The Department of Trade and Industry mentioned that they are mulling over the thought of creating Agricultural Zones in order to spur development in the agricultural sector. In the past these PEZA zones were often referred to as shelters of escape for the rich land owning class to prevent their lands from being land reformed, otherwise known as the mandatory re-distribution of land if you own more than 5 ha. of it (CARP).
Under PEZA, one could apply to have it classified as a tourism, industrial and IT zone, then lease it out in parcels to investors. It had been beneficial to transforming some parts of Luzon and the Visayan islands of the Philippines to industrial and IT sectors.
Although a hot topic for debate on whether Land Reform was good for the Philippines or not, what is known is that it was a huge deterrent to agricultural corporations to set up shop. The proof is in the pudding as we look at the graph above. In 2005, only 19% was contributed by the agricultural sector to the Gross Domestic Product of the Country, compared to 1992 when it was 22% (CARP was first implemented in 1988). A lot of the money earned in agricultural export was through the export of Cocount Oil, Pineapple and Cavendish bananas. New investors in agriculture don’t want to have to contend with the baggage of having to attract small parcel owners to be growers for them, not to mention having to split up their farms adds to the overhead costs.
However, while looking at the initial proposal for the agricultural zone, it turns out that lands which are to be classified for agricultural zones are those which have a land area of 10,000 ha or more and the locators there must have 70% of their produce made for export.
Why I think biofuel feedstock farming areas should be allowed into the Agricultural Zone Classification:
- It helps cut down operating costs and improves the net energy conversion of feedstock to biofuel because the biofuel producer has his own souce of feedstock material lumped in one place.
- Biofuel producers won’t be so easily affected by world and local market prices for feedstock materials since they have their own source of feeds stock material. However, this benefit can swing the other way, with the biofuel producer hoarding inventory to keep the price of fuel unnaturally high. This is where government and private watchdog groups should come in.
Development and proper nurturing of our biofuel industry could open up the opportunity for the Philippines to export biofuels. In effect we are creating another export industry for the country as well as helping to green the planet by helping other country’s cut down on their fossil fuel consumption. Of course before that, we have to ensure that we have adequate local supply.
Source of Data: NSCB
Category: Misc
May 4th, 2007 at 12:05 pm
“In 2005, only 19% was contributed by the agricultural sector to the Gross Domestic Product of the Country”
I think this is more or less the same scenario with developing and developed nations though. In the better performing ones, agriculture comprises an even smaller portion of their GDP. The reason for this is that we are now in a post-agriculture, post-manufacturing age and that the competitiveness of a nation depends mostly on its service sector. Note that the agricultural industry is not as “value adding” as the service sector.
Don’t get me wrong though. I’m not saying that I’m for CARP or that I think less of the agricultural sector.
All I’m saying is that to use GDP as a measure for how well we’re doing in the agricultural sector is probably barking at the wrong tree.
May 4th, 2007 at 12:18 pm
Allow me to further clarify: Measuring the agri sector’s relative contribution to the GDP is wrong since we’re basically comparing the productivity of the agri sector against better value-adding sectors. It’s like comparing apples to oranges.
What we need to do instead is compare the absolute (as opposed to percentage) performance of our agri sector with the agri sector of neighboring countries.
May 5th, 2007 at 6:55 am
Hi Mark, Thanks for pointing out that discrepancy. I modified the post to show how agriculture was in 1992 vs 2005. We can see that we shaved off a few percentage points in 10 years. 1992 was the year that the Ramos Administration took over and we had boom years in Industry and Service. However the sad reality is that Agriculture took a slide.
I feel that although the Agri sector may not contribute as greatly as the Service and Industry sectore, it sure does help spread the wealth a little bit better and helps reduce poverty. Having come from the Service and Industry sector myself I know that it needs a good educational background and skills in order to allow for entry, one which poor and uneducated farm folk don’t have.
Based from the Datu Paglas experience, we can see how establishing a 1000 ha corporate farm in a war torn area helped improved the lives of farmers and transformed combatants into non-combatants.
:D
May 5th, 2007 at 9:35 am
Hi Marc, thanks for engaging with me on this one.
Changing your graph into a time series doesn’t fix the problem that I pointed out earlier. Based on that graph alone, we really can’t say that agri’s contribution dropped because we invested less in it. We can’t even say if the contribution in terms of absolute numbers dropped if we look at just that graph. Many agri sectors around the world have, over the past few years, become a smaller and smaller part of their nation’s GDP. But it doesn’t mean that in all cases their agri sector has become less productive. For some, yes. For others, not at all. In fact, in many countries such as Australia and the US, their agri sector has been almost insignificant over the past years. And yet those same agri sectors are very productive. My point here is that a sector’s percentage composition of that GDP is not an accurate measuring tool to determine a sector’s performance.
I would think that the following are better:
1. A sector’s contribution to GDP, but in absolute numbers (not percentage)
2. A specific industry’s (not a whole sector) time series performance (again, in absolute numbers) compared to the same industry of a similar country.
3. A specific industry’s share of the global market.
As for the the degree of importance you put on the agricultural sector, sure I’m with you on that one. Being a Mindanaoan myself, I am definitely for improving the livelihood of our farmers. But before we can help them, let’s first make sure that we’re looking at the right performance indicators.
Cheers mate!
May 5th, 2007 at 9:38 am
Correction:
“In fact, in many countries such as Australia and the US, their agri sector has been almost insignificant over the past years.”
I meant to say:
In fact, in many countries such as Australia and the US, their agri sector has been an almost insignificant portion of their GDP (in percentage) over the past years.
May 5th, 2007 at 11:08 am
No Problem Mark, I always welcome your comments