History of the Philippine Agriculture
Philippine Agriculture over the Years: Performance, Policies and Pitfalls 1
Cielito F. Habito and Roehlano M. Briones 2
Introduction Although many still think of the Philippines as an agricultural economy, strictly speaking, it is not. Agriculture, fishery and forestry directly account for just one-fifth (20 percent) of the economy’s aggregate domestic output (GDP). Ever since the 1960s, the direct share of agriculture in the GDP had fallen below one-third, and by 1981, the sector’s share had decreased to only 23 percent. Growth from this level was rather anemic, averaging 1.7 percent per annum during the period 1981-2003, compared to the average overall GDP growth of 2.6% over the same period. While agriculture output was largely stagnant through the years, industry and especially services significantly raised their output shares, particularly in the past two decades (Figure 1). Agriculture’s importance looms larger when it comes to employment, with nearly two-fifths (i.e. 37 percent) of jobs currently coming from the sector. Still, the services sector accounts for close to half of both output and jobs in the economy. But if one considers agroprocessing and agricultural inputs manufacturing and trading (i.e. agribusiness sectors) along with basic agricultural production, about 40 percent of GDP and two-thirds of jobs in the economy arise from agriculture (Tolentino et al. 2001). Unfortunately, agriculture also displays the most erratic growth among the economy’s major sectors, with growth rates tending to fluctuate widely from quarter to quarter (Figure 2). The sector’s recent growth performance manifests the same volatility. While the sector’s full year real GDP growth performance was well within the target for 2004 and exceeded the preceding year’s performance, the most recent quarters have seen dramatic slowdowns from previous quarters, due mostly to unfavorable weather conditions. Notwithstanding these challenges, the critical role of the agriculture sector
Cielito F. Habito and Roehlano M. Briones 2
Introduction Although many still think of the Philippines as an agricultural economy, strictly speaking, it is not. Agriculture, fishery and forestry directly account for just one-fifth (20 percent) of the economy’s aggregate domestic output (GDP). Ever since the 1960s, the direct share of agriculture in the GDP had fallen below one-third, and by 1981, the sector’s share had decreased to only 23 percent. Growth from this level was rather anemic, averaging 1.7 percent per annum during the period 1981-2003, compared to the average overall GDP growth of 2.6% over the same period. While agriculture output was largely stagnant through the years, industry and especially services significantly raised their output shares, particularly in the past two decades (Figure 1). Agriculture’s importance looms larger when it comes to employment, with nearly two-fifths (i.e. 37 percent) of jobs currently coming from the sector. Still, the services sector accounts for close to half of both output and jobs in the economy. But if one considers agroprocessing and agricultural inputs manufacturing and trading (i.e. agribusiness sectors) along with basic agricultural production, about 40 percent of GDP and two-thirds of jobs in the economy arise from agriculture (Tolentino et al. 2001). Unfortunately, agriculture also displays the most erratic growth among the economy’s major sectors, with growth rates tending to fluctuate widely from quarter to quarter (Figure 2). The sector’s recent growth performance manifests the same volatility. While the sector’s full year real GDP growth performance was well within the target for 2004 and exceeded the preceding year’s performance, the most recent quarters have seen dramatic slowdowns from previous quarters, due mostly to unfavorable weather conditions. Notwithstanding these challenges, the critical role of the agriculture sector
References: Table 2: Yield Growth for Major Crops, Annual Average by Decade, 1961-2003 1961-1970 4.3 3.2 -2.6 0.1 1 1971-1980 2.6 1.5 1.7 0.8 13.4 1981-1990 3.3 2.8 4.9 2.8 -2.5 1991-2003 1.2 2.8 2.8 -0.8 3.1 Rice Corn Coconuts Sugarcane Bananas Source: FAOStat (2004) Table 3 Source: FAOStat (2004) Table 4 Source: Mundlak et al. (2004) Table 5 Sources: Bautista, Power and Associates (1984), Manasan and Querubin (1997) and Manasan and Pineda (1999) as compiled and cited in Habito et al. (1999) Table 6