Role of Agriculture in the Economic Development of a Country

The agriculture sector is the backbone of an economy which provides the basic ingredients to mankind
and now raw material for industrialization.

Agricultural sector plays a strategic role in the process of economic development of a country. It has
already made a significant contribution to the economic prosperity of advanced countries and its role in
the economic development of less developed countries is of vital importance.

It is seen that increased agricultural output and productivity tend to contribute substantially to an
overall economic development of the country, it will be rational and appropriate to place greater
emphasis on further development of the agricultural sector.

The Philippine economy posted a 6.1% growth in the fourth quarter of 2018, driven by the Services
sector which posted the highest share to GDP of 56.2%, followed by Industry (34.8%), and Agriculture,
Hunting, Forestry and Fishing (8.9%).

Among the major economic sectors in the fourth quarter of 2018, Industry grew the fastest at 6.9%,
mainly attributed to Construction sector which expanded by 21.3%. The Service sector came in next with
6.3%, while the Agriculture sector grew by 1.7%.
How does agriculture really affect our economy? And in the long run, how can agriculture truly make a
positive impact for the Filipino people?

1. Agriculture takes development to rural areas

According to an interview we conducted with Dr. William Dar, agripreneurship can bolster rural
development and create sustainable economies in many rural areas. Agripreneurship as a portmanteau
for agriculture and entrepreneurship and puts forward the concept of agriculture as no longer limited to
mere production but one that can be fortified by entrepreneurship. When agriculture becomes a viable
of source of income for rural communities, these areas can also begin to develop in terms of other
industries.

2. Agricultural development can lead to food security

It is obvious that agriculture is the food source of nation. The Philippines is considered to be one of the
most biodiverse areas in the world and the agricultural sector counts for about two-thirds of the
country’s employment. Why is it then that the workers in agriculture are also the most food insecure
and susceptible to malnutrition? When agricultural development progresses, through modernizing and
good governance, the Philippines can begin to have food that is sufficient and accessible to everyone.
When workers in the agri industry are well-compensated and gain purchasing power, they are able to
buy food and at the same time sufficient food supplies will drive prices down.

3. Agriculture is the key to unlock economic self-sufficiency

For micro, small and medium enterprises, agripreneurship and its game-changing potential can create a
culture of economic self-sufficiency. Many sectors depend on agriculture to provide raw materials.
When the Philippines can produce high-quality raw materials internally, the need to export these
materials will no longer exist. Creating a strong agricultural sector can in fact lead economic progress
through export.

4. Agriculture can lead to poverty reduction

Due to sheer number of workers in the agricultural industry, many of whom fall below the poverty line,
improving their lives through the development of their industry can positively contribute to the
reduction of poverty. Agripreneurship is seen as one way for workers in the agricultural sector to
become empowered citizens. By transferring entrepreneurial knowledge and skills to the agricultural
industry, many Filipinos whose source of livelihood is in agriculture are able to bolster their income and
savings. However, the challenge for agripreneurs is how to become more competitive. ““There are only
8,195 MSMEs in agriculture, forestry, and fishing or approximately 1% of the total 896,839 MSMEs,” Dr.
William Dar says. Furthermore, not many farmers are aware and interested in transitioning into
agriprneurship. “Farmers must be given access to credit, capacity training, links to manufacture and
trade, etc.”
Eight Paradigms

A paradigm is a set of concepts, practices or thought patterns that create a framework to define our way
of looking at something. Your age will influence your paradigms as you transition from the optimism of
youth to the caution of old age. If dad told you there was no future in farming, you were likely to believe
him, but his ideas were formed by his own disappointments.

We will translate our vision of ensuring food security with prosperous farmers and fishers by embracing
a strategy built around eight paradigms that make up our “new thinking” for agriculture.

They are:

Modernization of agriculture;

Industrialization of agriculture;

Promotion of exports;

Farm consolidation;

Infrastructure development;

Roadmap development;

Higher budget and investments for agriculture; and

Legislative support.

Modernization of Agriculture

Modernization and the use of modern technology must also cover all crops, including those with export
potential in processed or value-added form like coffee, cacao, cassava, tropical fruits, rubber, among
others. Relative to that, there is a need to diversify crop production in the Philippines as about 80
percent of the country’s farmlands are devoted to only three crops: rice, corn, and coconut.

Agripreneurship should also form part of the paradigm to modernize Philippine agriculture, as farming
and fisheries should be treated as business undertakings or industries. Agripreneurship is also one of the
components to industrialize Philippine agriculture.
Industrialization of Agriculture

Agriculture must be treated as an industry, with the objective of industrializing the value chain of every
agricultural commodity. While productivity increase is a major objective, it is equally important to
produce more income by value adding, processing, manufacturing, and developing markets for both raw
and processed agricultural products.

There is also a need to engage the private sector in investing and setting up of more agri-based
industries in the countryside and developing markets for agriculture products.

Relative to the industrialization of Philippine agriculture is creating the framework for the digitization of
farming and agribusiness activities in the country where credit is made available, affordable and
accessible.

Promotion of Exports

The country should have a systematic and long-term strategy in developing and promoting exports of
raw and processed agricultural products. This would require achieving economies of scale in on-farm
production that would generate sustained quantity and quality of export products.

The private sector’s role will be essential in developing and promoting agricultural products. At present,
the Philippines only has two agricultural products that earn at least $1 billion per year in export receipts:
bananas; and coconut products (mostly in oil form). Thailand has 13 types of farm exports earning over
$1 billion each year, Indonesia has five, and Vietnam has seven.

A convergence of efforts of the Department of Agriculture, and the Department of Trade and Industry
including other departments will be necessary.

Farm Consolidation

The government must promote and support farm consolidation arrangements to bring about economies
of scale, particularly for crops that require mechanization and massive use of technology. These
schemes include block farming, trust farming, contract farming, and corporative farming that will make
farming more efficient, where technology is used, where cost of production is reduced, and farm
productivity and incomes are increased.

Infrastructure Development

Agricultural areas need infrastructure development and logistics to improve their linkages to the
urban/domestic and export markets. Thus, a “Build, Build, Build” program is also a must for agriculture.

There is also a need to engage the private sector in a “build and transfer” scheme to accelerate the
development of national irrigation systems.

Higher Budget and Investments for Agriculture

The government and the private sector with the strong and popular support from the citizenry, must
provide the necessary budget and investment to grow and develop Philippine agriculture. The increased
budget will help unlock the bigger potential contribution of agriculture and agribusiness to the economy,
including more employment opportunities.

Legislative Support

The country’s agriculture sector needs the help of both the Senate and the House of Representatives,
for policy and structural reforms that need to be legislated and institutionalized.

Roadmap Development

The government, through the Department of Agriculture, should take the lead in generating the “big
ideas” for the roadmap, and should solicit inputs from the private sector and other stakeholders.

The roadmap should also actively involve the private sector, which may have more access to the export
markets and funding for research for development.

A value-chain approach to level up Philippine agriculture, while making sure the smallholders also earn
their fair share of the fruits of production along the value chain.

8 Problems of The Philippine Agricultural Sector

The Philippines is currently facing different problems especially in the sector of agriculture. These are
some of the problems we think that needs an urgent solution.

1. Small farm size; 78% farms are less than 3 hectares.

Most of our farms are have already shrunk in size due to the fast growth of our population. Therefore,
our country needs to build more houses, sacrificing the agricultural sector of our country.

2. Land is being encroached upon by the housing and industrial sectors

3. Absence of critical programs on efficient irrigation systems

Irrigation is an important factor in agriculture. Irrigation helps farmers keep their crops well-hydrated
and moist, especially during the warm seasons. Without irrigation, the soil would become dry and the
crops will wilt.

4. Inadequate management programs on soil, pests and diseases

Pests and crop diseases have been a major problem in the agricultural sector of the Philippines. It lacks
funding from the government. If these pests and diseases were to be left out of control, famine would
crawl across our country.
5. Reduced farm labor

Due to the fast industrialization of our country, many people prefer to do industrialized work instead of
planting crops for the nation to eat. Our farmers have started to grow old, and only few are replacing
our old farmers.

6. Expensive and inappropriate farm equipment for small farmers

Since we do not have much money for spending in agricultural needs, machinery needed for this has
become a great expense for our pockets.

7. Climate change and natural disasters

Our country is known to be prone to natural disasters like typhoons and earthquakes. What is not seen
is that most of our crops cannot resist extreme weather conditions like these. Encroaching climate
change can also affect our agriculture due to its effects like droughts.

8. Inadequate technology transfer mechanisms

Our technology regarding agriculture is not given enough attention. Our country lacks machinery and
technology to improve our produce.

Solutions of the Mendelian Economists

1-2. In order to solve these problems, it is good to consider the natural state of our farm lands. Most
farm lands are being replaced by buildings and houses dute to globalization but maintaining these lands
will help for the development in our agriculture.

3-4. To control and stop these problems, awareness is important as well as having a voice and a stand in
terms of this topic. Programs should be implemented by the government and providing subsidies for the
irrigation systems of the land. As a part of millennials, we can share our thoughts using social media to
campaign our advocacy to better improve our economy especially in agriculture for we depend on it in
terms of production.

5. To make the agricultural sector lively again, we can encourage citizens to farm again through
campaigning and education. Anything can be sparked using bare knowledge and motivation.

Evidence:

The number of Filipino farmers lessens each year. The average age of a Filipino farmer is 57. The
government has thought of ways in the past to fight this issue. For example the Republic Act No. 602
with a goal to establish a minimum wage law, to make it easier for farmers to earn money.

6. Science and technology is important. A project wherein it is agriculture-based would be a great idea
featuring different researches such as alternative and new machines, prcoesses, etc. which may help for
faster and better production of the country.
7. A possible solution would be good irrigation systems to prevent flood to damage crops.

Evidence:

Climate change and natural disasters are inevitable. The National Economic and Development Authority
(NEDA) is responsible for advising the Philippine President on national development planning. This
provides technical support in coordinating the formulation of national plans and policies for agriculture,
natural resources and agrarian re-form sectors.

8. Our country does not invest that much in Technology considering it is important when it comes to
agriculture. In order to have progress, new mechanisms and processes are important. Programs having
exhibits on researches will be a great and promising idea having Filipinos with great minds.

Agricultural Development and Plans in the Philippines

Southeastern Asian country of the Philippines faces many problems in the agricultural sector. This sector
employs around 37 percent of people in the country, being a major source of income for many
households.

Yet, this sector’s share in the country’s GDP has gone down over the years, showing a decline. The
Philippines government is also decreasing funding on agriculture. Starting in 2011, agriculture only
makes up about 4 percent of the national budget. This makes agricultural development in the
Philippines questionable.

To make matters worse, the Philippines is notoriously vulnerable to natural disasters, facing around 20
typhoons each year. For farmers, one typhoon or tropical storm could be enough to wipe out the entire
crop. Starting over with the work can be expensive and time-consuming. For example, coconut farmers
need up to 10 years for their crops to grow. The lack of financial support coupled with frequent natural
disasters leaves farmers in a compromising state.

As a result, 57 percent of agricultural households are impoverished. In comparison, non-agricultural

households are three times less impoverished. This rate is even worse in agricultural-dependant areas,
and reach up to 74 percent in Central Visayas.

Government’s Role in Agricultural Development in the Philippines

For these farmers, high poverty rates can be attributed to underemployment. Almost 70 percent of
underemployed Filipinos work in agriculture, forestry or fishery. While many farmers and agricultural
workers are searching for employment, the Government of the Philippines seems to be moving away
from reliance on local farmers, turning to imports instead.

In 2016, the Philippines was the biggest rice importerin the world, with close to 2.45 million tons of
imported rice. The lowered funding and employment of Filipino farmers put more than 12 million
people who work in the agricultural sector at risk. Evidently, more support needs to be given to farmers
in order to reduce poverty. Consequently, many poverty-fighting organizations target agricultural
development in the Philippines.

Performance of Philippine Agriculture, July-September 2019

Release Date: November 6, 2019

Agriculture

Agricultural production grew by 2.87 percent in the third quarter of 2019. Increases were recorded for
crops, livestock, poultry and fisheries.

Crops

Crop production which accounted for 45.19 percent of the total agricultural output went up by 2.01
percent during the quarter. Among the major crops, production of corn was up by 23.47 percent while
palay production decreased by 4.53 percent.

Livestock and Poultry

Livestock production was 1.63 percent higher this quarter.  It contributed 18.67 percent to the total
agricultural output. Uptrends in production were exhibited by hog at 1.96 percent and dairy at 6.48
percent.

Poultry production registered an 8.41 percent increment this quarter. It shared 19.44 percent in the
total agricultural output. All poultry commodities recorded production increases.

Fisheries

Fisheries production which shared 16.70 percent in the total agricultural output grew by 0.56 percent in
the third quarter of 2019. Milkfish, skipjack and seaweed registered increases in production.

Value of Production (at current prices)

At current prices, the total value of agricultural production amounted to PhP 395.3 billion, 3.64 percent
lower than the previous year’s record.