The government must pour efforts into agriculture and the education sectors to protect the country from a drastic rise in inflation and boost overall economic growth, stressed former Finance Secretary Margarito Teves.

He said lawmakers must speed up measures to consolidate small-scale farmers to achieve economies of scale which means massive agricultural production at lower costs.

Speaking before members of the Makati Rotary Club of Makati as the latter's guest of honor and speaker during its weekly meeting last 28 November 2023, Teves urged, "Lawmakers must amend the Comprehensive Agrarian Law to allow farm consolidation by increasing the five-hectare limit to 24 hectares."

In this way, Teves said farmers can take advantage of farming machines to increase harvest efficiently, resulting in cheaper food prices, especially rice.

Rice prices spiked by 17.9 percent in September from 8.7 percent in August, following India's export ban on non-basmati white rice and prior to the local harvesting season in October.

Real wages not keeping up with inflation

"Data from the Philippine Statistics Authority show real wages have not kept up with inflation.  Filipinos' average daily basic pay grew less than 21 percent from P391 in 2012 to P472 in 2022. Overall prices of goods increased by 35.3 percent in the same period," observed Teves.

There is actually a move by the current Marcos administration to consolidate at least 1,000 hectares of land for rice farming.

During his second State of the Nation Address in July, the President reported that the government has already identified 200,000 hectares of land distributed among 300 farm clusters thmanaged by 900 agricultural cooperatives.

Marcos added that the government has unused agricultural land spanning 52,000 hectares.

To further ensure affordable food, Teves said the government and private firms must exchange data and insights to extend technical and financial aid to the entire supply value chain in agriculture.

Develop more agriculturists

"The government should help develop more agriculturists, especially in extension workers who will focus on helping farmers enhance their productivity levels," he said.

"However, there should be greater private sector participation, especially from the conglomerates, in the supply chain to fight disruptions that drive up prices. This concerns collaboration also on post-harvest, dry and cold storage, logistics and retail distribution," Teves stressed.

Citing data from the Department of Science and Technology, the former finance chief shared that post-harvest losses, especially in fruits, range from five to 48 percent and at least 15 percent for vegetables.

"These exceed the global average of 14 percent. This is because the country has low refrigeration capacity per capita compared to other nations," Teves said.

He added that farmers also lack logistics infrastructure and management skills which pushes up consumer prices further.  "The Department of Trade and Industry said logistics cost accounts for 24 percent to 53 percent of wholesale prices," he added.

LGUs must raise agriculture budget

In terms of financing farm production, Teves said local government units or LGUs must raise their budget for agriculture, especially since the Supreme Court had already decided in 2019 to increase LGUs' revenue share from the national revenue through the Mandanas Ruling. This provides a 37.89 percent increase or around P263-billion additional revenue allotment to LGUs.

"There should be co-financing mechanisms that incentivize LGUs to provide more funding to crop plantations," Teves advised.

The former finance chief also supports the call of the Bangko Sentral ng Pilipinas for the speedy passage of the proposed amendments to the Warehouse Receipt Law.

"This can take advantage of technological innovations to improve farmers' access to agricultural financing and give financial institutions more confidence to lend to the sector," he said.

Amendments to the over a century-old Warehouse Receipt Law include digitalized transactions featuring a central electronic registry where goods and products can be deposited in exchange for a warehouse receipt that can easily be traded or sold to obtain credit.

Universal and commercial banks continue to lend less to agricultural workers at seven percent of total loans compared to 68 percent of the households, electricity, gas, air-conditioning wholesale and retail, financial and insurance and real estate sectors in mid-year.

Pursue multilateral, bilateral FTAs

Moreover, Teves said the government must "continue to pursue multilateral and bilateral free trade agreement opportunities" which grants low to zero tariff rates on exports of sensitive agricultural goods.

While these prevent consumer price hikes caused by food shortage, the friendly tariff rates also help increase farmers' income through exports amid high inflation.

In terms of education, Teves said the government must promote a longer apprenticeship period for the labor force to ensure competent services and high-quality products from the Philippines, resulting in higher demand from foreign consumers and projects from foreign investors for job creation for Filipinos.

"The duration must be increased from six months to a maximum period of three years, depending on the complexity of the skills being trained for," he suggested.

Digital skills a necessity

"Our students should acquire knowledge and skills that are more responsive and relevant to their needs and the demands of the market. Digital skills are now a necessity for everyone amid the shift to online activities," Teves added.

According to the Philippine Statistics Authority, national income from digital activities accounted for 9.4 percent of the gross domestic product last year, with revenues amounting to P2.03 trillion. This represented an 11 percent growth from the level in 2021.

Google's e-Conomy report shows Philippine revenues from digital activities could further grow to $150 billion by 2030. In the short term, it says internet transaction value could increase by 20 percent annually to $35 billion in the next two years.

Teves said it is also important for the government to "improve nutritional programs for school children by collaborating with the private sector," thus ensuring optimal mental and physical development of the country's future workforce.

According to the World Bank, learning poverty in the Philippines was among the highest in East Asia and Pacific at 91 percent last year. This means nine out of 10 Filipinos aged 10 cannot fully read and comprehend simple text, a situation that must be critically addressed by both government and the private sector.