A STUDY showed that investments in agro-processing will accelerate economic growth.
Philippine Institute for Development Studies (PIDS) researchers Connie Bayudan-Dacuycuy and Ramonette B. Serafica, in their study, said there is a huge potential in increasing the longevity of Philippine agricultural products through improving the country’s agro-processing.
The research, “Harnessing the Potential of the Philippines’ Agricultural Sector: An Assessment using the Product Space”, suggested developing the agro-processing industry as a strategy to harness the potential of the agricultural sector as a contributor to sustainable economic growth and employment.
While there were efforts to industrialize the agriculture sector in a bid to improve it, this did not reflect in the exports of agricultural products.
The study showed that agricultural goods in the export basket have been reduced in the past two decades. The share of agricultural products went down to only 10 percent in the 2014 export basket from 27 percent in 1995.
The industrialization of the agriculture sector is also a priority investment area under Department of Trade and Industry’s (DTI) Investment Priority Plan (IPP).
Through agro-processing, it will allow farmers and agribusinesses to avoid high transportation, handling, and storage costs of primary agricultural products.
The study suggests that since agricultural products are perishable goods, agro-processing will allow agribusinesses to export in areas outside Asia as this can increase the longevity of the product.
Currently, the country’s agricultural exports are concentrated in cereals, pasta, bread, and fruits and nuts. The study states that despite having these primary agricultural exports, in terms of competitiveness, they still lag behind other agricultural products in the world market.
The study recommended the tapping and improving of commodities that the country has a comparative advantage in.
"These include processed fish and seafood, industrial oil, cereals/pasta/bread, animal/vegetable fats/oil, and extracts/dye," the study states.
In the future the agriculture sector can also explore the improvement of products that are highly competitive in the world market like processed meats, preserved fruits, edible oil, and woven twill.
However, the researchers did point out that there may be challenges when it comes to turning the agriculture industry into a sector that is high value adding.
"The challenge, therefore, is for the government to take steps that will eventually provide opportunities for the agricultural sector to realize actual linkages with these more advanced and sophisticated industries," the study states.