Re-energizing Philippine Agriculture for the ASEAN Economic Integration

WILLIAM D DARDirector General, ICRISAT

Free trade + effective policies = promise of inclusive growth and development

ASEAN Economic Community (AEC) 2015

Is Philippine agriculture ready for AEC?

The Philippine agriculture scenario

GDP contribution of agriculture⁻ 11% of GDP in 2012⁻ From 20 to 30% in last two decades

Net food exporter to importer since late 1980s Important to food security and economy

⁻ Main source of domestic foods⁻ Employs 11.8 million or 35.1% of total workforce

Poverty in rural areas⁻ Half of 100 M live in rural areas⁻ 80% of country’s poor

Dominated by smallholderagriculture⁻ Lack of access to markets, credits,

technology⁻ Poor infrastructure

Performance of Philippine agriculture

Daunting task – producing more food from less land and water

Imports as alternative food sources⁻ World price spikes jeopardize food security⁻ Threatens livelihoods of smallholder

farmers Rice production serves to

meet food security goal⁻ Rice, one-third of harvested area (2011)⁻ Followed by coconut and corn; far behind, banana

and sugarcane Crops account for 60% of agricultural GVA

Shift to “high value” crops crucial

Trade in agricultural commodities

Top export earner, coconut oil (26%)

Exports growing, imports growing

faster

Imports, mostly driven by rice, soared in 2008

100% self-sufficient in corn

95% self-sufficient in rice (2011)

AEC regional integration pillars

Challenges under AEC (1)

Single market and production base pillar⁻ Food, agriculture and forestry are priority sectors⁻ Removal of tariffs to boost agricultural trade⁻ Harmonization

of quality management systems for food safety

Review of Philippines’ progress in meeting commitments under AEC⁻ 45.7% in AEC scorecard; average ASEAN score is 67.5 % ⁻ World Bank’s Ease of Doing Business Report:

Philippines’ rank dropped from 141 in 2009 to 144 in 2010

Challenges under AEC (2)

Factors limiting gains from globalization⁻ Low investments in infrastructure;⁻ Lack of political will to implement a sustained and credible

fiscal reform program;⁻ High transaction costs; and ⁻ Lack of a coherent industrial policy.

Current strategy highly conservative⁻ Prioritizes traditional crops⁻ Production targets only close domestic supply-demand gap⁻ Policy protects domestic markets with tariffs and non-

tariff barriers.⁻ “Import substitution agricultural development”

Good governance, committed leaderships with political will for genuine reform vital

Major opportunities for Phil agriculture (1)

Creating a diversified, dynamic and competitive agriculture sector

Overcoming non-tariff barriers by modernizing agricultural enterprises⁻ More capital, better input use and technology

packages Enhanced regional cooperation in dismantling

non-tariff barriers⁻ GAP, GAHP, GHP, GMP and HACCP

Major opportunities for Phil agriculture (2)

Technology transfer and farmers’ access to knowledge and scientific research⁻ Collaborative R&D among member-countries ⁻ Global networks in agricultural S&T

Promoting efficiency and competitiveness in agriculture⁻ Freer flow of capital and investments⁻ Expanding production to take advantage of potential

economies of scale⁻ Greater market access and better processing facilities

and roads⁻ Information and transport services

A New Philippine Agriculture Roadmap under the AEC Platform

“Towards an inclusive, science-based, resilient and market-oriented Philippine agriculture”

Are we ready to take advantage of, or even just survive and compete under the AEC regime? Rice production in 2013 = 18.44 M tons, 8% less

than FSSP target of 20 M tons. Resilience in production of food staples to the

impacts of climate change has yet to be addressed. Agricultural and food policies must adopt a holistic

approach.

Enabling strategies for a holistic, agriculture-led economic growth

1. Technology development– Improves yield, quality and value of produce– Prevents losses and conserve the environment – Results in improved productivity, profitability, competitiveness

and sustainability

2. Public and private investments– Physical infrastructure, rural credit, human capital and

institutions essential for agricultural modernization

3. Inclusive Market-Oriented Development (IMOD)– Linking farmers and small and medium enterprises (SMEs) to

markets– Enhanced public-private sector collaboration

4. Reforms in governance– Binding force for enabling strategies for a competitive

agricultural sector

Focus areas under an AEC regime (1)

1. Balance between rice self-sufficiency and crop diversification– Self-sufficiency in rice production along with diversifying into

high-value crops with comparative advantage

2. Sustainable resource management– Land use plan, soil and commodity mapping, water

management3. Linking farmers to markets (IMOD)

– Giving farmers access to innovations designed for the poor, to help them connect to markets

– Building their own resilience rather than creates dependency

Inclusive Market-Oriented Development (IMOD)

IMOD: A new approach

Climate change adaptation for smallholder, rainfed agriculture

4. Developing climate-smart agriculture – Increasing stocks of livelihood capital and biophysical

resilience of the system

5. GAP, sanitary and phytosanitary standards, and HACCP compliance– Harmonize standards; develop exporters’ capability to

conform to SPS and NTBs6. Innovative use of ICT in knowledge and information

sharing– Leveraging the power of

ICT to support smallholders in processing, marketing and realizing market opportunities

Focus areas under an AEC regime (2)

7. Increase in public investment to attract private sector participation– More public investment to attract more flow

of private capital to ensure sustainable economic growth by increased volumes of trade

8. Enhanced role of youth in agriculture– Promoting profitable and modern

productivity augmenting livelihood projects– Education system to address agri-innovations,

entrepreneurship and agri-business, etc.

9. Championing appropriate policies– Appropriate laws, policies, rules and

regulations to make public institutions work and to encourage broader stakeholder participation

Focus areas under an AEC regime (3)

Sustainable and inclusive growth of smallholder agriculture

Investments in smallholder agriculture⁻ Can lift people from poverty and food insecurity⁻ Under AEC, must become active players in the supply chain

Smallholder farming can transform rural landscape⁻ A new and sustainable agricultural revolution⁻ Needs policy environment to support and nurture them⁻ Can become commercially-oriented and profitable farming

Food security for all 24% of families (4.3 million households)

are hungry due to rising food prices

How do we feed the projected 150 million Filipinos by 2050?

Under the AEC, food security through regional trade and cross country cooperation to raise productivity must be our top priority.

A Five-Step Plan to Feed the World(National Geographic Magazine)

Step 1: Freeze agriculture’s footprint

Step 2: Grow more on farms we’ve got

Step 3: Use resources more efficiently

A Five-Step Plan to Feed the World(National Geographic Magazine)

Step 4: Shift diets

Step 5: Reduce waste

Feeding the hungry is not a need, but a moral imperative.

We have to make Philippine agriculture competitive.

Thank you!

ICRISAT is a member of the CGIAR Consortium