See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/353295428

Sector Study on Philippine Agriculture

Research · July 2021

CITATIONS READS
0 13,084

2 authors:

William Madayag Hajime Estanislao

University of the Philippines University of the Philippines
1 PUBLICATION   0 CITATIONS    1 PUBLICATION   0 CITATIONS   

SEE PROFILE SEE PROFILE

Some of the authors of this publication are also working on these related projects:

A Sector Study on Philippine Agriculture: Is it Growing or Dying View project

All content following this page was uploaded by William Madayag on 16 July 2021.

The user has requested enhancement of the downloaded file.

 UNIVERSITY OF THE PHILIPPINES
Technology Management Center
Diliman, Quezon City

A SECTOR STUDY ON PHILIPPINE AGRICULTURE

IS IT GROWING OR DYING?
In partial fulfillment of the requirements for the subject:
TM 206 - Technology Marketing and Commercialization
2nd Semester, AY 2020-2021

Submitted by:

WILLIAM MADAYAG / HAJIME ESTANISLAO

Submitted to:

PROF. CATHERINE PACIA, MTM

TMC Lecturer

June 18, 2021

 1

Table of Contents

I. Executive Summary …………………………………………………………………. 3

II. Industrial Structure …………………………………………………………………. 8
III. Macro-Environmental Trends ……………………………………….………….... 11
IV. Industry Value Chain ………………………………………………………………. 14
V. Market Segments …………………………………………………………………… 18
VI. Conclusion ………………………………………………………...………………… 19
VII. Recommendations …………………………………………………………………. 20
VIII. Bibliography ……………………………………………………………………….... 22
IX. Exhibits ………………………………………………………………………………. 25
 2

Acknowledgement

Foremost, we wish to thank the LORD of the harvest our ALMIGHTY GOD for all the
bountiful blessings that our nation has received and at the same time pray for more
workers in his vineyard (in the agriculture sector) that would sincerely make a
difference in order to reduce poverty and increase the income of those who are even
below the poverty threshold in this very industry that feeds the entire country.

We pray that the day will come that our younger generations will consider this sector as
a profession and as a business to ensure the continued succession of stewardship that
is necessary to provide food provision for everyone.

We wish to thank our Professor, Ms. Catherine Pacia, MTM for all the support she has
extended; for the wisdom, knowledge and learnings she has imparted with regards to
this subject and for the adjustment she has undertaken considering that she was
teaching from another country (Australia).

Special thanks to Mr. Chito F. Sace, PhD, an erudite scholar, a humble yet a radical
innovator from the Central Luzon State University and Agricultural Training Institute of
the Department of Agriculture for all his inputs and sharings with regards to the
problems, and challenges in this sector and the technologies he has fostered necessary
in redefining how farming or crops cultivation could be undertaken in the future to
improve the yields of our farmers and contribute to the food security of our nation.

Last but not the least, to all the Filipino Farmers who have spent their blood, sweat
and tears in feeding the entire nation, THANK YOU PO! We owe you our lives and as
such, we hope to give justice to all your sacrifices by promoting your welfare in this
sector study and hope that this paper will open the minds and hearts of everyone
especially the younger generations with regards to the importance of Agriculture.

-William & Hajime

 3

I. Executive Summary

It is our primary contention in this paper to discuss and analyze the current
trends and issues pertaining to a very important sector in the industry of the country but
sadly, this is often neglected and set aside by most people especially the younger
generations and this is our Agricultural sector.

We therefore aim to shed light on this sector’s history from the 1960s upto the
present to show how far we’ve come. We will echo the plight of farmers whose stories
are often left untold for we owe so much from them for without farmers, life in the land
would cease to exist.

Lastly, as students of Technology Management, we will also identify the role of

emerging technologies in this sector and promote its use in order to help our farmers
be competitive to help them address the effects of tariffs laws, climate change, increase
in population among others.

What is Agriculture?

The word agriculture came from two latin words (i.e., Ager = means Field and
Cultura = Cultivation).1 Agriculture therefore refers to the cultivation and production of
crops and plants and raising of livestock for economic purposes and human needs2; it is
also termed as the science and art of farming including the work of cultivating the soil,
producing crops, planting forests plants and trees, raising livestock and rearing fishes.

There are three sets of discipline or spheres in Agricultural crop farming (i.e.,
geoponic = normal farming; hydroponic = cultivation of crops using water; aeroponic =
cultivation of crops using air). We have a land area of about 30 million ha; 40% or 12
million ha is devoted to agriculture and 85% are into small scale farms in rural areas.3
Our Agri Products commonly include rice, corn, bananas, coconuts, sugarcane,
mangoes, abaca, coffee, pork, beef, eggs and fish. Our top agri exports include refined
coconut oil, coconut water, bananas, mangoes and pineapples and the top destinations
of our agri exports are in the USA and Japan. 4

1
Glynnis Chantrell ed. (2002). The Oxford Dictionary of Word Histories. Oxford University Press. p. 14
2
Explore Agriculture
https://exploreagriculture.com/what-is-agriculture/
3
Domingo Angeles, State of Philippine Agriculture (Presentation) slide no. 3, UPLB last March 16, 2009,
https://www.slideshare.net/KarlLouisseObispo/state-of-philippine-agriculture
4
Karl Obispo, Overview of Philippine Agriculture (Lecture) slide no 36, UPLB last accessed June 13, 2021,
https://www.slideshare.net/KarlLouisseObispo/7-overview-of-philippine-agriculture
 4

Why Agriculture?

Agriculture plays a significant role in the Philippine economy. Involving about 40

percent of Filipino workers, it contributes an average of 20 percent to the Gross
Domestic Product. This output comes mainly from agribusiness, which in turn accounts
for about 70 percent of the total agricultural output.5

The neglect of the agriculture sector and the uneven distribution of resources
worsened the poverty situation in rural areas. Only the remittances of migrant workers
to their families have enabled the latter to survive crippling poverty brought about by
stagnant agricultural productivity, stiff competition from cheaper food imports, and
periodic droughts and floods that devastated crops and livelihoods.6

Despite the world's social and political challenges, our country faces an even
greater challenge: Agriculture. Agriculture is one of the most important sectors in any
society because it is the only one that feeds and nurtures its people while also
cultivating the land's ecology; without farmers, we would all perish. We owe a great deal
to our farmers because they single-handedly cultivated an entire nation; not only did
they feed the people in times of need, but they also fought for the country's well-being.
Their life is built on blood, sweat, and tears. However, we should ask ourselves, "How
do we repay them?" As a result, there would be no way to survive without them.

Snapshot of the Agriculture Sector of the Philippines

1960s

The Philippines is proud to be one of the top agricultural countries in the world;
we are renowned for world class farmers and this kind of reputation led international
students to study our farmers and this is the reason why the International Rice
Research Institute was established. IRRI is the largest non-profit agricultural center and
was established in Los Banos, Laguna.

It paved the way to prevent the Asian famine in the 60s; 60’s was our heyday.
Agriculture contributes 31% of the GDP and now it's only 9%.

1970s - 2017

Per ADB, the average value added in the percent GDP index of the Philippines in

5
CIDA-LGSP (Canadian International Development Agency-Philippines-Canada Local Government Support Program). 2003.
Re-Envisioning Local Agricultural Development: A Guide for Development Managers
6
Food and Agricultural Organization of the United Nation (FAO) last accessed June 13, 2021
http://www.fao.org/3/ae946e/ae946e03.htm
 5

terms of agriculture is just 21.02% (minimum of 10.18% in 2017 vs. maximum of

31.06% in 1974)7 and this only proves that the Philippines is not an agricultural
economy anymore strictly speaking. The general trends in the last two decades present
a dim picture of the agriculture sector.8 Significant decrease in productivity, high
production costs, and low government support to the sector, among other things, have
led to a crisis in Philippine agriculture.9

2018

On June 18, 2018, Philippine Star, a reliable news company published that the
agriculture sector in the country is dying. According to the article, the agriculture sector
employs only 25.96% of Filipinos and this means that, this sector is still struggling to get
a traction as a priority as compared to some of its neighboring countries who prioritize
and give more importance to agriculture (India 43.3%, Indonesia 29.63%, Thailand
32.14%, Vietnam 38.06%, Myanmar 48.2% ).10 Per the recent study of the World Bank,
broad income inequalities exist in the Philippines, with 27.6 million Filipinos surviving on
less than USD 1.25 per day. Despite the fact that micro, small, and medium enterprises
(MSMEs) account for 95% of all business enterprises in the Philippines, there are
barriers to entry and development for entrepreneurs and small businesses. Though the
government has made substantial infrastructure investments in recent years, there is
still a significant backlog that is impeding economic development.

Agriculture is one of the most important sectors in the Philippines – representing

32% of land use; contributing to 10% percent of national GDP; and employing 31% of
working Filipinos in 2013. However, the agriculture sector continues to experience
declining productivity, efficiency and competitiveness, most significantly in crops where
the Philippines has a comparative advantage. The Philippines Agribusiness Program
can be seen as an effort to effectively respond to the decline in agricultural productivity
and competitiveness. The Philippines Agribusiness Program (2013-2017) supports the
Government of Philippines in its effort to improve the productivity and the
competitiveness of Filipino farmers and the agribusiness sector in order to ensure the
sustainable economic development of rural areas in the Philippines.11

We can simply infer from the illustration in Figure 1, which is taken from the
Department of Budget and Management, how the past Philippine Presidents were able

7
Global Economy/World Bank: GDP share of Agriculture in the Philippines
https://www.theglobaleconomy.com/Philippines/share_of_agriculture/
8
Cielito Habito et. al. Philippine Agriculture Over the Years: Performance, Policies and Pitfalls. January 2005
9
CIDA-LGSP, 2003
10
Distribution of the workforce across economic sectors from 2010 - 2020 in India, Indonesia, Thailand, Vietnam.
https://www.statista.com/statistics/271320/distribution-of-the-workforce-across-economic-sectors; for Myanmar,
https://tradingeconomics.com/myanmar/employment-in-agriculture-percent-of-total-employment-wb-data.html
11
M. Anderson, “Philippines Agri-business program Mid-Term Review”
 6

to contribute to agriculture. From our Agricultural “heyday” during the time of then
President Marcos, the growth from this sector has experienced significant setbacks due
to non prioritization. However, it's noteworthy to consider the efforts made under the
presidency of Joseph Estrada where significant growth was observed as compared to
his former predecessors and those who replaced him. If one is to show that he/she is
pro-poor, this can significantly be shown in agriculture for this is the only sector that
feeds the entire nation and its people.

The illustration on Figure 2 shows the percentage how much the past Philippine
Presidents have spent in this sector. Based on this chart, all the Presidents after
President Marcos gave a little importance to Agriculture in terms of the National
Government Expenditure where this sector share is only about 3.2% upto 4.7%.

Likewise, the charts on Figures 3, 4 and 5 only show what the present
government’s prioritization is. The Duterte administration allocated significant resources
in Infrastructure and Education. It has even increased its actual budget for Defense.
However, the most important sector was consistent in receiving the least prioritization
for the national budget.

What caused the decline?

It is imperative that we discuss and highlight the significant factors that led to the
decline of this sector. Based from our references, the decline in Philippine Agriculture
can be attributed mainly into three factors:

1. Government’s failure to protect the interest of our local farmers in favor of

globalization and commercialization
2. Employment across other industry sectors are also luring away farmers to
take on and adapt a different role (e.g., manufacturing, BPOs and
construction) thus affecting the number of those who work for the
agricultural sector and thus affecting its outputs
3. Failure to use emerging technologies (as compared to other neighboring
nations) to improve the produce in this industry to better supply the food
requirements of the nation.

All these factors when combined together is a formula for food shortages which
threatens the lives of the citizens, the very fiber of the nation.

In hindsight, we are not saying that other industries are not important. It is the
lack of attention and protection on this very important sector that we are aiming to
 7

expound on. For example, the concept of Urbanization is not bad, however, it is the lack
of strategic foresight to consider the protection of prime agricultural lands being
converted into residential subdivisions or other usages like malls and amusement parks
that has to be averted. Likewise, Globalization which is defined as a worldwide
movement toward economic, financial, communications and trade integration12 wherein
businesses begin operating internationally has also led to importation of other
agricultural products from other nations and this has also led to massive corruption in
the dynamics of importation. The government’s failure to curb the importation of other
agricultural products in favor of local produce has stifled the income of our farmers and
will kill this industry in the long run.

As a result, the younger generations are finding it difficult to consider “farming” as

a source of their future livelihood. Now, this should have a grim effect for all of us. If the
farmers will become extinct because of meager income, what would happen to them
and what would happen to us? How will our country thrive if there will be no food? Other
countries over Asia are putting in all efforts in becoming self-sustaining countries by
prioritizing agriculture. Worst, Filipinos only taught them in the 1960s how to farm, yet
now, they are a more developed and stronger nation.

Is there hope for the Philippine Agriculture?

Nature has its trivial way to make us remember what is essential in our
day-to-day existence. From the various and significant lockdowns due to pandemic, we
can see that it was food that has been sustaining us throughout our pandemic journey.
Various private, public, NGOs and small enterprising individuals joined hands to bring
food to those whose lives and livelihoods were destroyed by COVID-19 pandemic.
These food provisions were produced by the Agriculture sector whom our society has
been neglecting all along. Taken into logical extremity, if this sector has died already
due to circumstances which we earlier stated, what will happen to us at the onset of
pandemic? We will be fighting or hurting each other (similar to other 3rd world countries)
just to get scant food provisions.

According to the 2020 annual report by the Department of Agriculture, the Covid
19 pandemic was the worst crisis it has faced since World War II. This year has also
been the most challenging year for the Philippine agriculture sector. Our farmers and
fishers wrestled with so many stresses from various natural calamities like volcanic
eruption, infectious animal diseases (swine flu), crop pest infestations and the
pandemic. However, it was also during this same year when this sector rose to the
12
Globalisation Marketing Dictionary, Monash University Monash Business School Webmaster Team.
Last updated: Feb 2018. Copyright © 2021 Monash University. ABN 12 377 614 012
https://www.monash.edu/business/marketing/marketing-dictionary/g/globalisation
 8

occasion and kept the country’s economy afloat with steady and affordable food supply
for the population. This was a game changer since this gave birth for “reboot” in the
Department of Agriculture and identified this year as a “rebound” year where growth in
this sector is projected to hit a growth rate of 2% to 3% from the previous very dismal
growth performance of 0.6% - 0.7% during the previous years.13

Considering the resiliency of the Agriculture sector in the face of pandemic and
the emerging technologies which will definitely improve this (e.g., rice combines,
autonomous tractors, intelligent farming tools, drones, hybrid seeds, solar powered
irrigation system, guide maps and mobile agriculture apps), let us take advantage of the
particular “reboot” in Agriculture that will be spearheaded by the government as there is
still hope in establishing a larger footprint of this industry in the country and thereby
saving our nation’s future.

II. Industrial Structure

Agriculture in the Philippines is a declining sector in terms of total employment.
The World Bank estimates 22.86% of Filipinos are employed in the sector and has been
on the decline from 44.91% in 1991.14

The Philippines is the location of the International Rice Research Institute, an

organization spearheading rice-based, agri-food systems research as well as
collaboration and innovation in the agriculture sector building strong partnerships
domestically and abroad.15

Despite the strong agricultural influence in the economy during the 90s, the
Philippines showed strong neglect, reflecting only 8.9% of the gross domestic product
as coming from the agriculture sector and the same sector improved to 10.1% share of
the GDP despite the economic effects of the COVID-19 pandemic.16

The Philippines is among the top importer of rice17 and is an obvious effect of the
declining agriculture sector. With only P71 billion as the 2021 budget for agriculture.18

13
Department of Agriculture, The Year in Review: Philippine Agriculture Rises to the Challenge of the
Times, 2020 Year-End Report
14
Employment in agriculture (% of total employment) (modeled ILO estimate) - Philippines | Data. (2021).
World Bank.
https://data.worldbank.org/indicator/SL.AGR.EMPL.ZS?end=2019&locations=PH&start=1991&view=chart
15
https://www.irri.org/about-us
16
https://www.dti.gov.ph/statistics/gross-domestic-product-gdp/
17
Asian Journal, Philippines remain the world’s largest rice importer
https://www.asianjournal.com/philippines/across-the-islands/the-philippines-remains-the-worlds-largest-ric
e-importer/
18
Department of Budget and Management - PRRD signs the P4.506 Trillion National Budget for FY 2021
 9

The government is still showing minimal support to industrialize and to innovate on a

declining sector which still accounts to 34.3% of the poor farmers involved, driven by the
costs and yield related to their crops and product.19

Despite the decline and the still actions towards improvement and support, the
sector is beginning to capitalize on the use of technology as a focal point to increase
productivity and incomes by providing farmers, fisherfolk, rural women, the youth,
indigenous communities, and farm families the technical, marketing, and financial
support. Food and Agriculture Organization of the United Nations (FAO) and the
Department of Agriculture (DA) promotes the use of technology to monitor, assess, and
implement early warning systems relating to natural disasters and its effects; FAO and
DA also aims to integrate technologies such as the digital infrastructure to market and
promote products to the consumers.20

In cooperation with DICT, DA has envisioned that the agriculture sector needs to
have a national adoption of information and communications technology to address the
gaps within the value chain, potentially preventing pocketed effects of isolated
implementation. This being an aligned strategic approach of the DA, both the private
and public sectors are mandated by the Agriculture and Fisheries Modernization Act of
the Philippines (1997) to take advantage of the emerging technologies for the
enhancement of food security, easier access to markets and information that supports
rural livelihoods.

With the current state of agriculture in the Philippines still relying on human and
animal power, simple farming implementations, and the lack of mechanization and
innovation, and access to food technologies, can simply be compared with the first
industrial revolution.

According to the Philippine Statistics Authority, agricultural production decreased

by 1.2% in the first quarter of 2020, an increase of 0.5% in the second quarter, an
increase of 0.7% in the third quarter, and a decline of 3.8% in the last quarter of 2020.
This is the second decline year-on-year, with 2019 posting 0.1% decline.

Even with the overall decline due to the effects of the COVID-19 pandemic, the
Department of Trade and Industry and DA have set an end-to-end market-based system

https://www.dbm.gov.ph/index.php/secretary-s-corner/press-releases/list-of-press-releases/1778-prrd-sign
s-the-p4-506-trillion-national-budget-for-fy-2021#:~:text=President%20Rodrigo%20Roa%20Duterte%20to
day,to%20the%20COVID%2D19%20pandemic
19
National Anti-Poverty Commission - Statement: Organic Farming is the sustainable solution to uplift the
lives of the farmers
https://napc.gov.ph/articles/statement-organic-farming-sustainable-solution-uplift-lives-farmers
20
FAO Philippines Newsletter - December 2020 http://www.fao.org/3/cb3778en/cb3778en.pdf
 10

that is supported by a digital platform aimed to modernize marketing and connect food
producers directly to consumers, effectively eliminating trading layers.21

In 2018, even before the effects of the COVID-19 pandemic, agritech as it is

called is starting to take shape through the initiatives of Harbest AgriBusiness Corp in
promoting technologies for agriculture such as F1 hybrid seeds and WR-801
Multifunction Hand Tractors (Barcelona, 2018). The company, which was established in
1997, pushed for the innovation of the agriculture technologies starting with hybrid
seeds to development of sustainable crop nutrition and inputs to efficient labor
machines like drones and tractors.22

With agriculture starting to implement digital transformation on parts of the sector,

agritech startups started tackling issues related to funding and platforms for producers
to take advantage of with the objective of profiting from their potentially improved yield.

Cropital, a crowdfunding platform augments crowdsourced funds to support

farmers with the financial help they need.23

FarmOn, another crowdfunding platform helps farmers with their financial woes.
This assistance is extended as FarmOn owns 96 hectares of land that is managed by its
partners and local farmers.24

Tagani meanwhile focuses on the educational needs, utilizing a digital platform to

bring agricultural information in the style of online learning that promotes and advocates
sustainability.25

With these three companies becoming the frontier of a digitally transformed

agriculture, and the foundation built upon the traditional sector by existing agriculture
businesses, technological innovation in this sector is starting to take shape.

With the strong presence of digital transformation in the services industry and the
growing numbers of Filipinos gaining access to the Internet, possible integration of the
technology to traditional agriculture sector that is stagnated has become one of the
Department of Agriculture’s priorities when it comes to providing the needed help in
increasing the potential of the producers, especially when there are little to no middle

21
Department of Agriculture, The Year in Review: Philippine Agriculture Rises to the Challenge of the
Times, 2020 Year-End Report p. 12
22
https://www.harbest.com.ph/about
23
https://www.cropital.com/learn/how-it-works
24
https://community.farmon.ph/
25
https://tagani.org/pages/about
 11

men included in the process. Connecting producers directly to the consumers limits the
influence to the costs it promotes more information to and from the sector and the
consumers. This partnership is an important aspect of the sector that is supporting the
country despite it being just a small contributing factor to the economy; this has been
highlighted sorely in the midst of the COVID-19 pandemic.

Overall, including the pain points of the sector and the well established notion of
the Philippines as an agricultural country, the most obvious state is the sector being at
the back seat of the economy and is one of the least drivers when it comes to
innovation and technological output. This was often reminisced during the strong
performance of rice exports but as the population grows and the shift of interest towards
other industries as described by the Philippines’ GDP, agriculture can only grow bigger
and better as there is a big room for improvement.

III. Macro Environmental Trends

Social, cultural, demographic, and environmental factors

The Philippines being one of the supposedly agricultural countries competes with
other ASEAN nations when it comes to exports while maintaining a healthy lead on
imports such as rice. Despite the old notion that the Philippines is a powerhouse when it
comes to rice exports, this has been a long gone endeavor as the country is now the
biggest importer of rice; this is a threat that looms over the Philippine economy as
Filipinos are culturally and socially unable to cope up with other sources of staple foods
such as root crops and various other produce other than rice (Sace, 2021).

The farmers, fisherfolk, and related workers in the value chain are not prioritized
when it comes to industrialization and support; the Department of Agriculture is on the
latter half of the overall budget management, with possible plans of increasing support
towards agricultural innovation hindered by the total perceived growth in the sector. The
department is aiming to include the younger generation by supporting modernization
through different programs and start-up capital, and the establishment of DA’s
agricultural training institute that integrates initiatives for the youth.26

According to NEDA in 2015, the median age of the working population in the
agriculture sector is 23.4 years old. This is a factor that only gives hope due to the
increasingly transformed society wherein digital and e-commerce prevails over their
traditional counterparts and the youth is at the center of these emerging technologies.

26
DA Communications Group. (2020, February 18). DA Chief: “Innovations will fuel Phl agri
industrialization.” Official Portal of the Department of Agriculture.
https://www.da.gov.ph/da-chief-innovations-will-fuel-phl-agri-industrialization/
 12

The agricultural technologies involved are already recognized as much needed

items to be of priority; this however comes with a price and local farmers, laborers, and
producers tend to have lower income and revenues, currently stands at P331.1027. This
2019 average is almost within the lower range of the average minimum wage of P316 to
P537 for 2021. As technologies evolve, costs and related spending also increase
accordingly; this is seen as a burden but a huge opportunity for the sector.
Mechanization and improvement of the sector has been in the talks, on paper, and in
training but these are all lost in the increasing neglect, worsening climate in the country,
and the highly political strategies and the government being preoccupied with many
things (Sace, 2021).

Changing perception towards agriculture is also one of the important things to

consider, especially with the average age of workers being enabled by emerging
technologies. With the DA and its 8 paradigms to level up agriculture, the efforts to
continuous improvement within the sector and the connected aspects such as
infrastructure, budgetary decisions, legislative supports, and promotion of exports are all
integrated into generating the next steps of food security and resilience and growth of
the sector.

Between 2006 and 2013, the sector is hit by a devastating 78 natural hazards in
the form of extreme weather, costing USD 3.8 billion28, this prompted to increase
essential efforts into minimizing extreme weather impact and to provide better risk
reduction information to the local workers, and by upgrading tracking and preventive
measures through the use of technologies, and with cooperation with PAGASA and
NAP-ag co-led by the UNDP, protection of livelihoods and agricultural products become
much more effective.

Political, governmental, and legal forces

Despite the widespread effect of the COVID-19 pandemic, the Philippine

agricultural sector grew and continuously providing by not stopping any farming and
fishing activities, workers being exempted from quarantine and supporting businesses
such as animal clinics and essential supplies are exempted from checkpoints and
quarantine29, and the Inter-Agency Task Force on Emerging Infectious Diseases
approved a protocol to speed up transport of goods and major agro-fishery products to
Metro Manila from several parts of Luzon.
27
Philippine Statistics Authority, 2019 Report Trends in Agriculture Wages
https://psa.gov.ph/sites/default/files/Report_2019%20Trends%20in%20Agri%20Wage%20Rates_signed.p
df
28
https://www.adaptation-undp.org/philippines-improving-climate-forecasting-farmers-and-fisherfolk
29
Philippines | Agricultural Policy Monitoring and Evaluation 2020 | OECD iLibrary. (2020). Philippines |
Agricultural Policy Monitoring and Evaluation 2020 | OECD ILibrary.
https://www.oecd-ilibrary.org/sites/2cb7b858-en/index.html?itemId=/content/component/2cb7b858-en
 13

Technological Forces

Agricultural technology in the Philippines is also one of the neglected aspects of

the sector; the involved technologies are available for purchase or lease, but are
hindered by the actual costs related to the machinery.

The improving information and telecommunications industry is now becoming a

pillar of the Department of Agriculture’s approach to transforming the sector into an
IT-enabled contributor through their programs30 and according to Secretary William Dar,
the sector is starting to harness systems and technologies that will greatly improve the
yield, to increase the sustain, and help industrialize the sector by capitalizing on the
streamlined approach and cost-efficient measures.

Partnership with other agencies such as the DICT is becoming increasingly

visible as the inter-agency approach becomes the norm especially during and after the
COVID-19 pandemic. An example of this approach is the project to build and enhance
connectivity of remote areas, especially rural farmlands, and to allow improvement of
the country’s Internet in general.31

Economic Forces:

As the agricultural sector heavily relies on government support and the positive
economy as an output of spending, the sector grew despite the effects of the COVID-19
pandemic. This shows how resilient the sector is when faced with calamities from
weather-related to diseases; it is imperative however to not overly rely on government
support but to increase collaboration between the agricultural sector and the private
entities by supporting each other through possible shared values and mission.

According to Dr. Sace, urban farming with the help of information and
telecommunications technology and both aquaponics and aeroponics, and by tapping
the growing interest of the general public to growing flowering plants, possible
sustainable farming to emerge as small businesses or for private consumption will
compound and eventually help the sector in every little way (Sace, 2021).

With the country’s wages impacted by job loss, unstable local and world markets,
higher imported goods and low export, and the growing daily expenses due to
numerous new essential items brought by the COVID-19 pandemic, the typical worker

30
DA Communications Group. (2020b, August 20). DA speeds up digitalization of the agri sector, farmers’
registry. Official Portal of the Department of Agriculture.
https://www.da.gov.ph/da-speeds-up-digitalization-of-agri-sector-farmers-registry/
31
DICT, DPWH boost Philippine internet infrastructure. (2021, April 14). OpenGov Asia.
https://opengovasia.com/dict-dpwh-boost-philippine-internet-infrastructure/
 14

or employee now enjoys less financial prowess and this triggers a potential shift of
attitude towards spending, with agricultural products and services impacted especially
when it comes to food security.

IV. Industry Value Chain and Forces Driving Competition

Industry Value Chain

The agriculture sector of the Philippines can be described in a five-linked value

chain (Figure 6).

DTI is the champion of the value chain, enabling industrial development and
strategic clustering32. Within the value chain, the power that is basically lacking in the
Philippine agricultural sector is the industry that provides the input, or the raw materials
for products; this does not only impact the rest of the chain but the potential exports of
the sector to other countries (Sace, 2021). This is a fundamental problem in the sector
and production of raw materials also relies on the existing technologies, as well as the
institutionalized thought of manual labor due to the economic problems farmers and
fisherfolk were experiencing even before the industrialization of several other sectors.

According to the Food and Agriculture Organization of the United Nations (FAO)
shows that the producer at the beginning of the chain typically includes other services
and inputs such as fuel, fertilizer, machinery and other technologies, labor and other
utilities to start their activities. This is also highlighted as a major factor when it comes to
the success of the chain and these factors are mostly impacted by the economic
forces.33

By supporting the initial link, whether direct support from the government and
private sector, production of raw materials for processing and export becomes much
more bearable. The technologies involved cost more than what the producers make in
revenue and the threat of importation of goods lowers this further – the best example of
this is the rice importation of the Philippines. This specific need to import a staple food
product casts a negative impact on the farming sub-sector as farmers tend to compete
with the low price of imported rice. The rice tariff law is expected to help the economy
and promote competitiveness but this still hangs on the balance as hybrid rice is not
currently supported or used by local farmers at only 10% (Kumar, 2019).

The rice import and low export numbers are just effects of a slowly declining
agricultural sector; there is nothing but room for growth, especially with the current
programs and the potential of urban farming and gardening (Sace, 2021)
32
http://www.value-chains.org/dyn/bds/docs/889/pidsdps1435.pdf
33
http://www.fao.org/3/cb2622en/cb2622en.pdf
 15

Forces Driving Industry Competition

By using Michael Porter’s Five Forces Analysis (Figure 7), competition in the
agricultural sector of the Philippines can be summarized as a low-barrier and high risk
sector due to threat of substitution by purchasing lower priced imported goods over than
the local products, and with impact not realized until adaptation of the next generation
technologies as the industry transforms into Industry 4.0.

High risk due to the threat of substitution from imported goods or alternative
sources, especially with food. Alternative choices for food are subjective to the
consumers while both suppliers and buyers are left to rigid choices due to the effects of
the declining sector. The barrier of entry is low thanks to the other sectors growing
bigger and are sustained by the modernized society and how the services sector is
being selected over the agricultural sector by the general public. Initiatives on investing
and other socially funded activities are the lowest entry point into the agribusiness and
they are attached to the value chain by becoming the investors and consumers at both
ends of the chain.

Economic impact to the competition is also a factor due to the overall declining
economy due to the pandemic and this reflects to the bargaining powers of both
suppliers and buyers; according to PSA in May 2021, the country’s GDP declined by
4.2% with the agriculture sector shrinking by 1.2%; this is the 5th quarter in continuous
decline.

Radical and incremental innovations

The most notable innovation in the agriculture sector in the Philippines is the
hybrid rice developed in the International Rice Research Institute – IR8. This variety of
rice prevented the famine in the 1960s and became a staple variety of rice not only in
the Philippines but other countries as well. In relation to the radical innovation to the rice
variety, the Philippines is slowly catching up with different machinery and technologies
implemented to the sector. Farm mechanization through the use of a multi-function hand
tractor that increases efficiency by empowering farmers that can do multiple jobs.

Utilizing drones to spray fertilizer lessens the time farmers spend on lands and
the emergence of information technology for agriculture has started to produce
applications and data-driven systems that help the sector in managing data, track their
progress, and adapt to the weather forecast. Innovation to the farming sub-sector is
slow due to the lack of support and the high costs associated with machinery and its
maintenance. This is also true for the IT-enabled systems; the Department of Agriculture
 16

and its programs are aiming to build on mechanization and IT innovations to elevate the
status of the sector and to make it more profitable, sustainable, and efficient.

Life cycles of major technologies and products in the industry

Some of the major products of the industry is rice and corn34, which receives
technological advantages through the innovations of the varieties used in growing crops
like the IR8 and F1 hybrids respectively35. Hybrid varieties of crops receive support from
research through universities like the University of the Philippines Los Banos and its
research on different types of plants36, enabling food security and biodiversity. The
industry is being supported by the inclusion of the mentioned developments through
research of universities, government agencies, and the private sector and international
groups aiming to revitalize the Philippine agricultural sector37. Although the agricultural
sector is gaining traction, it is still well behind the other sectors that contribute to the
economy; workforce however is still more than the other sectors.

According to PSA in 2018, the agricultural sector still accounts for 23.1% and is
the second biggest number38. The Department of Agriculture aims to capitalize on the
workforce and to augment the already available technologies in the form of machinery
and information and communications technology as part of its programs.

Dominant designs and industry standards in technologies and products

The industry standard has been managed and referenced to the Agricultural
Machine Testing and Evaluation Center (AMTEC) since 1977 through the memorandum
of the Department of Agriculture and the University of the Philippines Los Banos. In
1997, the Republic Act 8435 or the Agriculture and Fisheries Modernization Act of 1997
established the group under the Department of Agriculture to be involved in all links of
the value chain, as well as conducting research, development, and inspections that
aligns the local standards with the international standards.39

34
Fact Sheet Philippines Women in agriculture, environment and rural production. (2003). FAO.
http://www.fao.org/3/ae946e/ae946e03.htm#:%7E:text=The%20Philippines%27%20major%20agricultural
%20products,bananas%2C%20pineapples%2C%20and%20mangoes.
35
Malasig, J. (2018, August 20). How technology is innovating agriculture in the Philippines. Interaksyon.
https://interaksyon.philstar.com/breaking-news/2018/08/20/131961/technology-innovating-philippines-agri
cultural-sector/
36
Araguas, K. (2019, August 8). UPLB-IPB introduces new crop varieties, hybrids. UPLB.
https://uplb.edu.ph/all-news/uplb-ipb-introduces-new-crop-varieties-hybrids/
37
http://ebrary.ifpri.org/utils/getfile/collection/p15738coll2/id/32328/filename/32329.pdf
38
Philippine Statistics Authority - Employment Rate in 2020
https://psa.gov.ph/statistics/survey/labor-and-employment/labor-force-survey/title/Employment%20Rate%
20in%20July%202018%20is%20Estimated%20at%2094.6%20Percent
39
http://www.bafs.da.gov.ph/history
 17

This reflects that the industry does not lack any standards or policies in effect to
make technological advancements and product innovations; this does not prove
however the acceptance and the lack of support to from the start of the value chain
when it comes to implementation and purchase of necessary input to mechanize the
sector or to improve the current state of manual labor. Despite the available
technologies, methods, and best practices, there are other potential causes that are
related to insufficient acceptance of the innovations; according to a 2017 study, about
42% of workers with better educational attainment prefer to work outside the agricultural
sector while the ones within were able to attain at least the secondary level.40

Resources and competencies used by firms as bases for competitive strategies

As the sector relies on the management and support of the government

agencies, private sector, and universities, resources and competencies used by firms
reflect both local and international standards. The AMTEC and the Department of
Agriculture creates references and programs made available to firms; this drives
competitive strategies in businesses related to the value chain, as well as the
supporting businesses that help the industry indirectly. The Department of Agriculture
has its programs that include innovative strategies to push the industry into the Fourth
Industrial Revolution, combining traditional agricultural strategic plans to the improved
information and telecommunications technology. This data-driven approach is then built
on the value chain that eliminates middle-men, therefore increasing value from both
ends without adding to the costs. This has been a critical approach proven to work
effectively during the COVID-19 pandemic as the sector becomes the only contributor to
the economy with positive growth in 2020.

Competitive advantages of the firms within the industry

Advantages of the industry typically lies on the manpower involved in the sector
and value chain. This however is becoming a small factor due to the aging workforce;
the sector is ramping up the use of technologies and transforming through the use of
digital technologies, but are met with some resistance. Some firms rely on investors to
the agricultural businesses, commonly related to the emerging information technologies
like the crowd-sourced funding efforts to help boost the sector by providing funds to the
first line producers.

The sector is declining and it can be seen as a competitive edge as there is no

way but up, the innovation and competitive strategies will further increase the
competitive advantages of the sector compared to others.

40
https://pidswebs.pids.gov.ph/CDN/PUBLICATIONS/pidsdps1731.pdf
 18

V. Market Segments (Customer Buying Profile, Products, and Emerging

Technologies)

Agriculture is divided into four sub-sectors (Figure 8):

1. Crop Farming - Crop farming is the cultivation of plants for food and for other
commercial uses (either thru geoponics, aquaponics and aeroponics).

2. Livestock - Refers to the management and breeding of domestic livestock or

farm animals for the purpose of obtaining their meat and products (milk, eggs,
leather, etc).

3. Fisheries - Is the enterprise of raising or harvesting fish and other aquatic life.

4. Poultry - Refers to the raising of domesticated birds such as chickens, ducks,

turkeys and geese for the purpose of farming meat or eggs for food.

Crop farming is still the leading sub sector in Agriculture as it accounts more than 50%
of this sector’s output.

There are also five (5) motivations that influence customer’s buying behaviour in
the agri sector.41

And these motivations also define where they will buy the agri products (i.e., in the
public market or private supermarket):

1. Price - It is believed that local public market provides cheaper foods than the
grocery stores in big malls

2. Lifestyle - Sometimes lack of time, opportunity and convenience (parking spaces)

can be a motivation in buying

3. Food Quality - Foods that are sold at the local public market are believed to be
better quality in terms of freshness compared to those at the private
supermarkets

4. Product Choice - Preference to buy canned goods, processed meats,

condiments and other preserved foods at the department stores because of the

41
Pascual et. al., Understanding Consumer Buying Behaviour Vol.6 (Iss. 3): March2019
 19

variety to choose from; for vegetables, meat and fish are commonly purchased
from the local public market

5. Support for Local Farmers - Territorial disputes in WPS has driven the consumers
to be positive in supporting local farmers believing that it was good to help them
in every possible way

Intermediaries Impact on Agricultural Products – From Farmer’s Perspective42

In the agricultural sector, marketing intermediaries are referred to as agents,

wholesalers, distributors and retailers who play a critical role. These are the channels
through which farmers can sell their goods at a lower cost. Farmers' risks are reduced
through intermediaries, who typically pay them for their goods before they are paid
directly, thus absorbing the risk of crop failure or declining prices (this is especially true
in vegetables). However, there is a need to regulate these forces as the farmers are
often discriminated against and exploited thus earning so little as compared to the
intermediaries (Figure 9).

Industry Competition

Realizing the importance of this sector, we can understand that the BIG NAMES
in the Philippines’ Business have invested heavily in agriculture. These businesses are
owned and controlled mostly by the Tycoons and some Filipino Oligarchs like Lucio Tan,
Ramon Ang, Lance Gokongwei, Jose Campos, Joey Concepcion (Figure 10). Though at
present, there are about 2,450 companies in relation to farming and 387 firms in
agriculture.

VI. Conclusion: Opportunities and Threats

There are innumerable number of threats in the Philippine Agri Sector but for the
sake of brevity we just would like to highlight some of the key issues confronting this
industry as follows:

1. Climate Condition (La Niña/El Niño) - The climate of the Philippines is highly
influenced by El Niño. This is associated with an increased chance of drier
conditions and La Niña is associated with an increased chance of wetter
conditions. ENSO is a naturally occurring phenomenon and has both negative

42
N. Vetrivel et. al. Intermediaries Impact on Agricultural Products – From Farmer’s Perspective
 20

and positive impacts on the various sectors of the society especially in the
Agriculture sector. 43

2. Increasing population - the steadfast increase in population can be a threat to

Agriculture simply because the outputs of this sector at present still falls short in
order to attain self sufficiency. This will result in almost doubling of demand in
terms of food consumption.

3. Land Conversion - significant agricultural lands are being converted to various

residential, community and industrial uses. Wanton land conversion can lead to a
faster demise of this sector simply because the arable lands will be reduced
significantly thus affecting agricultural productivity.

4. Lack of Interest due to Low Income - Due to low income in Agriculture and
opportunities in the other industry sector, the younger generations find it
unattractive to work in the field.

VII. Recommendations

The problems facing Philippine’s agriculture are deep and wide; any attempts to
solve them seem futile at worst and temporary at best (Calata) BUT STEPS MUST BE
MADE, ACTIONS MUST BE DONE! Thus we suggest the following:

1. Prioritize Farmers - Everything in this sector starts and ends with them. Thus
solving the plight of our farmers will solve more than half of this sector’s problem.
We should create a new breed of farmers by educating the younger generations
and familiarizing them with the new technologies available out there in the market
thereby creating agripreneurs and agri-scientists mindsets.

2. Increase in Government Support - We have seen the resiliency of this sector

this pandemic and how it has supported the nation (while other sectors which
were highly prioritized in the budget allocation were down). This should be a
redefining moment in the next budget deliberations to further ensure the food
security of the nation when another global pandemic of this magnitude will
happen again in the future. Globalization and Urbanization are not bad per se but
this should not override the importance of the agriculture sector. We cannot feed
our ever growing population if we continue to reduce those lands dedicated for

43
F. Hilario et al., El Niño Southern Oscillation in the Philippines Impacts, Forecasts, and Risk
Management, p.9 (Abstract), January 2009
 21

agriculture. In the future, we cannot rely on imports as developed/developing

nations will not be able to do this as they will prioritize their own people first.

3. Encourage Investment - This sector is too important to be left to the

government alone. But it should now be a collaboration and partnership among
the Public, Private, People sectors. We can further support the “One Town One
Product” or promote similar activities to bring in investment.

4. Promoting Sustainability - The chain is as strong as its weakest link. Therefore

we should ensure sustainability and strengthen all the Value Chain activities
involved in this industry across all sub sectors (Plant Plant Plant) from the farm
upto the tables of the general consuming public.

5. Well-Functioning irrigation system - Just as food is life for individuals, water is

life for the plants and therefore a proper irrigation system must be established
specially for those areas who are just awaiting the wet season just to plant. This
will make crops grow in these locations all throughout the year once completed
and will help us in achieving food security for the nation as well.

6. Resilience to Climate Risks - Greenhouse effect has been a global phenomena

and this has wreaked havoc in many regions across the globe. We can be
resilient to climate change by applying some technological solutions that would
enable the farmers to protect or to salvage portions of their crops even before an
impending weather disturbance comes.
 22

VIII. Bibliography

1. Angeles, Domingo, State of Philippine Agriculture, UPLB, March 16, 2009

https://www.slideshare.net/KarlLouisseObispo/state-of-philippine-agriculture

2. BusinessWorld. N. (2019, January 27). Only a minority of farmers prefer hybrid rice
seeds. https://www.bworldonline.com/only-a-minority-of-farmers-prefer-hybrid-rice-seed/

3. Chantrell, Glynnis, ed. (2002). The Oxford Dictionary of Word Histories. Oxford
University Press. p. 14. ISBN 978-0-19-863121-7

4. CIDA-LGSP (Canadian International Development Agency-Philippines-Canada Local

Government Support Program). 2003. Re-Envisioning Local Agricultural Development: A
Guide for Development Managers

5. DA Communications Group. (2020, February 18). DA Chief: “Innovations will fuel Phl
agri industrialization.” Official Portal of the Department of Agriculture.
https://www.da.gov.ph/da-chief-innovations-will-fuel-phl-agri-industrialization/

6. Department of Agriculture, The Year in Review: Philippine Agriculture Rises to the

Challenge of the Times, 2020 Year-End Report

7. Department of Agriculture. (2019, August 28). Ang Bagong Pananaw sa Agrikultura: 8

Paradigms to Level Up Agriculture. Official Portal of the Department of Agriculture.
https://www.da.gov.ph/ang-bagong-pananaw-sa-agrikultura-8-paradigms-to-level-up-agri
culture/

8. DICT, DPWH boost Philippine internet infrastructure. (2021, April 14). OpenGov Asia.
https://opengovasia.com/dict-dpwh-boost-philippine-internet-infrastructure/

9. Distribution of the workforce across economic sectors from 2010 - 2020 in India,
Indonesia, Thailand, Vietnam.
https://www.statista.com/statistics/271320/distribution-of-the-workforce-across-economic
-sectors; for Myanmar,
https://tradingeconomics.com/myanmar/employment-in-agriculture-percent-of-total-empl
oyment-wb-data.html

10. Employment in agriculture (% of total employment) (modeled ILO estimate) - Philippines

| Data. (2021). World Bank.
https://data.worldbank.org/indicator/SL.AGR.EMPL.ZS?end=2019&locations=PH&start=
1991&view=chart

11. Explore Agriculture last accessed on June 13, 2021

https://exploreagriculture.com/what-is-agriculture/
 23

12. Fact Sheet Philippines Women in agriculture, environment and rural production. (2003).
FAO.
http://www.fao.org/3/ae946e/ae946e03.htm#:%7E:text=The%20Philippines%27%20majo
r%20agricultural%20products,bananas%2C%20pineapples%2C%20and%20mangoes.

13. Food and Agricultural Organization of the United Nation (FAO) last accessed June 13,
2021
http://www.fao.org/3/ae946e/ae946e03.htm

14. Global Economy/World Bank: GDP share of Agriculture in the Philippines

https://www.theglobaleconomy.com/Philippines/share_of_agriculture/

15. Globalisation Marketing Dictionary, Monash University Monash Business School

Webmaster Team. Last updated: Feb 2018. Copyright © 2021 Monash University. ABN
12 377 614 012
https://www.monash.edu/business/marketing/marketing-dictionary/g/globalisation

16. Gross Domestic Product Philippines Q1 2021. (2021). Rappler.

https://www.rappler.com/business/gross-domestic-product-philippines-q1-2021

17. Habito, Cielito, Briones, Roehlano, Philippine Agriculture over the Years: Performance,
Policies and Pitfalls, January 2005; Uploaded to Researchgate.net on May 28, 2015
https://www.researchgate.net/publication/265248373_Philippine_Agriculture_over_the_Y
ears_Performance_Policies_and_Pitfalls_1/link/5566851808aeab77721cbce6/download

18. Hilario, FLaviana, De guzman, Rosalina, Ortega, Daisy, Hayman, Peter and Alexander,
Bronya, El Niño Southern Oscillationin the Philippines: Impacts, Forecasts, and Risk
Management, Philippine Journal of DevelopmentNumber 66, First Semester 2009
Volume XXXVI, No. 1

19. Ibon Foundation 2019 – 2021 GAAs under President Rodrigo Duterte
https://www.ibon.org/

20. Interviews: Chito Sace, Phd /Central Luzon State University (CLSU) / Department of
Agriculture-Agricultural Training Institute (DA-ATI) & Mr. Budi Fernandez/Bureau of
Agri-Research

21. Malasig, J. (2018, August 20). How technology is innovating agriculture in the
Philippines. Interaksyon.
https://interaksyon.philstar.com/breaking-news/2018/08/20/131961/technology-innovatin
g-philippines-agricultural-sector/
 24

22. Obispo, Karl, Overview of Philippine Agriculture (Lecture), UPLB last accessed June 13,
2021, https://www.slideshare.net/KarlLouisseObispo/7-overview-of-philippine-agriculture

23. Pascual, Pet, Sedanza, Nestor, Loso, Salvino, Maricris, Mendoza, Reynerio, Abenis,
Neuville, Understanding Consumer Buying Behaviour Vol.6 (Iss. 3): March2019 Leyte
Normal University, Tacloban City

24. Philippine Statistics Authority | Republic of the Philippines. (2021). Philippine Statistics
Authority.
https://psa.gov.ph/ppa-main/id/163837

25. Philippines highlights rising role of digital agriculture at FAO Regional Conference | FAO
in the Philippines | Food and Agriculture Organization of the United Nations. (2020). FAO
in the Philippines.
http://www.fao.org/philippines/news/detail/en/c/1307351/

26. Philippines | Agricultural Policy Monitoring and Evaluation 2020 | OECD iLibrary. (2020).
https://www.oecd-ilibrary.org/sites/2cb7b858-en/index.html?itemId=/content/component/2
cb7b858-en

27. Romulo, R. R. (2020, February 13). Digital agriculture. Philstar.Com.

https://www.philstar.com/business/2020/02/14/1992880/digital-agriculture

28. Sunstar. I. (2017, June 20). Information technology for agriculture.

https://www.sunstar.com.ph/article/148547/Business/Information-technology-for-agricultu
re

29. Vetrivel, N., Prasanth, A. Intermediaries Impact on Agricultural Products – From

Farmer’s Perspective Vol-3 Issue-3 2017 IJARIIE-ISSN(O)-2395-4396
 25

IX. Exhibits, Figures, and Tables

Scorecard of Presidencies in terms of Agricultural Sector Growth

Figure 1. Contribution of Philippine Presidents in terms of Agriculture (DBM)

Share of Agriculture Sector in terms of National Government Expenditure

Figure 2. Share of Agri Sector in National Government Expenditures per PH Presidents

 26

Share of Agriculture in the National Budget Allocation from 2019 to 2021

Figure 3. 2019 National Budget Allocation

Figure 4. 2020 National Budget Allocation

 27

Figure 5. 2021 National Budget Allocation

Five-linked value chain of PH’s Agriculture

Figure 6. Five-Linked Value Chain

 28

Porter’s 5-Forces Analysis

Figure 7. Porter’s Five Forces

Sub-sector of Philippine Agriculture

Figure 8. Sub-sectors of Philippine Agriculture

View publication stats

29

Impact of intermediaries with coconut as an example

Figure No. 9. Intermediaries Impact on Agricultural Products

BIG NAMES IN PH AGRI

Figure 10. People who owns companies with significant investment in Agriculture