THE inability of the country’s exporters to meet health, safety and marketing standards cost them some $249.7 million in lost opportunities annually, according to a study by a former Dean of the University of the Philippines School of Economics (UPSE).
In a presentation on the first day of the National Food Security Summit on Tuesday, former UPSE Dean Ramon L. Clarete said exporters missed earning $148.8 million from American buyers alone.
Clarete said much of these foregone opportunities represent export earnings from products that were able to reach the destination markets, but were refused entry due to health and other violations.
“We estimated that the country could have exported nearly $250 million more if not for the problems of our readiness to export our products,” Clarete said.
“We were not able to realize those potentials because of some of these problems. Number 1, some of the factors explaining that include our lack of readiness in meeting the food safety and marketing standards of our destination markets. There are many problems in exporting but this is really very cruel,” he explained.
In the US market, Clarete said, the most common violations are adulteration and misbranding. Adulteration is when a product deteriorates in transit or in storage, making it unhealthy for purchase.
Clarete said that in the European Union, aflatoxin contamination is the most common reason behind the refusal of entry for Philippine products. He noted that corn and corn products are prone to aflatoxin contamination.
Other reasons are defective packaging and inadequate temperature control while in transit or storage, he added.
“If we could just focus on meeting those requirements for SPS [sanitary phytosanitary], NTBs [non-tariff barriers], we would have contributed so much in realizing the potential for exports in food and agriculture products,” Clarete said.
These challenges are greater than the comparative advantage of the Philippines in some agriculture products. This is measured using the revealed comparative advantage (RCA).
Based on his estimates, the RCA of the country’s Top 20 agriculture exports reached as high as 248.18. Among its top 21 to 40 products, Clarete said the RCA reached as high as 4,381.1, which is the comparative advantage of the Philippines in the export of crabs worldwide.
With the violations and despite the comparative advantage, Clarete said, the tradability of the agriculture sector has shrunk in the past 60 years to only 8 percent in 2019 from 64 percent in 1960.
Starting in 2000, the share of agriculture to exports declined to single digit at 5.2 percent.
Further, the share of agriculture exports to Gross Value Added (GVA) of the sector shrank to only 1.6 percent in 2019 from 33 percent in 1960.
The share of food exports to agriculture GVA also reached the single-digit level in 2000 at 2.2 percent.
Clarete also said the share of agriculture imports to agriculture GVA declined to 1.9 percent in 2019 from 6 percent in 1960.