Policy reforms pushed to reinvigorate agri sector

The Foundation for Economic Freedom (FEF) is urging government to prioritize policy reforms that would help reinvigorate the agriculture sector and prevent the occurrence of inflationary pressures on the supply side of the economy.

FEF, a group of economists, former government officials and businessmen said with a weak full-year growth of 0.5 percent in 2018, the farm sector’s output is barely providing for the country’s population which is growing by 1.6 percent per annum.

“We are calling on the Duterte administration to pay special attention to agriculture because low agricultural productivity and anemic agricultural growth will increase the risk of a return of high infation and will drag down the economy as it had in 2018,” FEF said in a statement.

Economic managers attributed the agriculture sector’s weakness in 2018 to the series of destructive typhoons last year and the lack of irrigation in key production areas.

FEF said, however, that weather disturbances cannot be continously blamed because other economies in the ASEAN region are posting healthy growth rates in the agriculture sector despite having similar weather disturbances.

Poor agricultural productivity, it said, would remain a drag to the domestic economy as it stunts the growthin industry and employment.

“Agricultural products also serve as inputs into food manufacturing. Therefore, high agricultural input costs mean high manufacturing costs and poor competitiveness,” FEF said.

Continued poor performance in the sector would also get in the way of the government’s poverty reduction efforts, it added.

“Without significant improvement in the agricultural sector, the government cannot hope to alleviate poverty in the rural areas where most of the poor people live,” FEF said.

To enhance agricultural productivity, the group urges the implementation of six measures aimed at the development of the sector.

First, FEF urges tight measures against misuse and leakages of the P10 billion competitiveness fund created under the Rice Tariffication Law be instituted to ensure that it would be used properly for the benefit of rice farmers that would be affected.

The fund provides for the implementation of productivity-enhancement programs for farmers as rice importation is liberalized.

Making rural infrastructure a significant component of the Build Build Build program was also urged as this would create more market linkages.

FEF also said the Public Service Act amendments must be certified as urgent as this law would pave the way for increased foreign investments in shipping and ports. This, in turn, can lower logistical costs for farmers trying to reach the market

Amending the Comprehensive Agrarian Reform Law to reverse the fragmentation of farmlands can make CARP lands bankable and enable efficient farmers to expand beyond the legal ownership limit of five hectares.

Increasing the budget for agricultural research and development, especially for research into crops that will be resistant to climate change would raise yields.

FEF also threw its support to the now hotly contested liberalization of sugar importation, saying that doing so would make local sugar production more competitive and lower the input costs in food export manufacturing.