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Lecture 1 - Introduction To AB Processing

The document discusses the current state of Philippine agriculture, including key challenges around land, labor, capital, risk, infrastructure, resources, government budget, and trade policy. It also discusses possible solutions like increasing government support and promoting agricultural mechanization.

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johnrafaeltrementizo
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44 views

Lecture 1 - Introduction To AB Processing

The document discusses the current state of Philippine agriculture, including key challenges around land, labor, capital, risk, infrastructure, resources, government budget, and trade policy. It also discusses possible solutions like increasing government support and promoting agricultural mechanization.

Uploaded by

johnrafaeltrementizo
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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ABE 14

AB Products Processing and Storage


Lecture 1

Current State and Challenges


in Philippine Agriculture
The Current State of Philippine
Agriculture

▪ In the Philippines, agriculture


started growing at an adequate pace
in the 1960s and 1970s .

▪ Agribusiness also started in key


export crops (e.g., bananas and
pineapple), with coconut and
sugarcane enjoying a worldwide
commodity price boom.

Source: Briones, R. M. (2021). Philippine agriculture: Current state, challenges, and


ways forward. Phil. Inst. for Devt. Studies. No. 2021-12. ISSN 2508-0865
The Current State of Philippine
Agriculture

▪ From 2010 to 2019, the poultry


industry had been the key driver of
growth in agriculture, while crops
have stagnated.

Source: Briones, R. M. (2021). Philippine agriculture: Current state, challenges, and


ways forward. Phil. Inst. for Devt. Studies. No. 2021-12. ISSN 2508-0865
The Current State of Philippine
Agriculture

▪ A prominent feature of crop farming in the


country from the 1960s to 2010s is the
dominance of the same five traditional
crops: palay, corn, coconut, sugarcane,
and banana.

Source: Briones, R. M. (2021). Philippine agriculture: Current state, challenges,


and ways forward. Phil. Inst. for Devt. Studies. No. 2021-12. ISSN 2508-0865
The Current State of Philippine
Agriculture

▪ Meanwhile, fisheries further


contracted in 2014–2018, faring
even worse than crops.

Source: Briones, R. M. (2021). Philippine agriculture: Current state, challenges,


and ways forward. Phil. Inst. for Devt. Studies. No. 2021-12. ISSN 2508-0865
The Current State of Philippine
Agriculture

▪ Climate change has been a major factor in


these low and erratic trends, while capture
fisheries have been mostly affected by
overfishing and the destruction of natural
habitats.

▪ Hence, the government resources should


focus on providing public goods (such as
research and development) that effectively
boost long-term productivity.

Source: Briones, R. M. (2021). Philippine agriculture: Current state, challenges,


and ways forward. Phil. Inst. for Devt. Studies. No. 2021-12. ISSN 2508-0865
The Current State of Philippine
Agriculture

▪ Even livestock has been affected


by the African swine fever (ASF)
pandemic, a form of
environmental risk that has
caused shortages in supply and
soaring prices of pork since 2019.

▪ Nonetheless, agriculture was the


biggest employer of the economy in
the mid-1990s but has since given
way to services.
The Current State of Philippine
Agriculture

▪ Moreover, Agriculture still plays a


vital role in the Philippine
economy.

▪ This is also one of the hottest


issues today, especially with the
Rice Tariffication Law.
Issues and Challenges

Land
▪ The Food and Agriculture
Organization (2020) estimates the
country’s arable land at 12.44 million
hectares (ha).

▪ Likewise, fragmentation has also


prevented the realization of
economies of scale, exacerbated by
the Comprehensive Agrarian Reform
Program (CARP), which has broken
up farmlands and suppressed land
rental markets toward
The weak enforcement of the CARP has inadvertently reconsolidation of operations.
prevented a more severe productivity impact.
Issues and Challenges

Labor
▪ The number of workers in agriculture
has been declining both in relative
and absolute terms (Briones 2017a)
up to 2019.

▪ Population growth, diminishing farm


size, and declining relative incomes
in agriculture have incentivized the
shift out of agriculture.

The correlation between average daily basic pay


and level of education tends to be stronger in
industry and services.
Issues and Challenges

Capital
▪ A potent source of labor productivity
increase is mechanization, which
entails capital investments.

▪ However, capital formation in


agriculture has been limited.

▪ Moreover, a significant proportion of


other small farmers and fisherfolk may
have resorted to self-finance given the
voluminous requirements of availing a
bank loan.
Issues and Challenges

Risk
▪ One reason why banks shun
agriculture is the high risk of
recovering loans.

▪ Agricultural production is risky and


unfamiliar to many urban-based loan
officers.

▪ One instrument to reduce risk and


improve agricultural finance is through
agricultural insurance, which is deeply
intertwined with credit.
Issues and Challenges

Infrastructure
▪ Aside from private capital, public
capital stock, particularly rural
infrastructure, is also a key
determinant of agricultural growth.

▪ However, the country has been


underinvesting in infrastructure.

▪ According to Llanto (2012), poor rural


infrastructure is a contributor to low
agricultural productivity.
Issues and Challenges

Resource Base
▪ Agriculture faces several threats to
its long-term sustainability.

▪ Fish stocks and marine ecosystems


have been disrupted by overfishing
and human activity, resulting in the
declining capture fishery output.

▪ Meanwhile, the expansion of


agricultural lands has contributed to
the declining forest cover and
biodiversity.
Issues and Challenges

Government Budget/Spending
▪ The budget for agriculture has been high
and rising in recent decades.

▪ The total budget for agriculture in 2018


was PHP 142.7 billion, which is about 8.9
percent of the sector’s gross value
added, up from 7.4 percent in 2017.

▪ The Department of Agriculture (DA)


received the largest budget, followed
by the National Irrigation
Administration.
Issues and Challenges

Trade Policy
▪ Tariff and nontariff barriers continue to
protect large swathes of the country’s
agricultural sector.

▪ Despite fears of economic dislocation, the


removal of these barriers will not be
detrimental to long-term growth.

▪ Moreover, removing protection will


force a powerful reckoning and
reorientation of public support toward
long-term competitiveness and
diversification.
Issues and Challenges

Trade Policy
▪ Definition of Terms

▪ "Tariff” refers to a tax on imported


agricultural produce from another country.
▪ ❑It earns revenue for government.
▪ ❑It can also protect local producers by
increasing the price of imported products.

Minimum Access Volume - amount of


agricultural product that is allowed to be
imported with a lower tariff
Issues and Challenges

Trade Policy
▪ Definition of Terms

▪ Rice Shortage - is a situation where there is


lesser supply of rice in a market than the
demand

▪ Tariffication- refers to the lifting of all


existing quantitative restrictions such as
import quotas or prohibitions, imposed on
agricultural products, and replacing these
restrictions with tariffs
Possible Solutions & Interventions

Summary
▪ The challenges faced by Philippine ▪ The government is increasing its
agriculture cannot be solved by one support in production, post-
field of specialization alone. production, and marketing

▪ All stakeholders in the entire


agriculture value chain need to work
together to improve the lives of
farmers.
Possible Solutions & Interventions

Summary
▪ Agricultural Mechanization would ▪ Agricultural mechanization can
play an important role in improving help lower production costs,
the lives of our farmers, while reduce losses, and maintain the
protecting the interests of quality of agricultural products
consumers.

Source: Engr. Neil Caesar M. Tado. (2023). Lecture Material in ABE 112: AB
Products Processing & Storage.
Possible Solutions & Interventions

Summary
Agricultural Mechanization:
✓ Reduce labor requirement
✓ Allows for timely operation
✓ Reduce postharvest losses

▪ The government is helping


farmers by aiding in acquiring
these machineries.

Source: Engr. Neil Caesar M. Tado. (2023). Lecture Material in ABE 112: AB
Products Processing & Storage.
Possible Solutions & Interventions

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