Manila to boost its farm sector

By Cecilia Quiambo

MANILA (JP): The Philippines is belatedly investing in its neglected farm sector in a big way to realize its potential as a major exporter of agricultural commodities.

Agricultural output grew 3.9 percent in 1996, the highest achieved in 15 years, analysts said. The Manila-based Asian Development Bank (ADB) said that in the absence of weather- induced crop failures, agricultural output is expected to grow at 2.5 percent per year.

However, the sector's overall contribution to the domestic economy has been slipping at a substantial rate. Regardless of a lack of a cohesive policy over the years, the Philippines has remained the world's biggest exporter of coconut oil and cocochemicals, as well as a major international supplier of pineapple, carrageenan and canned tuna. Bananas are also a major export in Asia.

Forty percent of Japan's asparagus requirement is supplied by the Philippines, which also exports the product to the United States.

"We are recovering now. The Philippines can do a lot better if we get our act together," said Rolando Dy, director of the agribusiness section of the Manila-based University of Asia and the Pacific.

He cited the Philippines' comparative advantage in producing fresh and processed fruits and vegetables, aquacultured fish and rubber and palm oil -- whose export potentials are yet to be fully realized.

Philippine agriculture, which accounts for an estimated 20 percent to 30 percent of the country's total economic output, is currently suffering from low productivity.

"There was a lack of investment in the past. The country is just reaping what it sowed," Dy said.

Even the coconut industry, which is one of the top agricultural exports, can improve production if old trees, which constitute 40 percent of the total, are replaced with new ones.

The country currently has to import rice, its major staple because production in the past 15 years grew by just 1.9 percent compared to an annual consumption growth of 3 percent.

Corn is also in short supply and the country has to rely on imports to ensure that the livestock and the processed food industries are well-stocked with feed.

The sugar industry, until last year, was also in the doldrums due to decades of government protection and a lack of investment. The Philippines was one of the world's top sugar exporters in the 1970s.

The ADB said the slow pace of agricultural growth is a larger concern as this crippled rural incomes causing massive migration to rural areas.

It said the sector needed "additional irrigation and better support services" such as farm to market roads and storage and marketing facilities to increase output.

The country has yet to take advantage of technological breakthroughs in agriculture, ADB said.

Only 6 percent of public spending in the Philippines went to the agricultural sector since the early 1990s, down from between 10-12 percent in the previous two decades, the ADB said. The rate is far below that of its neighbors Indonesia and Thailand.

The government now wants to put an end to decades of neglect.

Last year, the agriculture department launched a banner program, Golden Harvest, to increase production of rice and corn, livestock, commercial crops and fisheries.

Agriculture Secretary Salvador Escudero said the Golden Harvest program will translate to higher output of rice and corn beginning this year, and eventually into a big drop in imports.

President Fidel Ramos has created a task force involving his key aides to increase production of sugar, which the Philippines supplied in abundance to the world in the 1970s.

Escudero believes 1997 agricultural growth will be a repeat of the previous year's 3.9 percent, if not better, stressing that agricultural output must always be ahead of the average annual population growth of 2.3 percent.

Dy said Philippine agricultural output could grow at a steady 3 percent to 4 percent in the medium-term provided the government puts more emphasis on infrastructure support and if Mother Nature is consistently benevolent.

An average of 25 typhoons hit the Philippines each year and drought devastates portions of the country every three or four years.

"Irrigation is the single most important factor for agricultural productivity," said National Economic and Development Authority chief Cielito Habito.

Agricultural growth of Thailand and Vietnam is faster simply because they have more irrigated land, Habito said.

The Irrigation and Agricultural Productivity Act is likely to be passed by Congress this year. Other key agricultural legislation pending in Congress includes a fisheries act and national land use act.

The government's Board of Investments has expanded the list of agricultural areas which will be entitled to tax breaks under a 1997 investment priorities plan. Such areas include the rubber, cocochemicals and the feedmilling sector.

The most promising contributor to the country's agricultural growth is the southern island of Mindanao, which could become the country's bread basket.

Mindanao is the only typhoon-free region in the Philippines, whose vast tracts of plantations bear rice, corn, bananas, pineapple, coffee and rubber.

Malaysian investors are said to be interested in Mindanao's potential as a major palm oil producer.

Mindanao's other key crops are sugarcane, cassava, oil palm, cacao, tomato, asparagus and cutflowers.

Hobbled by a reputation as a bandit country and seedbed of rebellion, the region will become the focus of massive government investments over the coming years as Ramos attempts to improve its infrastructure after signing a peace treaty last year with Moslem separatists.