Philippine Senate Committee On Agriculture
and Rural Development
PRIORITY MONITORING ACTIVITIES
“If we can reduce the number of poor people in agriculture, then we can reduce poverty in the Philippines”, Senator Cynthia A. Villar
According to the Philippine Statistics Authority (psa.gov.ph) poverty incidence among Filipinos registered at 21.6% in 2015. The annual labor and employment status in 2016 in the country is at 68,125 million covering 15 years old and over while the labor force participation rate is 63.4 percent. The current population of the Philippines is 103,288,987 as of March 5, 2017, based on the latest United Nations estimates. The total land area is 298,192 Km2 (115,133 sq. miles) and 44.8 % of the population is urban (46,543,718 people in 2017). The median age in the Philippines is 24.4 years. (http://www.worldometers.info/world-population/philippines-population/). The level of urbanization in 2010 or the proportion of urban population to the total population was 45.3 percent. This means that of the 92.3 million population in the Philippines in 2010, 41.9 million lived in areas classified as urban (Table A). The rural population or those who lived in areas classified as rural numbered 50.5 million and accounted for 54.7 percent of the total population. (http://web0.psa.gov.ph/tags/urban-rural-classification). The employment rate (%) is 94.5% or 40.8 million; unemployment rate (%) is 5.5% while underemployment rate is 18.3%. Of those employed 55.6% is with the service sector, 17.5% is with the industry sector and 26.9% is with the agriculture sector. Of those in agriculture workers only 14.8% are skilled as of December, 2016. Forty percent (40%) of the 11.8 million farmers and fisherfolks are living below the poverty line.
The Philippines is still primarily an agricultural country. Most citizens still live in rural areas and support themselves through agriculture. The country's agriculture sector is made up of 4 sub-sectors: farming, fisheries, livestock, and forestry and contribute 20 percent of GDP. The fisheries sector is divided into 3 sub-sectors: commercial, municipal, and aquaculture (cultivation of the natural produce of bodies of water).
Rural population (% of total population) in Philippines was last measured at 55.63 in 2015, according to the World Bank. Rural population refers to people living in rural areas as defined by national statistical offices. It is calculated as the difference between total population and urban population. (http://www.tradingeconomics.com/philippines/rural-population-percent-of-total-population-wb-data.html). Citing Alyansa Agrikultura, our rural poverty is 2.4 times Vietnam’s, 2.9 times Thailand’s and Indonesia’s, and 5 times Malaysia’s. The Land Bank 2014 Annual Report states that only 9 percent of its P386 billion loanable fund went to its mandated sector of small farmers and fisherfolk. (http://business.inquirer.net/207459/presidential-debate-rural-poverty-agriculture#ixzz4aVsoYa00).
According to the research of Floredeliza Bordey, et.al. as published in the Rice Science for Decision Makers, Vol. 6. No. 1, entitled Game Changer: is Ph. Rice Ready to compete at least regionally, in November, 2015 and Vo. 6, No. 2, The Filipino farmer’s competitiveness rest on the ability to produce the same quantity at a lower cost than his local or international competitors. There is plagued with, high labor cost (which can be solved by improving the cost of production to retain bigger profit by using hybrid variety, intensifying the use of labor-saving technologies); land productivity, availability of socialized credit and financial literacy by operating their farm as a small business.
Creating Jobs on and off farms
Agricultural and rural development can reduce poverty and hunger. It can help create jobs and livelihoods for small farmers and the landless, while producing food and raw materials for the urban economy. Most of Filipino farmers are smallholders. Being small can give advantages in supervision of labor and understanding of micro-variations in soils and climate but there are drawbacks when dealing with buyers, suppliers of inputs and bankers. Hence, finding ways to link small farmers to link effectively to large-scale enterprises in supply chains is a challenge. The smallholder farmers to scale up their activity and increase market engagement. Developing countries are moving from being largely rural and agrarian to becoming urban and industrial. The Committee on Agriculture and Food in the Senate will hopefully pass legislations mutually beneficial to rural and urban areas in the Philippines. We shall see to make rural non-farm economy provide local jobs for some of those who leave farming for better paid jobs in the city.
The farms can be farm schools to assist technology transfers to farmers and fisherfolks at the nearest level. This can generate additional income stream for the farm other than production. Accreditation from DA- Agriculture Training Institute and Technical Education and Skills Development Authority (TESDA).
Moreover, with the recently passed Farm Tourism Law (RA 10861), which aims to attract more tourists and visitors through the use of farm areas for production, educational and recreational purposes. which we principally authored a farm can generate more income other than production.
Agri-tourism - or also referred to as “farm tourism” is a form of tourism activity conducted in a rural farm area which may include tending to farm animals, planting, harvesting and processing of farm products. It covers attractions, activities, services and amenities as well as other resources of the area to promote an appreciation of the local culture, heritage and traditions through personal contact with the local people.
An Agri-Tourism/Farm Site - is a working farm producing and/or showcasing raw and/or processed products. A Farm Tour - refers to the activity of visiting an agri-tourism/farm site on a day tour, overnight stay or longer period of time for the purpose of participating in or enjoying farm activities and other attractions offered. While Farm Product/s - refers to fresh and processed products of the farm. All these activities can generate additional income for the farmer and fisherfolks.
Agriculture and Better Nutrition
Reducing poverty and producing more food that helps reduce the real cost of food are half the battle in beating hunger and malnutrition. But better nutrition, above all for preschoolers, is also about their health and care. So we are also interested in complementary policies to promote basic health care, clean water and sanitation, and education on better nutrition.
Climate-smart agriculture
Making agriculture better able to cope with increasing variability in climate and weather, and long-term climate change, supporting effective systems of carbon emissions reduction or carbon storage in agriculture shall also be studied and important legislations shall be formulated after stakeholder’s consultation. (https://www.odi.org/programmes/agricultural-development-policy/climate-smart-agriculture).
Agriculture Finance
According to the World Bank, the need for investing in agriculture is increasing due to a rising global population and changing dietary preferences of the growing middle class in emerging markets toward higher value foods (e.g. dairy, meats, fish, fruits, vegetables, etc.). According to estimates, demand for food will increase by 70% by 2050, and at least $80 billion annually in investments will be needed to meet this demand, most of which is expected to come from the private sector.
Banking sectors in developing countries lend a much smaller share of their loan portfolios to agriculture compared to agriculture’s share of GDP. This limits investment in agriculture by both farmers and agro-enterprises. It also demonstrates that the barrier to lending isn’t due to a lack of liquidity in the banking sectors, but rather a lack of willingness to expand lending to agriculture.
Even when available, much of the agriculture funding tends to be informal and short-term, precluding longer-term investments. This informal funding only partially covers the financial needs of farmers and small agribusinesses, and usually at a high cost.
The challenges financial institutions face when offering financial products to agriculture are threefold:
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The transaction costs of reaching remote rural populations
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Higher perceptions of non-repayment due to sector-specific risks, such as production, price and market risks
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Financial institutions’ lack of knowledge in how to manage transaction costs, agriculture-specific risks and how to market financial services to an agricultural clients
Also, government policies often prove to be ineffective and could in fact create impediments to offering financial services to the agricultural sector. Policies like concessional lending practices, interest rate caps, and loan forgiveness programs create disincentives for private sector lending while creating problems for government lending to agriculture. (http://www.worldbank.org/en/topic/financialsector/brief/agriculture-finance).
Financial Literacy
In the Philippines there is a need for farmers and fisherfolks to have more financial power than before. They have to be given proper financial literacy training, and they should understand how money works and what are the consequences of having bad money habits. Why is financial literacy important to farmers - 1. To be able to provide for themselves and their family. When a person is financially literate, he can maximize his farm income and be able to make ends meet without the need get into debt. When a person can comfortably deal with the family’s expenses and that of the farm, then he has achieved a certain level of financial freedom through literacy. 2. To be able to invest in their future as well as that of their children- it isn’t just about solving the money problems of the present; it is also about investing in something that you can reap in the future, like having savings in the bank or purchase of property. The financial steps calculated by each farmer or fisherfolk may free him from the shackles of debt and allow him to manage his personal finances better. (https://www.ecomparemo.com/info/introduction-to-financial-literacy-and-its-importance-to-filipinos/)