In what could be considered a stinging slap on Agriculture Secretary Emmanuel Piñol, economic managers said yesterday the farm sector is underperforming and constitutes a drag to growth.

Agriculture has really been a weak link and this structural issue has been pointed out by many economists

With the agriculture sector having grown at a negligible 0.8 percent in 2018, economic manager said measures are being taken to enhance farm productivity.

“Had the agriculture sector grown at its potential of 4 percent in 2018, full-year economic growth would have reached 6.5 percent equal to the low-end of our revised growth target last year,” Budget Secretary Benjamin Diokno said at a regular forum.

“Looking at 2018 gross domestic product (GDP) growth by industrial origin, the agriculture sector contributed a measly 0.1 percentage point to the full-year growth rate of 6.2 percent.

Simply put, the farm sector had virtually zero contribution to economic growth last year,” Diokno added.

Historically, the performance of the agriculture, forestry and fisheries sector has been erratic and subpar relative to the economy. The farm sector has posted low and inconsistent growth rates, frequently below annual gross domestic product GDP growth, across administrations.

Agriculture sector expansion was the highest under President Estrada, averaging 6.5 percent and lowest under former President Fidel V. Ramos.

President Gloria Macapagal-Arroyo has an average of 2.9 percent growth for the agriculture sector, Mr. Duterte hit 2.4 percent in his first two years, followed by 1.8 percent under President Corazon Aquino and 1.2 percent under President Benigno Aquino III.

“It’s for these reasons that the Duterte administration is prioritizing the agriculture sector. For our farmers and fisherfolk in the rural areas, higher productivity will mean higher incomes. At the same time, for consumers, this means lower prices for staple food items like rice, vegetables, fish and meat,” Diokno added.

“Economic managers are working hand-in-hand with officials in the agriculture and agrarian reform sectors to put it in a more sustainable and less volatile growth trajectory,” Diokno said as he cited historical data on the employment share and contribution to GDP of the agriculture sector that he said speak volumes that it is the “laggard industry” of the economy.

As of the end of last year, the agriculture sector accounted for a fourth of total employment in the Philippine economy. However, its share to total GDP is disproportionately low at less than a tenth, specifically 8.1 percent (at constant 2,000 prices). In historical terms, this is not much better as in 1992 the agriculture sector accounted for as much as 45 percent of total employment while only accounting for 16 percent of total output. This employment-output mismatch is common for developing countries with less productive agriculture sectors.

“Agriculture has really been a weak link and this structural issue has been pointed out by many economists. It has consistently grown at rates lower than overall economic growth and has failed to reach its potential economic contribution despite the great number of people the agriculture sector employs,” Diokno said. “This is bad news because the poor are concentrated in rural areas where agriculture is the primary livelihood. Clearly, inadequate policies, vulnerability to natural hazards and bureaucratic mismanagement all had a hand in the sluggish performance of the agriculture sector throughout the years,” he added.

In more advanced economies with better technology, the employment share and economic contribution of the agriculture sector are tied closer. For instance, in 2017 the farm sector of Malaysia accounted for 11 percent of total employment while contributing 8.8 percent to GDP.

South Korea also employs 4.9 percent of workers in agriculture with the sector accounting for two percent of GDP.

“This means that as countries enhance agricultural productivity, they are able to maintain a lean yet productive farm sector while also enabling most workers to shift to high-value employment in the industrial and services sectors,” Diokno said.

“In our last Cabinet meeting, we discussed some measures to help farmers and fisherfolk,” the Budget Chief said. “The LandBank discussed ways to allow small farmers access to credit and loan facilities. That’s one step in ensuring more resources are channeled to the agriculture sector,” he added.

“Weak agriculture growth and last year’s inflation spike exposed the vulnerabilities of the farm sector. The DBM (Department of Budget and Management) is currently reviewing studies by agriculture experts in an effort to find ways in enhancing resource allocation in the farm sector,” Diokno said.

The Organization for Economic Cooperation and Development has recommended directing more resources in improving supply-chain connectivity and focusing on agricultural research and extension services that leads to long-term productivity gains as opposed to emphasizing input subsidies.

“We will coordinate with the concerned agencies, especially the Department of Agriculture (DA) and the National Economic and Development Authority. Once ready, we will share our findings in hopes of reversing the poor performance of agriculture. This will take a holistic approach, both in policy formulation and program implementation,” Diokno said.

Rest assured that the DBM will continue to play its part in ensuring that resources are allocated to most beneficial and most efficient purposes, he added.