Agriculture: Key to Mindanao's growth

FOR decades, Mindanao has fallen behind in terms of growth due to the challenges it faced in previous years.

In the recently launched Mindanao Jobs Report, a strategy of Mindanao regional development, it stated that minimal economic dynamism and high population growth, exacerbated by armed conflict, have resulted in few jobs being created, widespread poverty, and net emigration.

The report also stated that Mindanao's growth lagged behind Luzon and the Visayas due to a narrow growth strategy.

Data from the World Development Indicators of World Bank showed that Mindanao's average growth from 1975 to 2014 was only at 3.4 percent as compared to Luzon's 4.1 percent, Visayas' 3.9 percent, the National Capital Region's 4.3 percent, and the national average of 3.9 percent.

In the Family Income and Expenditure Survey (FIES) 2015, 36 percent of the population of Mindanao lived below the poverty line.

The Philippines Mindanao Jobs Report also stated that in 2012, 3.7 million farmers and fisherfolk live in or near poverty wherein 1.2 million are food-poor, 1.1 million are labeled poor, and 1.4 million are near poor.

"Mindanao's economy was driven by plantation crops, foresty, mining, and heavy manufacturing to support an import substitute regime," the report states, adding that these had very low local multiplier effects as these were capital intensive, involved little local processing, and reinvested little profit locally.

The report said while plantation crops, forestry, mining, and heavy manufacturing contributed to Mindanao's high gross domestic product (GDP) per capita in earlier years, it created few jobs and hence did little to reduce poverty.

"Mindanao's growth path failed to build on the main comparative advantage: agriculture based on smallholders," the report said.

The report said Mindanao's agriculture sector has a high potential to power the country's economy as it contributes 40 percent (as of 2014) of the country's agriculture products.

However, the report pointed out that while Mindanao's comparative advantage is agriculture, it was plagued by various problems like low productivity and lack of necessary infrastructure.

"Mindanao has always been called as the food basket but unfortunately the productivity and the yields of the majority of the small farmers who are small landowners have remained very low and uncompetitive," Miguel Rene A. Dominguez, chairman of the Philippine Business for Social Progress, said during the launch of the Mindanao Jobs Report at Marco Polo Hotel Davao on March 6, 2018.

The Philippines Mindanao Jobs Report, which is a World Bank report with the support of the Australia-World Bank Philippines Development Trust Fund and the Korea Trust Fund for Economic and Peace-building Transitions, states that in order to improve growth and reduce poverty in Mindanao, there is a need to raise the agricultural productivity and improve the connectivity of farms to markets.

The report identified three priorities for interventions that will unlock Mindanao's agricultural potential -- raise farm productivity through agrospatial approaches and productive alliances; build up logistics services, improve roads from fields to market; and develop key ports and modernize custom procedures.

It was also pointed in the report that there should be policies that will help increase the productivity of farms.

One of the policies highlighted in the report was the need to address the basic constraints of smallholders, which are finding resolutions to land disputes and investing in education and health of farming households.

"The resolution of land disputes while respecting traditional land allocation practices, and measures to secure land titles in an equitable manner, would encourage economic efficiency," the report said.

Meanwhile, investing in education and health of farming households would allow for more gainful employment and higher household income.

In terms of infrastructure, the report said there is a continued demand for more and better farm-to-market roads (FMR). Preliminary impact assessments from the Philippine Rural Development Program (PRDP) showed that FMRs have paved way to robust direct benefits to farmers -- reduced travel time and costs, greater trader competition, higher farm gate prices and farm incomes, expanded agricultural services, and easier access to health and educational services.

Dominguez said in areas where roads have not been developed, he would observe horses or motorcycles transporting around six sacks of produce.

"However, if roads were improved...it would boost the competitiveness of our farmers," he said.

The report also said there is a need to step up the irrigation services in Mindanao as it remains to be behind Luzon and Visayas. Irrigation development in Luzon is at 61 percent and Visayas is at 71 percent while in Mindanao it is only at 43 percent.

Although irrigation services now cover a wider area, irrigation in Mindanao still trails that of Luzon and the Visayas and needs more investment, especially for crops other than rice.

In 2014, the regional budgets per hectare of non-irrigable land in Mindanao was only P2.3 million as compared to P8.3 million in Visayas and P4.5 million in Luzon.

The report also highlighted the need for farmers to have better access to capital.

"Capital is essential for farmers to begin planting, improve productivity, shift to high-value crops, and move up the value chain to post-harvest, processing, and marketing -- all with positive impacts to their households," the report said.

Despite the lending programs available for farmers, the report recommended that the government should consider reforming the agricultural credit guarantee program currently operated by the Land Bank of the Philippines.

"The current program has limited capital and operational challenges that limit its ability to mobilize financing, especially from larger institutions," the report said.

The report also said banks need to be educated about agricultural lending especially value chain financing approaches.

"Reforms on the financing side would need to be hand-in-hand with the efforts to boost productivity and improve producer capacity," the report said.

Other efforts recommended by the report to improve Mindanao's agriculture include enhancement of postharvest facilities and removal of import barriers to agricultural goods.

Mara K. Warwick, World Bank country director for Brunei, Malaysia, the Philippines, and Thailand, said the report seeks to increase jobs generated in Mindanao and by initially focusing on the island's agriculture sector will allow generation of jobs.

"Agriculture in Mindanao brings great opportunity to those people for a broad base but a more inclusive growth for Mindanao," said Warwick.

"If I am to envision the island-region's development in the next 10 to 20 years, I see agriculture and agri-based industries as the most prominent drivers of Mindanao's economy," Secretary Datu Hj. Abul Khayr D. Alonto, chairman of the Mindanao Development Authority, said.

He added that there is a need for stakeholders to work towards achieving an optimum balance between large plantation and smallholder farming to achieve social inclusiveness and environment sustainability.

"Mindanao holds about one-fourth of the country's population and one-third of the total number of poor Filipinos, therefore, significantly reducing national poverty hinges on reducing poverty in Mindanao. Ensuring Mindanao's prosperity benefits the entire country," Warwick said.
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