Strategic push to agro-industrialization
October 23, 2023originally published in The Manila Standard:
“Industrializing the agricultural sector in the Philippines will be a game-changing strategy that would boost productivity and efficiency across the industry”
Imagine if farming was the backbone of our country’s economy.
Imagine if millions of Filipinos depended on it for their living.
Imagine if it could boost our growth and development like never before.
Well, you don’t have to imagine, because that’s how the agriculture sector used to be.
But, sadly, it’s not how it is now.
The agriculture sector has been ignored and neglected for too long.
It has suffered from low investments, outdated technology, and poor policies.
This neglect has led to many problems, such as low productivity, income inequality, and reduced economic contribution.
In last week’s Stratbase Institute forum on “Cultivating Investments in the Philippine Agro-Industrial Manufacturing for Food Security” policy leaders and industry experts from government and the private sector dissected the complex dynamics influencing the surging prices of staple food commodities that’s driving the inflation rate and heavily depleting the purchasing power of Filipino consumers.
According to Foundation for Economic Fellow Dr. Fermin Adriano, the low agricultural productivity is attributed to “limited private sector investment.”
He showed data wherein only 1 percent of the private sector are investing in Philippine agriculture because of the perceived lack of adequate government support in risk mitigation, an unawareness of incentives considered “outdated,” high taxes, custom duties, and tariff rates.
Additionally, the difficulty in obtaining licenses and procuring raw materials, coupled with poor infrastructure, are also significant obstacles.
All agricultural products need to be grown, which means to be able to produce a good and profitable harvest, growers must adequately invest in quality production inputs.
For instance, feed corn plays a pivotal role as a primary and indispensable animal feed worldwide.
It’s noteworthy that feed corn makes up a substantial part of animal feeds, representing about 40.0 percent to 60.0 percent of their total components.
Moreover, animal feeds constitute a significant expense in poultry and livestock farming, accounting for approximately 60.0 percent of the total costs.
The cost-effectiveness, and easy access to feed corn, along with other crucial feed ingredients, significantly impact the production of protein-rich meat products.
However, local producers face a multitude of obstacles due to the insufficient local supply of feed corn and the surge in local corn prices.
The rising costs of feed corn aren’t just an issue for the sector itself.
They directly affect the production of protein-packed meat goods and other key inputs needed for livestock, poultry, and aquaculture.
It’s crucial for the government to take effective action on this urgent issue.
Further neglect might plunge the country into a situation where our homegrown animal feeds and protein-rich meat products will completely lose out to cheaper, more efficiently produced imports.
A big potential and solution is corporate farming which could enhance local production and competitiveness.
While temporary import mechanisms are crucial for immediate food security, it’s equally important to invest in strengthening local production.
Corporate farming, with its financial and technical prowess, can help strike this balance, reducing reliance on imports and bolstering long-term food security.
Corporate farming can benefit small-scale farmers by providing them with a share in the value chain margins, which typically does not happen in conventional farming.
Additionally, corporate farming adds resilience against external shocks as these corporations can strategize to weather market uncertainties caused by economic shifts or natural disasters.
To move forward with corporate farming as a strategy to ensure food security,
FEF Fellow and Policy consultant Atty Erwin Tiamson said “what we have to do in scaling up small to medium farmers is to remove the land ceiling and to create a program to consolidate agricultural lands (for) industrial agriculture production.”
He pointed out it is imperative that foreign investors be allowed to participate in efforts to achieve food security and agricultural resilience in the country.
Stratbase Group COO Rupert Paul Manhit emphasized the leveraging of the Philippines’ abundant natural resources, skilled workforce, and growing population, to build agro-industrial manufacturing and drive value across food production, and ultimately spur consumption, and the economy.
Stratbase Institute President Prof. Victor Andres “Dindo” Manhit in his statement said, “Promoting investments in the manufacturing sector, specifically for the domestic market, in the agro-industrial sphere will contribute to increasing the country’s productivity and provide the growing domestic market with more affordable goods and essential commodities.
“This also strengthens our position in the global supply chain.”
President Ferdinand Marcos Jr. in a recent speech stressed the need to industrialize the agriculture sector to meet the demand of the population and the current geopolitical risks.
Industrializing the agricultural sector in the Philippines will be a game-changing strategy that would boost productivity and efficiency across the industry, leading to higher yields and lower production costs.
This ensures the availability and affordability of food staples like rice and meat for consumers. Additionally, it would enhance the quality, safety, and diversity of locally produced food products, that would hopefully give consumers more accessible and affordable food options and creating income opportunities for farmers and agricultural entrepreneurs.
Importantly, it would also fortify the sector’s resilience and competitiveness amidst current global geopolitical volatilities.
This will shield consumers from external shocks that could disrupt supply chains and inflate food prices.
Agro-industrialization is a strategic move towards a sustainable and resilient agricultural sector that benefits both producers, consumers, and the national economy.