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Chapter 7
MODERNIZING
AGRICULTURE AND FISHERIES
To extend the opportunities of the new economy to the rural countryside, the Macapagal-Arroyo Administration must create a modernized and socially equitable agriculture and fisheries sector. Crucial to the modernization of the agriculture and fisheries sector is the attainment of stability of productivity growth, and with the sector accounting for half of the population and 77 percent of the poor, broadening the base of rural development.
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THE AGRICULTURE AND FISHERIES MODERNIZATION ACT OF 1997 The Agriculture and Fisheries Modernization Act (AFMA) of 1997 is a comprehensive legislation that provides for the country’s blueprint for the sector’s modernization and rural development. It defines the necessary policy environment and deliberate public investment stream that will transform the rural economy into one that is modern, science and technology-based, more integrated into the national and international markets, and thus highly productive and competitive. AFMA’s major provisions include: 1. Reforms and reorientation in the provision of public production and marketing services - • Focus and concentration of public investments on identified Strategic Agriculture and Fisheries Development Zones (SAFDZs), which are defined geographical areas of competitiveness and comparative advantage based on biophysical and socioeconomic endowments; • Crafting and execution of medium- and long-term Agriculture and Fisheries Modernization Plans (AFMPs), in full consultation with all stakeholders and based on the SAFDZs; • Phase-out and consolidation of directed credit into the Agro-Industry Modernization Credit and Financing Program (AMCFP); • Specific principles and guidelines for irrigation and watershed development, providing for economic cost recovery, and the devolution of communal systems to LGUs, promotion of private sector-led development of minor systems; • Establishment of the National Marketing Assistance Program (NMAP) and National Information Network (NIN); • DA-DPWH-LGU coordination in the formulation and implementation of the Agriculture and Fisheries Infrastructure Plan; and • Product standardization and consumer safety, through the establishment of the Bureau of Agriculture and Fisheries Products Standards (BAFPS). 2. Human resource development. Rationalized and strengthened National Agriculture and Fisheries Education System (NAFES) that offers high quality agriculture and fisheries education at all levels. 3. Research and development. A dynamic, client-responsive, rationalized National Research and Development System in Agriculture and Fisheries (NARDSAF) under the coordination of the Department of Agriculture. 4. Extension. Integrated, strengthened and rationalized system of National Extension System in Agriculture and Fisheries (NESAF) built on strong partnership among the NGAs, LGUs, civil society and the private sector that is fully responsive to the needs of the fishing and farming communities. 5. Rural nonfarm employment. Policies and programs designed to employ workers efficiently in the rural areas through a basic needs approach, promotion of rural industrialization. 6. Trade and fiscal incentives. Exemption of all agriculture and fisheries enterprises from tariffs and duties in the importation of specific types of inputs. 7. Budgetary appropriation provisions. Provides for an initial year P20 billion funding for AFMA and P17 billion annually for the next 6 years. For period 2001-2004, an annual budget of P20 billion will be allocated to implement AFMA, providing for the needed steady stream of public investment support to agriculture and fisheries modernization, as follows: - Irrigation P6 billion - Capability building P1 billion - Post-harvest facilities P2 billion - NAFES P1 billion - Credit and financing P2 billion - NIN P800 million - Other infrastructure P2 billion - Rural nonfarm - R&D P2 billion employment training P350 million - Marketing assistance P1.6 billion - Identification of SAFDZs P50 million - Salary supplement of extension workers P1.2 billion |
The Administration does not accept increasing poverty and inequality as necessary costs and results of development. Therefore, the most vulnerable shall be sheltered from the pains of adjustment.
One million new jobs in the sector shall be created through:
¨ implementation of the Agriculture and Fisheries Modernization Act or AFMA of 1997 (Box 7.1) and the Fisheries Code of 1998, specifically targeting public investments in the identified key Strategic Agriculture and Fisheries Development Zones (SAFDZs) (Box 7.2 ); and
¨ broad-based development with targeted policies and programs to shelter the most vulnerable groups from the adjustment shocks attendant to development, especially safety nets for sectors affected by globalization.
AFMA defines the principles to be followed in modernizing the agriculture and fisheries sector and specifies in detail the mandated programs and stream of public investments necessary. The major provisions focus on reforms in the provision of public production and marketing services, human resource development, research and development, extension, rural nonfarm employment, trade and fiscal incentives, and budgetary provisions.
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STRATEGIC AGRICULTURE AND FISHERIES DEVELOPMENT ZONES (SAFDZS)
The AFMA mandates that all suitable agricultural lands within the alienable and disposable lands be identified, set aside and protected from unreasonable conversion. These privately owned lands are referred to as the Network of Protected Areas for Agriculture and Agro-Industrial Development (NPAAAD) and SAFDZs. The identification and setting aside of the NPAAAD ensures that the future expansion of SAFDZs promoted under AFMA shall be done on economically and environmentally suitable lands. The identification (biophysical and socioeconomic profiling) and mapping of SAFDZs and their incorporation into the local government land use and zoning plans legitimize their locally designated use and ensure that investments on these lands are adequately appreciated and sustained. This process involved the participation of various stakeholders in agriculture and fisheries development in all municipalities, provinces and regions of the country. The AFMA planning process, to formulate the Agriculture and Fisheries Modernization Plans (AFMPs) at all levels, mandates the participation of all stakeholders and the convergence of SAFDZ development plans and investments of adjacent local government territories. The convergence of contiguous SAFDZs into a common development zone for the covered local governments is an important phase of planning for the optimum use and management of development interventions of government. Most basic in the implementation of the AFMPs is the adoption of the integrated area development approach, which focuses on the SAFDZs. Each SAFDZ will have an Integrated Development Plan (IDP), which will be integrated into the local AFMP. Prime examples of the integrated area development approach are local and foreign-assisted projects being implemented in Mindanao. These include the 15-year, US$550 million Mindanao Rural Development Project (MRDP) which will ultimately cover all of Mindanao, and the locally funded integrated area development projects covering the Davao provinces (Davao Integrated Development Program or DIDP), the South Cotabato, Sultan Kudarat, Saranggani, General Santos City (Socksargen) Food Security Plan and Fisheries Development Program, and the Zamboanga Peninsula and Basilan Integrated Area Development Plan (Zambas), among others. As of 2000, a total of 753,407 hectares of key SAFDZs areas and 318,556 hectares of emerging SAFDZ areas have been identified and mapped by the Department of Agriculture and LGUs. |
The recent historical pace of rural development has not been sufficient to sustain employment and income growth in agriculture and fisheries (Table 7.1). Productivity growth rates in agriculture and fisheries have been low. The sector has not modernized (Figures 7.1 – 7.2).
Farming systems and rural incomes have not diversified (Table 7.2). The rural sector’s base for production, income and population continues to be narrow. There has been little improvement in farming systems, and therefore in farm, off-farm, and nonfarm income diversification nationwide.
The productivity and competitiveness of agriculture and fisheries generally have not improved as shown by trends in both broad and specific indicators of productivity
Stagnant labor productivity. Labor productivity growth, measured by the change in the ratio of total output to total employment has been sluggish, exhibiting an annual average of 0.56 percent from 1993-1999 (Table 7.3).
Inadequate rice production. Rice yields and output continue to be low relative to national requirements (Tables 7.4 - 7.5).
Lagging coconut productivity. Coconut yields have also lagged behind most other countries in Asia and remained relatively stagnant during the last decade
Declining productivity in fisheries. Fisheries also exhibited similar trends, as highlighted by the 1.8 percent decline in freshwater aquaculture yield from 1989-1991 to 1996-1998 (Table 7.7).
From net exporter to net importer in food and agriculture. The country’s share in the world market for major export commodities such as coconut, banana and pineapple has declined. The country became a net agricultural importer as early as 1994 (Table 7.8).
Whatever progress attained in rural development has not been broad-based; the ranks of the rural poor have increased
Poor rural households have increased. While growth in agriculture GVA has been, on the average, within target for the past two years, rural welfare has not significantly improved. Poverty in the country continues to be a rural phenomenon with the rural sector accounting for four out of five poor Filipino families. Between 1997 and 2000, rural poverty incidence increased by 3 percentage points or an increase of 382,000 households - a total reversal of progress made in poverty incidence reduction between 1994 and 1997 (Table 7.9).
Rural income distribution has worsened. Rural income distribution continues to be highly skewed and has in fact worsened as nearly 50 percent of rural income was accounted for by the upper one-fifth of rural households in 1997, up from about 46 percent only three years earlier (Table 7.10).
TARGETS AND STRATEGIES
Targets
An average of 3.12 – 4.02 percent stable annual growth in gross value added in agriculture and fisheries (Table 7.11)
The agricultural crops subsector is expected to grow annually by an average of 2.4 to 3.6 percent. Traditional crops (rice, corn, coconut and sugarcane) will show moderate growth (2-3 %). Growth in the crops subsector will be led by high value and export crops (tropical fruits and vegetables) which are expected to register average annual growth rates of 3.4 to 5.7 percent.
The annual growth rates of the livestock and poultry subsectors are projected at 4.1 to 4.6 percent and 4.2 to 5.1 percent on the average, respectively. The hog and chicken industries, mainly private sector-led and driven by growth in domestic demand, will continue to lead growth in the sector at 4.1 to 4.7 percent and 4.1 to 5.2 percent, respectively.
The fisheries subsector is projected to post an average annual growth rate of 3.8 to 3.9 percent led by the aquaculture industry, which will grow by an average of 7.6 percent annually. Municipal fisheries will stabilize in the next four years and commercial fisheries will grow by an average of 3.1 to 3.6 percent annually.
One million new jobs generated in agriculture and fisheries
The implementation of AFMA and the Fisheries Code provides for a more predictable policy environment and stream of public investments necessary and conducive to private sector investments that will create still more jobs in the rural sector. At P20 billion per year in public investments in the various mandated modernization programs until 2004, no less than a net of one million jobs are expected to be generated. For 2001, about 100,000 will be generated. The remaining 900,000 jobs will be generated from 2002 to 2004.
Program targets
Irrigation and Water Management
For the period 2001-2004, 473,752 hectares will be irrigated. Of this total, 301,361 hectares will be irrigated from the rehabilitation of existing but degraded systems and 172,391 hectares from the construction of new irrigation systems. This effort will raise the country’s total service area from 1.4 million to 1.6 million hectares.
Farm-to-market roads and related infrastructure
To expand the rural infrastructure systems, essential fishery-related infrastructure facilities and improved services will be provided that would spur employment generation in fisheries, increased productivity, and improved quality standards to achieve global competitiveness.
About 1,597 km. in new farm-to-market roads will be constructed and 601 km. of existing farm-to-market roads will be rehabilitated, repaired and upgraded. Rehabilitation of two regional fishports and 19 municipal fishports will be continued. Sixteen mariculture parks; 14 seaweed village ecozones; and 280 seaweed nurseries will be established.
Postharvest facilities
Within the plan period, 21,863 assorted postharvest machinery and equipment will be distributed while 14,810 assorted postharvest-related infrastructures will be constructed to benefit 3,136,643 farmers. The increase in density of postharvest facilities is expected to reduce current postharvest losses from 15 percent to 11 percent in grains.
Strategic commodity targets
Tables 7.12-7.13 show the range of production targets for selected commodities in the agriculture and fisheries sector that is necessary to attain sectoral gross value added targets. Comprehensive packages of targeted and specific production and marketing assistance support shall be provided to strategic commodities such as rice, corn, high value commercial crops, livestock and fisheries under the Ginintuang Masaganang Ani Program (Box 7.3).
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GININTUANG MASAGANANG ANI Production
and Marketing Support Programs
Priority interventions mandated by AFMA are to be implemented to push productivity and competitiveness in the priority commodities under the Ginintuang Masaganang Ani (GMA) Programs. Many of these interventions, such as infrastructure, marketing assistance, R&D, credit and extension support, cut across major commodities. They will also be focused on the Strategic Agriculture and Fisheries Development Zones (SAFDZs). GMA Strategic Commodity Programs and Salient Features GMA Rice. The rice program aims to progressively increase sufficiency in domestic production as called for by AFMA. Major strategies for the medium term include massive promotion of certified seeds, shift in focus to the rehabilitation of existing systems particularly communal systems and promotion of small, farmer-controlled systems, nationwide expansion of Farmers’ Field Schools using knowledge-intensive modalities in technology promotion and extension, post-harvest loss reduction and promotion of hybrid rice technology. GMA Corn. The corn program aims to transform the current farm clusters into modern agribusiness systems through the establishment of Corn-based Agribusiness Systems Technology (COAST) demonstration projects which shall generate private sector investments through joint venture or ‘corporative’ arrangements with farmer cooperatives in the farm clusters. COAST projects will cover mechanized production and post-harvest activities on irrigated corn and corn-based farming systems. GMA High Value Crops. The high value crops program aims to promote income, employment and livelihood diversification among existing farming systems within the context of the SAFDZs. The program’s major strategies include the nationwide development and promotion of high quality planting materials, development of harmonized product standards, cold chain systems and other appropriate modern post-harvest loss reduction systems. GMA Livestock. The livestock program targets increasing competitiveness and sufficiency in meat and meat products as a major component of the food security program. Major thrusts include improving and conserving the genetic pool, the control and eradication nationwide of all major livestock pests and diseases particularly foot and mouth disease, promotion of modern production and post-production technologies targeting both the domestic and international markets. GMA Fisheries. The fisheries program operationalizes the fisheries mandate under the AFMA and the Fisheries Code. Major thrusts include intensification of productivity in the aquaculture systems, rejuvenation of municipal fisheries, expansion of marine fishing grounds in the adjacent high seas, promotion of captive marine fisheries systems and the improvement of fisheries port infrastructure, post-harvest and processing facilities including the promotion of Hazard Analysis Critical Control Point (HACCP) systems to improve quality assurance and food safety in fish and fisheries products. |
Strategies
Implement AFMA and the Fisheries Code
1. Ensure adequate budgetary support to finance priority and mandated programs;
2. Prioritize public investments and program implementation in the identified key and SAFDZs;
3. Improve the flow of credit and financial resources to the sector by phasing out and consolidating directed agriculture and fisheries credit programs in agriculture and fisheries into a market-driven Agro-Industry Modernization Credit and Financing Program (AMCFP);
4. Install a comprehensive market information and assistance system to promote timely, accurate and responsive business information system and efficient trading services that will integrate farmers and fisherfolk to the appropriate markets; and
5. Complete the necessary organizational and governance reforms for the efficient and effective implementation of mandated modernization programs.
Improve effectiveness of public sector interventions
1. Limit public intervention to strategic investments such as correcting market failures and targeted/focused programs as mandated by AFMA and the Fisheries Code. Prioritize strategic public investments which focus on public goods and services that would support:
¨ Attainment of sustained food security, including self-sufficiency in rice and white corn;
¨ Small holder productivity and competitiveness;
¨ Enhanced market access of agriculture and fisheries products in foreign and domestic markets;
¨ Diversification of farming systems, rural livelihood and employment toward high value-added production; and
¨ Generation of more jobs in the rural economy.
2. Expand and further enhance existing resource counterpart schemes among NGAs, LGUs and rural communities in program and project planning, implementation and monitoring in order to extend and multiply limited budgetary resources; and
3. Improve the absorptive capacity and resource utilization of rural development projects particularly foreign assisted projects.
Improve support service delivery
1. Implement a convergence approach to sustainable rural development to unify and harmonize rural development programs of the DA, DAR and DENR;
2. Ensure needs- and demand-driven capacity building of farmers, fisherfolks, their organizations and LGUs to support devolution and decentralization;
3. Implement immediately a rationalized cost recovery and maintenance of irrigation and other rural infrastructure systems; and
4. Use extensively information and communication technologies (ICT) in improving information, extension, government procurement and regulatory systems.
Mobilize entrepreneurship, private sector investments and participation
1. Reduce deterrents to private investments by asking Congress to enact a law making farm land acceptable as loan collateral;
2. Implement reforms in public utilities and transport industries regulation, fiscal and trade incentives to agribusiness;
3. Enhance the predictability of the investment environment in technology development through the institutionalization of an intellectual property rights (IPR) protection system and the provision of appropriate incentives for innovation;
4. Shall vigorously advocate the passage of the Plant Variety Protection and Registration Act now pending in Congress, as well as similar laws;
5. Waive the monopoly of the National Food Authority (NFA) in rice importation and administratively liberalize the importation of rice to allow the private sector, particularly farmers and their associations, to import rice when domestic supply is short of national requirements. To maximize the social benefits to small farmers of this liberalization, the (DA) shall build the capability of farmers’ organizations to import rice for their own account;
6. Increase transparency in government transactions and eradicate red tape through the rationalization of all regulatory procedures to reduce the costs of doing business;
7. Provide incentives to promote private sector-led development of small-scale irrigation, postharvest and other rural infrastructure systems through build-operate-transfer and other viable schemes;
8. Promote strategic alliances between the private business sector and small producers and/or their cooperatives to improve the latter’s access and integration to the markets;
9. Operationalize the Bureau of Agriculture and Fisheries Products Standards to rationalize the development and harmonization of product standards;
10. Implement fully the trade remedy laws on safeguards, countervailing and anti-dumping measures against unfair trade competition; and
11. Pursue a more aggressive stance in negotiating for greater market access in multilateral, regional and bilateral trade agreements.
Shift to appropriate technology-based, labor employing, value added-driven agriculture and fisheries
1. Promote production and marketing technologies that will employ the sector’s abundant labor resources;
2. Continue the rationalization of the R&D and extension systems into a ‘one system–one program’, demand-driven component of agriculture and fisheries modernization;
3. Promote and encourage private investments in agriculture and fisheries R&D to complement public investments;
4. Activate an aggressive program to acquire promising and appropriate technologies from abroad, particularly those appropriate in harnessing abundant rural labor resources;
5. Develop, through proper and adequate stakeholder consultations, and implement transparent guidelines/regulations governing the safe and socially beneficial development, field testing and commercialization of products of modern biotechnology; and
6. Modernize and rationalize the technology extension system, under a devolved and decentralized regime of governance, in order to effectively promote modern technology, particularly modern genetic materials, knowledge-intensive farm management and cultural practices, processing and marketing.
Develop Mindanao as food basket and exporter of high value agriculture and fisheries products
1. Develop and exploit the synergy between the current piloting of integrated area development and the existing critical mass of foreign assisted projects in the island;
2. Ensure adequate budgetary support that is commensurate to the island’s contribution to the national economy (target attaining 34% of budgetary allocation within the medium term);
3. Assign/dedicate one senior official to coordinate modernization program in the island;
4. Prioritize irrigation development inclusive of nonrice high-value farming systems, land transport infrastructure inclusive of the network of farm-to-market roads, postharvest and storage facilities, sea transport infrastructure and facilities, particularly the ports system; and
5. Establish specialized research, development and extension (RD&E) networks dedicated to high value agriculture and fisheries production and marketing systems.
Shelter the most vulnerable from the adjustment shocks of modernization and globalization
1. Utilize the abundant rural sector labor resources in public investment programs and must nurture, rather than crowd-out, private investments that sustain employment generation in the sector;
¨ The DA shall specifically adopt labor-intensive modalities of program and project implementation;
2. Refine and expand coverage of the existing targeted food subsidy programs for the poor of the DA, through the NFA while pursuing necessary reforms in the grain sector;
3. Pilot and implement the Basic Needs Program in coordination with DSWD, LGUs, SUCs and civil society;
4. Expand nonfarm livelihood training and facilitation programs for communities adversely affected by modernization, particularly those outside of the SAFDZs; and
5. Promote and expand viable innovative financing schemes for small and resource-poor rural households that will be affected by the consolidation of directed credit programs into a market-driven AMCFP.
Buildup the capabilities of partner institutions and ensure the continued full participation of stakeholders in the formulation and implementation of the AFMP
1. Facilitate the transfer of technologies from academic and research institutions to LGUS, cooperatives and people’s organizations;
2. Transfer more responsibilities on project formulation, implementation, monitoring and evaluation to farmer, fisherfolk coops and LGUs.
