THE private sector can help the agriculture sector post a growth of 2 to 3 percent annually if they will take up the challenge of investing in the sector through corporate farming, according to a local economist.
In a briefing for the Rotary Club of Manila on Thursday, University of Asia and the Pacific (UA&P) economist Bernardo Villegas told local businessmen that raising agriculture growth and productivity is crucial in the fight against poverty.
Villegas said higher agricultural productivity will boost economic growth to 8 to 10 percent annually. This can bring down poverty to the level of the country’s Asean neighbors of zero to 4 percent by 2028.
“It’s time for people in large corporations to invest heavily in corporate farming because that is one way of helping our economy reach higher levels of productivity,” Villegas said.
Villegas said Malaysia’s Nucleus farm model can help inform these efforts. Through the model, Malaysia was able to assemble thousands of hectares of land and dedicate it to the production of high value crops such as palm oil and rubber.
He said the President’s advisory council, which consists of experts in agriculture, are now working on a similar effort surrounding coconut which is a step toward the right direction.
Noting there are 3.5 million hectares of land dedicated to coconut, Villegas said maximizing this would not just allow the country to reap the same benefits that Malaysia gained from palm oil and rubber but also replicate the success of the banana and pineapple industries in the country.
“I hope those of you who can do something about it will help the government and the other sectors of society. There is no way we can improve agriculture if we keep those millions of hectares in two to three hectare fragments. There is no way we will ever grow in agriculture,” Villegas said.
“So we have to undo the harm done by agrarian reform, not by taking back the ownership from the small farmers but by finding creative ways of reconsolidating them (such as through) cooperatives,” he added.
Villegas said it would also help if local entrepreneurs will encourage children to go into agriculture. He said agriculture is not just farming, but it can be in post-harvest facilities or logistics that are profitable.
Food processing is also a very lucrative business venture in the Philippines. This will not only bring down the cost of food items but also help the country industrialize.
It may be noted that poor Filipinos are sensitive to expensive food items. Based on the Consumer Price Index (CPI), food has a weight of 51.38 percent of the CPI for the Bottom 30 percent of the population.
This is significantly higher than the 34.78 percent weight of food in the CPI for all households. This only shows that because of their low incomes, poor Filipinos spend more of what little they have on food.
“I tell our graduates, why don’t you go into agriculture, their immediate reaction is no, that’s a backward sector because they’re thinking of the small farmer Carabao etc, etc. But I tell them, agribusiness is not just farming. It’s post harvest. It’s cold storage, logistics, supply chain. It’s processing,” Villegas said.
“I hope that you can influence your children and your grandchildren that food and agribusiness should be a focus. If not on the farming side, at least in all the legs of the value chain that will make food more accessible to people,” he added.
Earlier, the Bangko Sentral ng Pilipinas (BSP) said cheaper food items, electricity prices, and the appreciation of the peso may have helped cool down inflation to below 5 percent in July.
The BSP projects July 2023 inflation to have settled within the range of 4.1 to 4.9 percent. This is the lowest inflation rate since April 2022 when inflation was at 4.9 percent or March 2022 when inflation was at 4 percent.
Inflation has been trending downward since it peaked at 8.7 percent in January 2023. The increase in commodity prices slowed to 5.4 percent in June 2023.