A bright spot in an otherwise lackluster 2025 for the Philippine economy is the news that the entire agricultural sector grew at 3.1 percent—the highest in eight years—for the whole year, having surprised everyone by growing at seven percent in the second quarter, led by poultry and crops. This is an encouraging sign that the BBM government is delivering on its promise of assigning the highest priority to food security. A growth of 3.1 percent may seem unimpressive, but we must consider how this “Achilles’ heel” of the Philippine economy had been performing for the last two decades, growing at close to zero percent annually.

According to a comprehensive Organisation for Economic Co-operation and Development (OECD) analysis of Philippine agricultural production, between 2013 and 2022, agricultural output grew at an average annual rate of only about 0.2 percent—significantly lower than global averages. This reflected a period of very modest expansion in the farm sector, which accounts for less than 10 percent of gross domestic product (GDP) but represents 22 percent of the labor force, clearly exposing the very low productivity of farm workers and, therefore, the very high rate of poverty in the countryside, which can be as high as 40 percent in some rural regions.

The poorest of the poor in the Philippines are the small farmers, landless farm workers, subsistence fisherfolk, and “slash-and-burn” farmers. This situation is the result of long-standing neglect of the agricultural sector by one government after another, as can be discerned from the absence of farm-to-market roads, irrigation systems, post-harvest facilities, and other services needed by the millions of agrarian reform beneficiaries.

This is in stark contrast to some of our ASEAN neighbors, such as Thailand, Malaysia, and Vietnam (as well as Taiwan), which also implemented comprehensive agrarian reform programs but grew their agricultural sectors at two percent to three percent per annum over the last 20 years. It must be affirmed that what caused the very poor performance of Philippine agriculture was not the Comprehensive Agrarian Reform Program (CARP). Our neighbors had even more thoroughgoing programs of dividing their large landholdings into small farm units. In fact, during a recent visit to Vietnam, I found that the average holding size for a Vietnamese farmer is less than one hectare, not very different from that in the Philippines.

What went wrong was not the fragmentation into small farm units, but the inability of inept or negligent governments to deliver the support services needed by agrarian beneficiaries to make their small holdings productive, starting with the indispensable farm-to-market roads. A study of how Taiwan, Thailand, and Vietnam helped their small farmers rise above poverty shows that the state in these countries showered their agrarian beneficiaries with the support needed to make their farm holdings highly profitable. In Thailand, the late King himself was the most enthusiastic advocate of agricultural development.

Let us not cry over spilled milk, however. There are signs that the current administration is learning from past mistakes and negligence and is poised to replicate the success of neighbors such as Thailand and Vietnam. The year 2025—despite gloomy macroeconomic results—may be the beginning of a new era for Philippine agriculture. It helps to have a competent and “street-smart” Secretary of Agriculture in the person of Francis Tiu Laurel, who has surrounded himself with some of the brightest and most experienced agricultural experts. There is a high probability that the agricultural, fisheries, and forestry (AFF) sector will match the three percent annual growth of our neighbors for the remaining years of the present administration, leaving a most important legacy to the next administration. We have a long way to go to match the successes of our neighbors; for instance, Vietnam’s annual agricultural export volume has reached $60 billion, compared to our $8 billion.

Fortunately, there is now a strong coalition among the private sector, civil society, and academia to address the challenge of making small farms highly productive through consolidation to achieve economies of scale. One outstanding example is the partnership between the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), the University of Asia and the Pacific’s Center for Food and Agribusiness, and a handful of agribusiness entrepreneurs to promote the consolidation of small farms. This initiative aims to help the government attain an average of two percent to three percent growth in agriculture and accelerate the overall GDP growth rate from the 15-year average of six percent to the desired eight percent, helping bring poverty incidence to single-digit levels.

To advance productivity, SEARCA and its partners organized a Food and Agribusiness Forum to present specific, successful consolidation models. A position paper prepared for the forum pointed out that Philippine agriculture remains highly fragmented. According to the 2022 Census of Agriculture and Fisheries, the average farm size in the country declined by 53.4 percent over a decade, from 1.7 hectares in 2012 to 0.79 hectares in 2022. Such unconsolidated lands limit productivity and market access.

More recently, a PIDS assessment of the Agriculture and Fisheries Modernization Act highlighted how integration and consolidation initiatives can enhance market efficiency. While the Department of Agriculture (DA) launched the Farm and Fisheries Clustering and Consolidation Program (F2C2) in 2020 to create 50- to 100-hectare blocks, implementation challenges indicate that consolidation requires more than administrative clustering; it must be backed by enabling policies, partnerships, and sustainable business models, with private-sector participation indispensable.

To be continued.