Agriculture Reference
In-Depth Information
and only the farmers located near NFA warehouses (about 3 percent of all farm-
ers) can sell rice to receive price-based assistance. An assistance package con-
sisting of an appropriate level of trade protection and public expenditures in
agriculture will present a more strategic way of increasing the farm incomes of
more farmers. A better assistance program would focus on reducing systemic
inefficiencies in the market through capital outlays in production and market-
ing infrastructure, the inadequacy of which justified the formation of NFA, as
well as technology development.
PUBLIC EXPENDITURES FOR AGRICULTURAL DEVELOPMENT
. The Philip-
pines has lately done relatively little to support its agriculture. It has among the
lowest, if not the lowest, ratio of public expenditures for agriculture to total ex-
penditure and GDP among members of the Association of Southeast Asian Na-
tions. From an average of 10-12 percent between 1976 and 1983, the share of
government expenditures on agriculture in total government expenditures de-
clined to an average of 6 percent between 1992 and 1995. At the same time,
there has been a marked shift of government expenditures away from research,
irrigation, and community development (including rural roads) to agrarian re-
form, environment (which each claim one-fourth of government expenditures
on agriculture), and price supports (which claims another 7 percent).
This trend has to change, and there have been initiatives to do so. In the
wake of the country's accession to WTO, the national government had set aside
significant resources for the development of the country's agriculture. However,
the grain sector has been the prime beneficiary of this recent policy focus on
agriculture. Budgetary resources for the sector increased from Php 0.54 billion
in 1993 to more than Php 4.00 billion in 1997. Similarly, the Agriculture and
Fisheries Modernization Act of 1998 also offered a set of measures and invest-
ments to prepare the country's agriculture and fisheries sectors for global com-
petition, including a budgetary allocation to ensure funding for agricultural
R&D projects, extension, irrigation, and other infrastructure.
However, a major problem that has emerged in agricultural development
planning in the country concerns the capacity of the Department of Agriculture
to absorb agricultural development resources. Although a case can be made for
expanding the size of this department's field operations to process these funds
more quickly, a better option might be to involve local government organiza-
tions in identifying and implementing development projects. This point of de-
centralizing public expenditures for agricultural and rural development is elab-
orated below.
DECENTRALIZING AGRICULTURE SECTOR INFRASTRUCTURE DEVELOPMENT
SERVICES
. Government decentralization has been a key program of the Gov-
ernment of the Philippines. In 1991, the government enacted a law devolving
various governmental functions, largely in the social services and infrastructure
development sectors, to local government units (LGUs). Accompanying the de-
volution of various responsibilities was the institutionalization of internal rev-
