Agriculture in trade and industry
Agriculture must be fully considered and supported by industry planners for genuine and inclusive economic development.
This was the conclusion at the Sept. 4 meeting of the Philippine Chamber of Commerce and Industry (PCCI) and the House of Representatives’ Committee on Trade and Industry. PCCI was led by its chair George Barcelon and president Eunina Mangio, while Iloilo 4th District Rep. Ferjenel Biron appeared for the committee.
At the meeting, there were more than 10 industry subsectors represented, one of which was from the food product subsector. According to data gathering firm Statista, in 2023, the largest manufacturing subsector was food products (P1.8 trillion). This was followed distantly by chemical and chemical products (P461 billion), and computer, electrical and optical products (P401.9 billion). Agriculture, which is the source of the food product subsector, clearly has a very significant role in manufacturing and industry.
From a larger perspective, the economic managers who largely influence our economic development are usually the secretaries of Socioeconomic Planning, Finance, and Trade and Industry. However, the Secretary of Agriculture has an equally important role.
For agriculture exports, for every dollar earned, more than 80 percent is value added from the Philippines. But for certain electronic exports, the local value added is less than 20 percent.
Reforms
Two PCCI agriculture resolutions were discussed that greatly affect industry. Both are related to two conditionalities proposed by the Agri-Fisheries Alliance (AFA) and identified in the Regional Comprehensive Economic Partnership (RCEP) ratification document signed last Feb. 21, 2023.
The first was “Amendment of Agrarian Reform Law to increase the retention limit from 5 to 24 hectares, including the lifting of the agriculture land ownership ceiling to encourage more consolidated farming businesses.”
We can never be globally competitive unless we have economies of scale. This is a requirement not only to compete against cheap imports, but also to enable us to export. In 2024, agriculture imports reached $17.9 billion, while our exports hit just $6.4 billion.
We must consider our new RCEP environment. From an overall view, rosy projections from that trade deal did not happen. From 2022 to 2023, our exports decreased from 41 percent to 36 percent while imports grew from 58 percent to 63 percent. Our foreign direct investments also decreased by 13 percent to $7.5 billion. In this difficult trade environment, agriculture must get all the support it needs.
Monitoring
The second resolution was: “Urging the Department of Agriculture (DA) and the Philippine Council of Agriculture and Fisheries (PCAF) to constantly engage the private sector in regular dialogues/consultations in all commodities, issues, and program planning to ensure accountability and transparency in the use of government funds.”
This is directly related to an RCEP conditionality of private sector monitoring of DA funds. It is especially important following revelations from the Commission on Audit (COA) that one third of the DA’s expenses can’t be liquidated nor explained for three years starting 2020.
A separate study showed that from 2019 to 2022, 25 percent of the machines given by the DA to farmers were unutilized, while 10 percent were underutilized.
Agriculture Secretary Francis Tiu Laurel Jr. is now acting decisively, but private sector monitoring would be an effective preventive measure for this not to happen again.
Unfortunately, PCAF’s operation budget was previously cut in half, severely limiting its power to monitor. This year, the PCAF budget is P214.1 million, only 1/10 of 1 percent of the DA budget of P197.8 billion. This should be addressed in the 2025 purse.
I applaud Biron for giving importance to agriculture. To achieve a holistic and inclusive economic development, our legislature and executive branch must now do the same.
