Agriculture and Fisheries Modernization: Remaining a Pipe Dream

The AFMA provides a workable framework for agriculture modernization in
the Philippines. However, if government does not act to address
problems in the its implementation, agricultural modernization and
poverty alleviation in the countryside will remain a pipe dream. This
paper looks into the status of implementation of the AFMA, identifies
existing implementation problems, and proposes adjustments towards a
more effective implementation. Crucial issues include a) adjusting
credit policy, fiscal and trade incentives under AFMA to make them
sensitive to the level of development of farmers and fisherfolks; b)
increasing the revenue effort through reforms in tax administration and
changing the expenditure priorities to favor countryside development,
and; c) addressing problems in land reform for marginalized farmers and
fisherfolk to participate and share in the benefits of agriculture
modernization.

Concerns over poverty and globalization have compelled Philippine
development analysts to give closer attention to agriculture. The
incidence of poverty in the Philippines is highest among people engaged
in agriculture. In 1994, the government's working group on poverty
statistics placed the total number of poor families at 4.53 million, or
35.5 percent of the total number of families. Three million or 66.4
percent of poor families are in the rural areas and predominantly
engaged in agriculture. Of the total number of families that earned
under PhP40,000 in the rural sector in 1994, 69.5 percent derived their
income principally from agriculture activities. Even in the urban
sector, a considerable proportion (33 percent) of families that earned
below PhP40,000 in 1994 was agriculture-based. Combined, 57.2 percent
of families that earned under PhP40,000 in 1994 derived their income
principally from agriculture.

Increasing globalization has given the agriculture problem another
dimension. While there will be winners in the opening up of the
agriculture sector to greater competition, there will likewise be
losers in the process. Globalization has also exposed the economy to
vulnerabilities that can trigger economic reverses, in turn affecting
the poverty situation. After posting appreciable reduction in poverty
from 49.5% in 1988 to
31.8% in 1997, poverty is again on the uptrend, increasing to 34.2 % in
the year 2000. The problem is more pronounced in the rural sector,
where poverty incidence has remained high and exhibited the same
reversal in trend. This pattern in poverty reflects the country's
recent economic growth experience. The poverty reduction was achieved
during the relatively higher growth years of the first half of the
1990's, while the reversal was precipitated by the economic slowdown
following the 1997 Asian crisis. And the future is not encouraging as
the economy reels from a weak global economy that has been shaken by
the September 11 terror attack in the US and its aftermath.

Many analysts have identified the key interventions needed not only to
address poverty in agriculture but its lack of competitiveness as well.
These include investing in rural infrastructure, investing in human
resource development, and investing in agriculture research and
extension.

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