Regulators work to modernise farming practices and boost profitability in the Philippines

Increasing public and private efforts are being made to move Philippine farming from subsistence to commercial operations with initiatives to modernise production techniques, harness new technologies and link farmers with national and regional value chains. One of the largest government programmes to encourage entrepreneurship in the sector is the Agribusiness Support for Promotion and Investment in Regional Expositions, a joint project of the Department of Agriculture (DA), Department of Trade and Industry, and the Philippine Chamber of Commerce and Industry to improve domestic and international market access for small farmers. In June 2017 four pilot regions were selected with full implementation targeted for 2018. This, in combination with other initiatives, could provide the productivity boost the sector needs to generate more wealth for farmers while addressing national trade imbalances.

Targeting New Entrepreneurs

By changing perceptions of the opportunities that agriculture offers, the government is hoping to attract new talent to an industry where the average age of farmers is in the late 50s, according to various estimates. “We want young people to see the promise of agriculture as a career choice that involves exciting new technologies. This starts at a young age; we have to cultivate an interest in science and an appreciation for nature as early as kindergarten,” Segfredo Serrano, the DA undersecretary for policy and planning, told OBG.

One challenge in making the sector more attractive will be overcoming obstacles to obtaining financial resources. Under the Comprehensive Agrarian Reform programme, designed to aid landless farmers, banks are mandated to direct 15% of their loan portfolios to producers, particularly farmers, and 10% to beneficiaries. However, Benigno Peczon, president of the Coalition for Agriculture Modernisation in the Philippines, told OBG that the fines for non-compliance were so low, at just 0.5%, that banking institutions only lend out 12.58% of their portfolios to farmers and 1.02% to beneficiaries.

The issue is on the government’s radar. Serrano explained the DA was looking to provide more support for banks dispersing agricultural loans, reducing the cost of borrowing and simplifying complicated requirements. “Pilot programmes have demonstrated that farmers are capable of higher levels of productivity with the right inputs and connections to capital and financial markets, as well as showing high levels of repayment rates and borrower discipline,” Serrano said.

Improving Infrastructure

Enhancing the transportation infrastructure linking producers to markets is also key to bolstering business prospects. In January 2018 the World Bank approved $170m of additional financing for the Philippine Rural Development Project, designed to increase farmer incomes and develop rural infrastructure such as roads, bridges, irrigation systems, greenhouses and composting facilities. “With our geography, we need good roads, bridges and transport equipment; without this, farmers will not have sufficient access to markets and will be unable to respond to price information. Despite expenditures of billions of pesos on gravel roads, they disappear due largely to weather. We need permanent service roads that can survive extreme events,” Serrano told OBG.

Using Technology

Harnessing available technologies and modernising production techniques, such as the use of genetically modified products, is another area of focus. In December 2002 the Philippines became the first country in Asia to permit genetically modified organisms (GMOs) for commercial agriculture and had 800,000 ha under cultivation with GMO corn in 2017. Peczon explained that this has helped increase yields and provided export opportunities, as well as generate substantial amounts of feed for chicken, pigs and tilapia.

Taken together, these initiatives could provide the support farmers need to become engaged in agribusiness and turn a greater profit. If this momentum is maintained, the country could see a rise in production volumes and export values in the short to medium term.