August 5, 2020
Secretary William Dar; Undersecretaries Ariel Cayanan, Rodolfo Vicerra, Evelyn Lavina, Zamzamin Ampatuan, Cheryl Caballero, and Eduardo Gongona; Assistant Secretaries Noel Reyes and Kristine Evangelista; the heads of the Department of Agriculture’s attached bureaus and corporations; the men and women of the Department of Agriculture: Good afternoon.
Thank you for inviting me to participate in this significant event marking the second year of Secretary William Dar in the government service and his first year in the Cabinet of President Duterte.
Most of us have long appreciated Secretary Dar for his solid grasp of the realities of our agriculture sector as well as his clear vision about where it should go.
Secretary Dar has ably presided over the Department of Agriculture during critical challenges. He has kept the African swine fever at bay, and the outbreak of avian flu controlled and eliminated. With his capable and systematic handling of these and other significant issues, we face the COVID-19 pandemic with renewed strength on the food security front.
We are fortunate that when the pandemic hit our country, some of the reforms Secretary Dar introduced had already taken root. Much of these measures relate to building of productivity and enhancing the resiliency of our agriculture sector.
Despite some weaknesses in our logistics system and the rush of some local governments to seal borders where community quarantines have to be imposed, a food crisis did not happen. No food riots and hoarding of supplies broke out. The continuous flow of food from our farms to our consumers is one of the brightest spots in our response to this pandemic.
The Department of Finance is proud to have worked with the Department of Agriculture on securing our access to affordable food. The DOF was able to secure a commitment from the Government of Vietnam to keep our rice imports moving. Vietnam lived up to that commitment even as it initially imposed export restrictions after its farms suffered from a prolonged drought.
Beyond assuring that there would be no food shortages, the Department of Agriculture was also able to keep food prices broadly stable, with some price fluctuations reflecting increased logistics costs. This is one of the major reasons we succeeded in keeping the inflation rate low during this health emergency.
The price of rice has also remained under control mainly due to the passage of the Rice Tariffication law. On the average, today’s Filipino consumer already enjoys a reduction in the price of rice of about 8 pesos per kilo from its peak in 2018. This is particularly helpful for low income households that spend a fifth of their budgets on rice alone. Filipino consumers also have a variety of choices now under a liberalized rice trading regime.
During the first half of this year, the RCEF or Rice Competitiveness Enhancement Fund collections have already breached the 10-billion-peso minimum earmark. The funds will translate into subsidies for our farmers to improve their yields and mechanize their farms, especially in the 57 priority provinces identified as having the potential to be globally competitive.
The shift to a tariff-based system is not just working to the benefit both of consumers and our farmers. It will also power a revolution in our agriculture.
Meanwhile, the Plant, Plant, Plant program spearheaded by Secretary Dar will also further reinforce the nation’s food security. By helping boost yields and improving on our distribution systems, we will soon achieve adequate supply in our most basic crops that our people need.
Moving forward, we need to continue ensuring that there will be no disruptions in food production. We hope the gains in productivity in the rice sector could be extended to some plantation crops, particularly sugar, where archaic trade restrictions preserved inefficiencies in our domestic production.
The sugar industry still operates within a 70-year old production sharing mechanism designed in the 1950s. This mechanism dictates how much final sugar output millers and planters get. This arrangement is problematic because it limits the incentives for sugar millers to upgrade their technology and improve their milling efficiency. Whatever output increases obtained through milling efficiency will have to be divided with the planters, even if such efficiency comes from the miller’s efforts alone. The same is true for the planter, who has to divide any added return due to farm efficiency with the miller.
Domestic industries, such as food manufacturing that rely on cheap and stable sugar supply are also constrained by onerous and complicated import restrictions on volumes, category, and type of sugar, as well as the eligibility of the importer.
We also need to study ways to improve the welfare of sugar workers, small landholders, planters, millers, and other domestic industries without restraining growth in other equally important sectors of our society, such as food processing. Protectionism and heavy regulation have not promoted efficiency in local sugar production and instead come at the expense of the Filipino consumer.
Meanwhile, when the lockdowns were at their most restrictive, we saw spontaneous responses that directly linked farmers to our consumers. These responses underscore the need to further digitalize our agricultural systems. The more direct the link between the farmer and the consumer, the less non-value-adding middlemen and processes will there be. As a result, the price structure will return more value to both the consumer and the producer.
The more we digitalize, the less we will also need physical stores for our agricultural products. The asymmetries between supply and demand result in food waste, reduced value for both producer and consumer, and deterioration in food quality by the time it reaches the end-user. The expanded market access, reduced logistics and storage costs that digitalization allows will make agriculture more rewarding for our farmers and agri-entrepreneurs.
Digital marketing will also support our efforts to boost consumer spending, as it allows consumers to access fresh produce without having to congregate in traditionally crowded public markets. It also provides the transport sector, which has shifted to doing deliveries, with much needed business.
Further, new technologies can help predict weather patterns, which would make an appropriate basis for the planting calendar. These technologies will also help identify climate-determined comparative advantages in terms of crops.
I strongly agree with Secretary Dar that the only way our agriculture will be competitive is to increasingly mechanize our farm systems. This is why mechanization is the largest component of the RCEF for a reason. This will reduce the spillage and spoilage that force up prices of our agricultural produce.
As we have seen with many expensive programs in the past, not all problems can be solved by throwing money at them. The need to be efficient is especially more pronounced during this pandemic, when we need to preserve government resources for what could be a long struggle with the virus and its adverse economic impacts.
As we continue to face the pandemic, we encourage the Department of Agriculture and other agencies to work with increased efficiency to deliver the best results for the Filipino families, within their budgets. There are some actions that the agency could take that would improve efficiency in program delivery, and complement the whole government’s efforts to serve the agriculture sector.
This includes completing the registry of farmers as soon as possible to have a more solid basis for policy formulation, especially in designing programs for the farming sector. Accurate estimating of the optimal rice buffer stock is also a must to reduce unnecessary costs and spoilage due to overstocking. More importantly, the Department of Agriculture should also focus its research efforts on developing new farming technologies.
Finally, I leave this challenge to Secretary Dar and the Department of Agriculture: you must fulfill the target of an annual growth rate of at least 2 percent for the agriculture sector. This is needed to keep ahead of the country’s annual population growth rate, which is estimated to be around 1.4 percent in 2019 based on the Philippine Statistics Authority data. The steady growth of our agriculture sector is crucial to achieving stable food prices for all Filipinos.
On our part, we support the unlocking of more financing for the agriculture sector by proposing amendments to the Agri-Agra Reform Act. These amendments will provide more access to credit for the entire agricultural value chain. A thriving agri-business sector will enable farmers to earn more income from their produce.
I look forward to more progressive steps being taken to modernize our agriculture sector. I have a great confidence that Secretary Dar and his team will bring us to where we need to be.
Thank you.
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