DURING the tenure of Dr. William Dar as secretary of the Department of Agriculture (DA), so-called farmers, agricultural traders and producers’ advocacy groups pejoratively called the agency the “Department of Agriculture Importation” (DAI).
The reason was that DA allowed the importation of significant amounts of agricultural products due to production shortfalls resulting from an outbreak of African swine fever, the severe lockdown during the peak of the Covid-19 pandemic, the eruption of Taal Volcano, and successive destructive typhoons that hit our agricultural — particularly rice — areas.
Today, the importation of various agricultural products has dwarfed the volumes during the time of Dar. However, no one is again referring to the DA as the DAI. The situation is a clear manifestation of the political economy dynamics of Philippine agriculture. Unfortunately, it is this very political economy that is impeding the sustained growth and development of the sector.
Protectionism vs. liberalization
The contending forces in the debate on how to promote the development of the agricultural sector can be divided mainly into two. On one side are those who believe that our small farmers and local producers should be protected from cheap imports to enable them to survive and hopefully flourish. Protection is afforded through import bans or the imposition of high tariffs.
Continuing and increasing amounts of dole outs are also advocated because this, they argue, will result in higher productivity, though empirical evidence (locally and globally) shows that the positive result is insignificant, if none at all. They warn that if we do not protect our small farmers and local producers, the country’s future will be compromised, as no one is going to produce food for our people.
On the other side are those who believe that competition should be promoted by liberalizing the entry of imported agricultural products. By allowing the managed entry of cheaper agriculture items, it will force our farmers and producers to become efficient and competitive to survive.
They claim that liberalization will not wipe out our farmers and producers — as the protectionists alarmingly assert — as the more efficient ones will survive. They stress that we will not be in short supply of food items because there is always the option of importing from the global market.
In addition, they see that the proper role of the government is to ease the transition of small farmers and producers from traditional to modern agri-preneurs. This will necessitate that the government provides the necessary support for the transition. It means real hard work from the government, particularly DA personnel.
The proponents of this second school of thought stress that the money saved from reducing dole outs and from the consumers having to pay less for food can then be used to fund or access other basic needs such as education, health, housing, etc., thus increasing the overall welfare of ordinary Filipinos.
Though the above logic is so simple, decades of advocacy never culminated in its implementation. The political economy of Philippine agriculture reveals why this is so.
Inward-looking vs. outward-looking
Similar to our previous industrial policy, which started in the 1950s and lasted up to the 1990s and protected local industrialists whose roots could be traced to their haciendero origins, the protectionist policy economically benefited domestic capitalists while penalizing Filipino consumers in the form of poor quality and high-cost goods and services.
Protection, through the imposition of import bans and high tariffs, meant the absence of competition and hence local industrialists had a monopoly. Their products had a captive local market because no other options were available for the poor consumers. They could rake in massive profits despite selling low-quality and expensive products.
It is for this reason why our oligarchs supported nationalist and leftist groups. Their economic interest jibes with the nationalist battle cry of “Philippines for the Filipinos.” Unlike the oligarchs running the zaibatsus in Japan and South Korea’s chaebols who defined their nationalism as an outward-looking strategy (meaning proudly selling their products in the international market), ours was inward-looking: the local market should be the preserve of Filipino entrepreneurs to exploit.
Unlike the Japanese and South Korean oligarchs, who had the global market from which they could sell their products and profit from, our local entrepreneurs had to maintain a monopoly hold on the local market to continue amassing profit and wealth. Thus, the protective wall against imports and foreign ownership of key economic activities in the Philippines.
The same kind of mind frame afflicted the development of the Philippine agricultural sector. However, the implementation of agrarian reform led to the division and distribution of large swathes of lands in the country, though significant portions of these were actually public or government land. But by that time, most of the oligarchs had already diversified their portfolios from owning huge manufacturing or utility industries or engaged in downstream agricultural activities like hog and poultry production, food processing and services that do not require large tracts of land.
Similarly, they found cause with small farmers and producers in their call for greater protection from agricultural and food imports. As a result, while import bans and tariff levels for industrial products started to decline in the late 1990s, high tariffs persisted for most agricultural imports for the next 25 years.
With little competition from agricultural imports, small cultivators and producers were able to survive despite low incomes derived from farming due mainly to the miniscule sizes of their land. The other way for them to survive was through continual and ever-rising subsidies or dole outs from the government, which politicians have nurtured to strengthen the poor’s dependence. It is no wonder then that the bulk of our producers are engaged in backyard or retail farming. While neighboring countries have modernized their agricultural sectors, ours remains backward and traditional.
But the most pernicious result of this arrangement is that while poor tillers continue to wallow in poverty, medium and large local producers and traders and their advocacy groups rake in massive profits from protectionism. At the other end are poor consumers who continuously groan from high food prices and witness their kids suffering from hunger, malnutrition and stunting.
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