grow not just on the farming side but the entire value chain as well including processing and marketing”.
Weiss is the lead author of World Bank’s ‘Transforming Philippine Agriculture During Covid-19 and Beyond’ report that was launched on Wednesday. The report outlines policy and investment options to promote the development of a more diversified agriculture and food system in the Philippines.
The report suggested the Philippine government to shift away from a heavy focus on specific crops like rice towards improving the overall resilience, competitiveness, and sustainability of the rural sector.
“In the past, spending has gone mostly toward price supports for selected crops and goods, as well as subsidies on inputs such as fertilizer, planting materials, and machines,” the World Bank said in a statement.
“But global experience shows that while ensuring the availability of key inputs remain important, reorienting significant public spending toward investments in public goods—including research and development (R&D), infrastructure, innovation systems, market information systems, and biosecurity systems—results in faster poverty reduction and greater productivity gains through an overall modernization of agriculture,” it added.
The report also said that small farmers have difficulty accessing inputs and markets for their produce, while buyers such as agribusiness enterprises and wholesalers find it difficult to get the quantity and quality of produce that they need for processing on a timely basis.
Now, government support can help overcome this market failure by bringing together buyers and producer organizations and providing support for the preparation and implementation of profitable business plans that benefit both parties.
In situations where farmers need support to help them access markets and improve their livelihood, or when compensation measures are needed for farmers affected by trade policies such as the rice liberalization in the Philippines, direct cash payments or cash transfers can be a better option, as practiced in many countries like Turkey, European Union, and the US, the report further said.
Lastly, the report also said that interventions like farm consolidation (including cooperative farming schemes for instance), better extension services, e-commerce, and investments in agribusiness start-ups can further advance modernization of Philippine agriculture.
For his part, Dar, who was also in the virtual briefing, said he hopes that World Bank will continue to support DA’s future endeavors, in addition to the ongoing the Philippine Rural Development Project (PRDP) that has become “one of the best examples of successful multi-sectoral, multi-level partnerships” in the country.