Economic Update

The Philippines: Agriculture going greener

Asia | 6 Dec 2011

The Philippines is looking to encourage the development of organic farming, seen as a niche agriculture sector ripe with opportunity for the country. With the proper support, organic farming could work to boost high-value agricultural exports as well as incomes in the agriculture sector, which currently employs more than 30% of the nation’s labour force.

On November 8 President Benigno Aquino III announced that he had instructed the Department of Agriculture (DA) to direct 2% of its annual funding allocation to support programmes and policies covering organic agriculture. With the department in line to receive $1.2bn in the 2012 budget, organic food production is set to benefit to the tune of $24m next year, local media has reported.

“I expect the DA to exert double efforts to craft and implement policies and programmes to hasten the development of organic farming in the country under its National Organic Agriculture Programme,” he said.

A deeper commitment to organic farming would help improve food security in the Philippines, as well as answer concerns over environmental damage and climate mitigation, Aquino said during an address at a conference on organic agriculture in Tarlac.

Government agencies and local government units are also expected to back organic production ventures so that the country can meet its domestic food requirements, as well as tap into the growing international market for chemical-free food commodities, the president told a local newspaper.

According to the secretary of agriculture, Proceso Alcala, while organic products currently cost more than their non-organic rivals, the current spread is in part due to economies of scale. Once a larger volume of organic foods comes onto the market, prices will fall to a more competitive level, he told a press briefing on November 8.

“This is the future of Philippine agriculture,” Alcala said.

Although organic production may be seen as having significant developmental potential in the Philippines, efforts have thus far been moving somewhat slowly. While the Philippines already has legislation setting out the terms and conditions to assist organic farming, signed into law by Aquino’s predecessor Gloria Arroyo in April last year, the final steps required to activate the Organic Agriculture Act of 2010 have yet to be taken.

However, President Aquino has recently stated that the final rules needed to implement the legislation have been drafted, and that the law, along with the incentives it provides to stimulate organic farm production, would soon come into force.

The stated objective of the new law is to promote, commercialise and cultivate organic farming methods through the education of farmers and consumers, and to provide assistance to local government units, community bodies, non-governmental organisations, and other parties involved in the agriculture sector.

The legislation also provides for incentives to be given to organic producers, including a seven-year income tax holiday for organic farmers. Additionally, the law allows for subsidies for certification fees and other support services to facilitate organic accreditation, as well as duty-free importation of agricultural equipment, machinery and implements, and support from the Land Bank of the Philippines.

The DA’s Bureau of Agriculture and Fisheries Product Standards will be charged with giving accreditation to organic certifying bodies in various regions, and will also be responsible for employing them with the necessary accreditation rules and procedures. The department has already been active in supporting organic agriculture, though the new programme should feature a more coordinated and focused effort than before.

The DA has also been funding training schemes for farmers in a number of regions, with four-week courses focusing on organic fertiliser production, as well as the planting and nurturing of organic rice. Additionally, informational seminars across the country are being held to raise awareness of the benefits of organic farming.

Among the issues that the DA is currently tackling are the potential cost savings associated with organic production. Climbing hydrocarbons prices have pushed up the cost of most chemical-based fertilisers, most of which are imported, as are many of the pesticides used by Filipino farmers.

While organic farming methods have traditionally been associated with higher prices, if hydrocarbons continue their ascent, producers could in fact reduce overhead by employing organic methods, especially as the sector begins to benefit from economies of scale.

The aim of achieving self-sufficiency in many agricultural products, particularly rice, may mean the industry’s focus will remain on cheaper methods intended for higher yields, if not higher quality, at least for the time being. However, by supporting efforts to develop both the production and demand side of organic agriculture, the Philippines may, in time, be able to have both quality and quantity.

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