Agricultural Value Chain Development

Despite high levels of economic growth, the agriculture sector of the Philippines has shown consistently low growth and productivity rates. The lack of modernization, productivity and profitability of the agriculture sector is the result of an accumulation of factors across the value chain:

FARMERS, in the vast majority smallholders with an average age of 57 and 5 years of education, are often unable to turn agriculture into a profitable business as they lack the capacity or the funds to apply innovative methods and technologies to their farming methods. Indeed, the small size of the farms, the lack of mechanization, use of high-productivity agricultural methods such as inter-cropping, planting of new plant varieties and proper application of agricultural inputs, are some of the major barriers to increasing farmers’ productivity. Additionally, as farmers benefiting from the Comprehensive Agrarian Reform Program (CARP) and the Comprehensive Agrarian Reform Program Extension with Reforms (CARPER) are unable to use their land as collateral, access to finance is especially difficult.

The SUPPLY CHAIN itself has handicapped the ability of the Philippines to guarantee food security and increase its agricultural products’ competitiveness at an international level. Farm to market infrastructure, including roads and logistics services, are an important hindrance to the supply chain. Indicatively, it is estimated that 20-50% of fresh goods are damaged during the journey from market to consumer (post-harvest losses are estimated at 30%); this is compared to just 6% in Thailand.

Additionally, the lack of a support framework, such as effective cooperatives, to ensure that farmers are able to access the market at competitive prices has meant that they are vulnerable to middle-men. 

While there have been efforts at a national level to implement laws, policies and projects in support of agricultural development, often jointly with the private sector, the implementation of those is frequently challenged at the regional and local level. Specific examples where implementation has been challenged at the local level include the observance of the national convergence initiative, good agricultural practices for coffee and the compliance to bidding requirements.

The EU has supported initiatives that aim to empower the Philippine agriculture sector. Namely, since early 2015, the Philippines has benefitted from the EU GSP+ program, which allows tariff free access to the EU market for over 6,200 Philippine products, many of which are agri-fishery products. Similarly, the development of GIs offers an excellent opportunity for farmers to incrementally increase the value of their products.

We look forward to the opportunity to join hands with relevant government authorities, including LGUs, to establish a constructive public-private sector partnership with the objective to share expertise, create joint ventures between Philippine and European companies in the agri-food supply and value chain, and invest in a bankable, sustainable agriculture sector with the following aims:

- Promote and support the utilization of GSP+ opportunities by the Philippine agriculture sector, including through the continuation and expansion of capacity building and technical assistance offered by DTI to SMEs around the country to support compliance with EU standards, so products can be exported to the EU market;

- Reform the land title regime to establish a system that allows farmers to be bankable;

- Facilitate access to finance for smallholders and those benefiting from agrarian reform, with no collateral;

- Establish professional, transparent cooperatives across the country to serve as agricultural hubs and support farmers with access to finance, capacity building in agri-preneurship and agri-business skills, new agricultural techniques and value added processing; provide processing facilities, serve as a trading hub for agricultural goods to cut out the middle man and provide machinery and agricultural inputs to farmers at fair market prices;

- Invest in transportation and storage infrastructure and facilities to reduce spoilage of products during the transportation / storage process from farm to market;

- Target products and areas to support in developing GIs;

- Ensure cooperation and alignment between national and local government, in support of the implementation of pro-growth policies and projects for the agriculture sector.