It’s the Chinese New Year. This is the year of the Wood Dragon according to the Chinese lunar calendar.
Wood Dragons are intelligent and usually well-loved. They have the ability to make good use of their environment and have an intuitive sense of timing. In general, Dragons are powerful, endlessly energetic, goal-oriented yet idealistic and visionary – usually for the benefit of the community than themselves. We will need to assemble all the Dragons here in the country so that we can make 2024 the launchpad for all the great dreams and aspirations of the Filipino.
The economic outlook seems promising enough. 2023 GDP growth closed at 5.6% but 2024 is projected to rack up growth beyond 6%. Inflation is expected to settle down to 4% or less, with January headline inflation hitting 2.8%, the lowest it has been since October 2020. In November last year, unemployment fell to 3.6% which is the lowest reported level since the Philippine Statistics Office changed their measurement methodology in 2005. Meantime, as of November 2023 as well, remittances of Overseas Filipino Workers (OFW) grew by 3% to PHP 33.6 billion. These are the makings of a good year ahead but there is still a lot we need to do.
Among my dearest aspirations is that we achieve food security. I don’t have any illusions that this will magically happen within the year. What I am hoping for is that reforms be put in place so that the fundamentals of a strong agricultural sector are institutionalized rather than left to the randomness of circumstance.
In a country of over 110 million people, we cannot leave being able to have food on the table to chance. Every man, woman and child must be able to eat. It really is saddening that we need to import our staples just to secure enough food for everyone. I believe that our high inflation – among the highest in the major ASEAN economies – is due in large part to the rise in food prices resulting from supply shortages. This phenomenon is unlike inflation in other countries that is resulting mainly from imbalances in demand and supply coming out of COVID. Our food inflation is a result of historical and systemic gaps in our ability to sustainably grow essential farm crops. This, in turn, leaves us highly vulnerable to any regional or global disruptions.
The agrarian reform act of the Philippines was designed to break down the feudal state and give land to the people, for them to till. I do not think that anyone will argue with the nobility of the act. Unfortunately, the other necessary elements to assure the end goal of democratizing farming were sorely lacking. Small farmers were hard-pressed to access the needed capital to procure production implements and inputs. Although the Land Bank of the Philippines was mandated to deliver responsive financial support services to small farmers and fishers in underserved and unbanked areas, the financial viability of small farms – or, more precisely, the lack of it – inevitably undermined the goal of the bank to make capital available.
I believe that land reform should have also been accompanied by a robust program that enables small farmers to band together to achieve economies of scale, better productivity and cost efficiency. To be sure, cooperatives were formed to promote collaborative farming but, perhaps, there may have been a lack of management and administrative expertise among the coop members to achieve sustained results. Anecdotally, the farmers ended up “surrendering” their land back to their former landlords in exchange for financial support, thus defeating the aim of land reform.
Local supply of production inputs may also be another limiting factor. The cost of fertilizer, for example. We are a net importer of fertilizer and, as such, are severely affected by soaring prices driven by global demand, more expensive raw materials and rising transport and logistic costs. Consequently, this affects the quality and quantity of production.
Finally, I think that the structural infirmities in the agricultural sector also need addressing. In particular, the outsized role of middlemen between the farmers and consumers distorts the economic returns to farmers while, at the same time, inflating prices for consumers. Farmers are arguably at the mercy of brokers who buy from them at low prices in order to take the produce off their hands. Farmers do not have the logistics means to transport their harvests directly to market nor do they have storage capabilities for distribution. A more efficient system connecting farmers directly to end users using shared farm-to-market resources is direly needed. This will wrest power away from the middlemen and enable a more equitable – and timely – distribution of food products.
Surely, there is much to do. I sincerely hope that the year of the dragon opens the way to a better-fed Filipino nation.
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