Joint chambers say agri largely untapped, bold moves needed

February 26, 2016 at 14:42

It added that the country also contends with “a supply chain that progressively erodes the sector’s competitiveness en route to consumer markets.” It estimated that 20%-50% of fresh produce is lost in the transit from farm to consumers.

“By the time agricultural products reach markets, transaction costs have escalated, rendering many agribusiness susceptible to external shocks, at best, and competitive at worst,” said the group, whose membership includes chambers of commerce of the United States, New Zealand, Australia, Canada, Europe, Japan and South Korea.

The joint chambers will conduct on March 1 what it calls the Arangkada Forum, during which it will release its annual assessment of previous recommendations covering sectors including manufacturing, mining, agriculture and tourism.

“As part of the broader Arangkada advocacy agenda, the [joint foreign chambers] seeks to contribute to this reform dialogue by highlighting measures that could contribute appreciably to accelerating growth in agribusiness and other priority sectors,” the group said.

For agriculture, the business chambers are recommending measures to improve market information, technology transfer, marketing, export promotion and broader trade facilitation for the country to take advantage of the opportunities presented by the trade agreements, the regional integration and other preferential trade privileges.

It said the market access provided by these trade deals offers “promising opportunities” for Filipino businesses especially for agricultural exports, whose share in the Association of Southeast Asian Nations has declined.

“Moves to harmonize sanitary and phytosanitary standards and reduce pervasive non-tariff barriers and non-tariff measures have started, but more work is required,” the chambers said.

“Efforts to promote a level playing field need to look beyond tariff barriers and focus on discriminatory ways in which trading partners may distort market access for Filipino exports,” they added.

The agriculture sector can also benefit significantly if can have access to bank loans, which has become a “daunting challenge” for farmers.

“Many agribusinesses are small and financially weak, requiring business development support, collateral substitutes, and other credit enhancements to improve their risk profile,” the chambers said.

They recommended a re-focusing of Land Bank of the Philippines’ scope of business from universal banking activities to supporting the agriculture sector. They also proposed a more comprehensive approach to crop insurance to mitigate the environmental risks faced by small farmers.

“Crop insurance continues piecemeal,” they said, “Yet, to de-risk the agriculture sector, the Philippines requires a bold initiative… that reaches a large swath of an underserved market segment.”

They said that “bold” move should be on par with the Conditional Cash Transfer program, the government scheme that aims to reduce poverty by releasing money to recipients on condition that they meet criteria such as enrolling their children to school.

The foreign chambers also pointed to agrarian reform, which they said remains incomplete after six decades, “creating uncertainties for agribusiness, limiting collateralized lending in finance, and discouraging investments in agricultural productions.”

“Limits on landholdings and its consolidation should be lifted, along with restrictions on selling or mortgaging newly redistributed land,” they said. “To improve productivity and create economies of scale, efforts should be made to integrate small farmers into large enterprises.”

Other priority areas mentioned include farm-to-market roads, post-harvest processing facilities, irrigation, sanitary and phytosanitary standards inspection facilities, food terminals, cold storage and food processing factories.

In 2015, the agriculture sector eked out only 0.11% growth to P789 billion as the country moved away from a farm-based economy. The services sector accounts for around 60% of the gross domestic product.

Over the past six years, farm sector output grew an average of 1.3%, well below the 6.2% growth rate for the Philippine economy. About a third of the local work force continues to rely on farming for its livelihood.