It is a week to the inauguration of Ferdinand Marcos Jr. as the Seventeenth President of the Republic of the Philippines and even if he has not yet assumed office, he has already thrown the gauntlet at himself by assuming the post of Secretary of Agriculture in a concurrent capacity, as soon as he is sworn into office.
In a presser last week, Marcos explained the gravity of the problem of food security and the agriculture crisis which he cited as the reasons for his taking on the Agriculture portfolio. Food inflation and supply shortages brought about by internal and external factors have led him to the conclusion that the urgency of the situation requires no less than his attention as President in order to fast-track the necessary reforms at the DA which has been plagued by corruption allegations and the lack of a sense of urgency in addressing the pressing issues affecting farmers, fisherfolk and livestock growers.
The lack of a long-term agricultural development plan is the main reason why we find ourselves in this situation, which began in 1986 and was exacerbated by the globalization and free trade policies pursued primarily by the Ramos and Arroyo administrations during their incumbency. It did not help that the freedom and democracy restored in 1986 also restored the cartels and smugglers back. It was open season again unlike during the martial law period when Marcos got them under control under pain of detention.
Then there is the failed land reform program. President after President has made land reform an issue until Duterte. Government land was still being given away to farmers despite proof that they could not efficiently produce crops even if they were organized into cooperatives. A vicious cycle exists where awarded public land is usually sold to succesful farmers who have the financial wherewithal and the scale to produce crops profitably. There are few success stories in the agricultural sector.
The same is true in fisheries. The Philippine Fisheries Development Authority has the mandate to building fishing ports throughout the coutnry. These fishing ports are supposed to be landing and distribution hubs strategically located across the country. For most of its existence, politics have ruled its policies and fishing ports are built not based on feasibility but political concessions. The result is most fishing ports today are in use as cold storage facilities for products other than fish. Only a few fishing ports are succesful and most do not cater to the average fisherman but export processing companies owned by foreigners who ship out the processed or semi-processed product abroad.
We used to be one of the top exporters of black tiger prawns until disease struck the industry due to the greed of farmers who practiced intensive farming with high stocking densities and forcing three crops a year when only two was ideal in order to dry out ponds completely in between harvests. Today, fishponds only produce the Ecuadorian white species and a greatly reduced volume of black tiger prawn despite technological advances. These are limited only to those who have deep pockets because they are capital intensive.
You would think that the Philippines being an archipelago with a large coastline would be teeming with aquaculture ventures. This is not the case because of poor research and development on the part of the Bureau of Fisheries and Aquatic Resources. The potential is there but it has not been tapped. We cannot even produce milkfish in quantities which makes it feasible to export. Most of the milkfish consumed by OFWs are produced in Taiwan.
Our waters are also open to poaching because we have not developed a modern fishing fleet. Most of the fishing vessels operating out of Navotas are antiquated Japanese surplus vessels. It has got to the point that these fishing vessel operators are importing marine products from Taiwan, Vietnam, China and Thailand and distributing them throughout the country. This is more profitable for them than operating a fishing fleet.
Then there is the issue of logistics. Shipping costs are prohibitive. It is actually cheaper to ship from abroad into the country than it is from Mindanao to Manila. While the Cabotage Law has been amended, It has still not given impetus to the modernization of the shipping industry in the country.
High domestic shipping cost and the Philippine cabotage policy are closely linked. The protection enjoyed by the domestic shipping industry through cabotage restrictions result in the lack of meaningful competition in the industry and weak incentives for operators to modernize and become competitive. There are of course other reasons for the high domestic shipping cost, such as inadequate port facilities and inefficient port practices. But this does not invalidate the argument for lifting cabotage restrictions and instead only underscores that cabotage liberalization should be accompanied by other needed reforms, such as improving port infrastructure and having an independent port regulator. The different country experiences point out that although there are still countries which maintain closed cabotage regimes, the general trend is to move towards a more open cabotage policy. The degree and manner of cabotage liberalization also depend on the developmental objectives to be met and are not hostage to the demands of national ship operators/owners alone. Rather, cabotage policy reforms should balance the interests of traders, the labor sector and ship operators/owners. It is high time that policymakers seriously consider lifting cabotage restrictions, but in a phasedin and well‐planned approach. Llanto and Navarro (2012) recognize the various reservations to cabotage liberalization such as “cut throat competition, the survival of domestic shipping firms that would be unable to muster enough financial muscle to stay in business, and the spectre of mass unemployment arising from closure or weakening of domestic shipping and allied business activities.” However, Llanto and Navarro argue that fears of foreign players immediately dominating the local shipping industry may be unfounded because market limitations such as market size, lack of familiarity with the domestic markets, and institutional barriers may not allow foreign shipping companies to do business in all
sectors of coastwise trade. The market adjustments by foreign competitors will also give domestic shipping lines ample time to modernize their fleet and operations in order to be more competitive. The need for reciprocity or lifting of cabotage restrictions in our trading partners has also been raised in the debate (e.g., JFCCP, 2010). However, this is not truly an argument against cabotage liberalization but can be viewed instead as an opportunity to move the debate away from protectionism and towards the demand for reciprocity in opening markets. In this regard, we can take confidence in the fact that this has been included in the roadmap of the ASEAN through the planned ASEAN Single Shipping Market. Finally, it should be recognized that an immediate blanket removal of cabotage restrictions could be disruptive. There is a need for MARINA to study very closely the likely effects of the removal of cabotage restriction on domestic shipping, trade and movement of passengers and cargo. For example, among others, the study can examine whether or not a flexible cabotage policy that applies only to certain tonnages of cargo and passenger volumes, could be pursued, and whether the reform path should involve a phased cabotage liberalization accompanied by regulatory reforms in the ports sector. Such reforms include the establishment of an independent port regulator, liberalization of port management and greater private sector participation in port development.
Alex Magno writes: The only alternative strategy is to reconsolidate land and build agro-industry. But the prevailing social justice orthodoxy on the matter will resist that even as we can no longer feed the nation with subsistence-level farms.
Our agricultural logistics system is primeval. When farmers harvest a bumper crop or fishermen chance upon an unusually good catch, much of the produce goes to waste. We need to invest trillions in domestic shipping, rail transport, silos in ports, cold storages and reefers to improve the system.
Currently, about a third of our grain and vegetable produce is lost to spillage and spoilage. That adds to the costs and the shortages.
Agriculture is a poverty trap. Those who toil in subsistence farms are condemned to be poor. They bear the brunt of the inefficiencies deeply ingrained in the system.
Those in the cities, dependent on rural produce, are at the mercy of inefficient delivery systems as well. They pay high prices and eat bad food. Most consume instant noodles poured over poor rice – a diet that guarantees malnutrition.
The Department of Agriculture, limited by the scope of its bureaucratic mandate, has become little more than a mechanism for dispensing subsidies. Low-grade corruption explains the substandard fertilizers and inappropriate farm tools distributed to farmers.
All the money being burned for placebo solutions solve nothing. The money will be better used to capitalize farm production and create forward linkages to food processing.
It is not enough to break up the entrenched syndicates plaguing modernization of our agriculture. The systemic inefficiencies present us with an encompassing problem that requires revolutionary strategies.
Marcos has his work cut out for him at the Agriculture Department. Unlike past President’s, he will likely have a staff at his office that is not organic to the DA who will advise him on what needs to be done. This is not a short-term project which will see immediate progress. It will only be probably at the mid-point of his term that there will be some gains manifested in statistics. But he realizes the gravity of the situation enough that he understands he needs to put it under his wing if agriculture is to become efficient and productive to provide food security for the Filipino people.
It is a daunting task but it is the only way forward in resolving the crisis. This early, Marcos has begun the serious work of correcting the mistakes of the past thirty-six years.
Comments