Contribution of Agriculture to Economic Development - Essay Example

? Agriculture’s Contribution to Economic Development Agriculture’s Contribution to Economic Development The agricultural sector of the Philippines plays a major role in the economic development of the country. Economists view the agricultural sector as the driving force that will push the country’s economy forward. They have pointed out that the reason for the Philippines’ slow economic growth is because of the weak performance of the agricultural sector. To address this issue, the government has put in place policies and reforms which hopefully will improve the performance of the sector. Agriculture is very important in the economy of a country especially among developing countries like the Philippines. It provides food for the nation’s inhabitants. It supplies the raw materials needed by the other sectors of the economy such as the manufacturing, trading and services sectors. Agricultural products are an important source of exports for the country. It also generates employment especially among those living in the rural areas. Approximately 30 million hectares or 40 percent of the total land area of the country is classified as farm lands. The country is composed of 7,107 islands with a total coastline of about 18,000 kilometers and which boast of bountiful fishing areas. Farming and fishing are major sources of livelihood for most people in the rural areas. The food crops produced by the farm lands are used for local consumption while some crops are exported. One then wonders why inspire of the rich natural resources of the country it has remained to be a Third World country. The answer is simple. There is not enough government support being given to the industry. Without the necessary government initiatives to improve the agricultural sector, one cannot expect the industry to grow. The people who rely on agriculture are not given the opportunity to raise their income; thus, pushing the economy downwards. To determine the impact of agriculture in the Philippine economy, recent developments in the industry must be examined. In 2010, despite having vast agricultural lands and an ideal geographical location, the agriculture and fishery sector contributed only17 percent to the gross domestic product of the Philippines, a .34 percent decline from the previous year (Bureau of Agricultural Statistics (BAS), 2011). Compared to last year’s level, the gross value of agricultural output rose by 15.97 percent to P706.4 billion at current prices. The BAS also reported that of the country’s total labor force of 38.89 million, about 11.96 million persons or 33 percent were employed in the agriculture sector. During the first half of 2010, the daily nominal wages of workers in palay farms in Philippine pesos was P227.23 while those in corn farms earned P175.25. In terms of support services, government expenditures in agriculture amounted to P89.22 billion or six percent of the national expenditures, which represents an increase of 9.58 percent from last year. In the case of irrigation, only 49 percent of the total potential irrigable area is irrigated. The production performance of the agricultural sector in 2010 showed that output of palay and corn dropped by 3.04 percent and 9.34 percent, respectively. Coconut production registered a loss of one percent in the same way as sugarcane also recorded a loss of 21.82 percent. On the contrary, production output for mango, tobacco, onion, cabbage and eggplant grew by more than three percent (BAS, 2011). While agricultural products did not show remarkable improvements, the livestock production went the opposite direction (BAS, 2011). Carabao production increased by 5.05 percent, cattle at 2.71 percent, hog at 1.11 percent and goat at 1.38 percent. Likewise, production of dairy products grew by 11.14 percent. Chicken meat production increased by 4.01 percent and chicken eggs grew by 5.12 percent. Among the major livestock products only duck meat and duck egg production declined by 8.24 percent and 7.44 percent, respectively (BAS, 2011). The fisheries subsector was not as impressive as the livestock subsector. Commercial fisheries production decreased by 0.94 percent but municipal fisheries and aquaculture recorded production increases of 1.69 percent and 2.77 percent respectively. Average prices received by farmers in 2010 improved by 6.39 percent from 2009. On the average, prices of palay and yellow corn increased. But the highest increase in prices was achieved by the commercial crops which grew by an average of 41.51 percent. In the same manner, livestock prices increased by 6.02 percent and poultry products increased by 0.75 percent (BAS, 2011). Exports of agricultural products in 2010 increased by 30.67 percent from last year’s level to reach US$ 4,097.59 million (BAS, 2011). Of the total agricultural export earnings of the Philippines, 39.67 percent is attributed to coconut oil and tuna. Major markets for these products are the United States, Germany and Netherlands. Other main agricultural exports of the Philippines are banana, pineapple and mango. Although the Philippines exports several agricultural products, it also imports some agricultural products to meet the demands of its population. These products include rice, milk and cream products which accounts for 30.62 percent of the country’s agricultural imports. The agricultural imports of the Philippines rose to US$7,331.18 million in 2010 representing a 20.58 percent increase from the previous year. This resulted to a deficit of US$ 3,233.59 million in the country’s agricultural foreign trade, a 9.83 percent rise from 2009 levels (BAS, 2011). Several issues confront the Philippine agricultural sector. One of the major problems is the increase in the number of agricultural lands being converted into other land uses such as those developed for housing, commercial and industrial sites. These land conversions are an offshoot of the government’s move to attract foreign investors into the country. It has however resulted in the dislocation of farmers and a loss of a means of livelihood for them. Because of this trend, landowners have found a new way of circumventing the Comprehensive Agrarian Reform Program (CARP) by converting their lands into alternative land uses other than agriculture (Briones, n.d.). According to Briones, the agricultural practices and farming systems in the country have brought about problems in the environment (Briones, n.d.). Agricultural concerns such as low and inconsistent crop yields, labor inefficiency, pests, inadequacy of land for farming were addressed through mechanization of land preparation, planting and harvesting; the intensive use of inorganic nitrogenous fertilizers; use of chemical pesticides; planting of hybrids and genetically narrow varieties and cultivation of marginal upland areas. Briones pointed out that these solutions however resulted in some environmental problems such as soil erosion, energy dependency, labor reduction, ground water contamination, soil and water pollution, worsening pests problems, human poisoning, dependence on chemicals, loss of local adaptations and higher expenses (n.d.). It is imperative therefore that government weigh the pros and cons of the solutions to be able to come up with more acceptable and appropriate agricultural practices that will not harm the environment. The fishing industry is not without its problems too. Briones enumerates the dilemma that the industry is facing namely: “(1) siltation due to deforestation and improper agricultural practices; (2) settlements and coastal land developments; (3) nutrient enrichment due to agricultural fertilizer run-off and sewage; (4) industrial pollutants; (5) destructive fishing methods; (6) over fishing; (7) storms and typhoons; and (8) others (aquarium fishing, mariculture, coral extraction, diseases such as red tide and tourist and diver damage” (n.d.). The livestock and poultry subsector are also hounded by problems. Principal problem is the management of animal waste. The improper disposal of the animal waste has brought about water and air pollution. This can however be addressed by putting into place waste water treatment facilities but it may be costly for the small livestock growers (Briones, n.d.). Realizing that agriculture will hold a critical role in the economic development of the country, the Philippine government has instituted policies and reforms to improve the sector’s performance. The agribusiness strategies were focused on two major goals. First is the “development of 2 million hectares of new agribusiness lands through multi-cropping, the cultivation of idle and marginal lands, the expansion of fishery production in unutilized offshore and inland waters, and expansion of the product mix through high value crops and value-adding through innovative packaging and agro-processing. The second goal is to make food plentiful at competitive prices for rice, corn, sugar, vegetables, poultry, pork, and fish” (National Economic and Development Authority (NEDA), 2005). Under the economic development plan, the government also intends to achieve rice self-sufficiency, it being the staple food of Filipinos. Presently, policies and reforms introduced by the government include extensive financial, production and logistics support to the agribusiness sector. The Philippine government has mandated government financial institutions to offer various loan programs to the agribusiness sector. Production support initiated covers the construction of quick-gestating irrigation facilities and intensification of science and technology in Philippine farms (NEDA, 2005). In addition in terms of logistics assistance, “the government will cost-effectively link the production areas to major markets through the construction of farm-to-market roads, expansion of shipping services and use of roll-on roll –off facilities” (NEDA, 2005). The private sector will be encouraged to invest in post harvest facilities. Moreover, fish port complexes will be built in various regions and municipalities along the coastal areas. A developing country like the Philippines needs to realize that in order to achieve economic development, they have to focus their efforts not only in the manufacturing and service industries but more so on the agricultural sector. With 26.5 percent of its people living below the poverty line, it is of utmost importance that they have a well-developed agricultural sector. Concentrating on the manufacturing and service industries alone will not pump up the economy to the level where they want to go. Poverty alleviation is one of the major economic contributions of the agricultural sector in a developing country like the Philippines. To achieve economic progress, it is essential that the government recognize the importance of developing and improving both the urban and rural communities of the country. With agriculture serving as a foundation for the development of the rural areas, one cannot over emphasize its role in the Philippines route to economic progress. References Briones, Nicomedes. (n.d.) ‘Environmental Sustainability Issues in Philippine Agriculture’, Asian Journal of Agriculture and Development, vol.2, nos. 1 & 2, pp. 67-78. Bureau of Agricultural Statistics. (2011). Performance of Philippine agriculture. [Online]. Available at http://www.bas.gov.ph/?ids=agriperformance. [Accessed 19 October 2011]. National Economic and Development Authority (NEDA). (2005). Medium Term Philippine Development Plan 2004-2010. [Online]. Available at http://www.neda.gov.ph/ [Accessed 19 October 2011]. Read More