Consumers: Paying the cost of agri players’ inefficiencies
FULL DISCLOSURE - Fidel O. Abalos (The Freeman) - October 4, 2015 - 10:00am

Recently, in the opening of the Asia Pacific Economic Cooperation (APEC) Policy Partnership on Food Security Meeting in Iloilo, the country’s Bureau of Fisheries and Aquatic Resources (BFAR), through Director Asis Perez, urged member economies of the APEC “to include agriculture and fisheries in their investment promotion priorities to address food security issues in the region.”

He strongly emphasized that “with the private sector’s growing role in agriculture and fisheries, it is high time that we recognize their importance in terms of promoting trade, market access and investments along the food value chain, guided by public policies, laws and regulations.”

Indeed, this is an appropriate call.  More importantly, if the call for more investment is heeded, this will not only bring prices of the basic food down, it shall also generate employment in the countryside.  Notably, more investments are registered with the Philippine Economic Zone Authority.  Such fact reveals that most of the investments that went into the country are export oriented companies that are into service (like BPOs), heavy and light industries. Most of which are based in the highly urbanized areas.

On the other hand, while it is true that these projects will generate jobs, we must remember that joblessness is felt more in the agriculture sector (and are obviously in the countryside) where one-third of our labor force belong.  Therefore, these projects could never put a dent on this sector’s unemployment woes.

Remember, while we brag about our economy growing at six percent annually,  joblessness is still so prevalent and felt by most of our countrymen.  Most of them are in the agriculture sector (where most illiterates or uneducated abound).  Thus, despite our government’s economic czars’ brags about our constantly expanding economy, most of us are still languishing in poverty.

To President Aquino’s credit, in his keynote speech at the Philippine Investment Forum 2013, he enjoined investors to invest in agriculture, tourism and infrastructure (which are seen to support agriculture and tourism through the development of road networks, ports, and airports).  These were intended to address the acute need for jobs among the poorest of the poor who are mostly in the agriculture and construction sectors.

However, while we totally agree with PNoy’s sales pitch for investments on the aforementioned sectors, it is quite revolting that, for one, while a foreign investor heeded the call (for investments in agriculture), the local players (National Federation of Hog Farmers Inc., partylist groups Abono and Agham, The Agricultural Sector Alliance of the Philippines Inc., the Pork Producers Federation of the Philippines Inc., the Sorosoro Ibaba Development Cooperative and the Association of Philippine Aqua Feeds Millers Inc.) in the same sector, instead of learning from CP’s cost efficient technology (that, to our benefit, can bring prices down) has asked the Supreme Court to withdraw the tax breaks given by the government through the BOI.

To recall, the BOI granted Thailand’s Charoen Pokphand (CP) Foods Corp. (after complying with existing requirements) a six-year tax holiday and a 30-percent tax incentive covering the importation of corn and other raw materials for its plan to develop a P2.32-billion integrated production project.  Notably, agriculture is in the BOI’s Investment Priority Plans (IPPs) since 1986.  It is open to both foreign (more stringent) and local investors.

Thus, this vehement reaction of the local players is quite appalling.  First and foremost, CP fully complied with the existing requirements and has poured in capital and constructed their plants in Luzon.  So that, we may ask, is it appropriate for this government to withdraw the very same incentives that made them (CP) decide to pour in their hard-earned money?

On the other hand, with the local players’ businesses threatened by CP’s existence and the strength it may have due to the bestowed incentives, why have they just complained after the approval.  Remember, since 1986, these perks were already included in the IPP.

Why didn’t these local players raise a howl then and until 2012 for its inclusion in the IPP?  They should have lobbied then that agriculture should instead be included in the Negative List (a list of businesses a foreigner can’t own or have limited ownership), not in the IPP.

It has been two years since the complaint was filed.  We haven’t heard of any update yet.  Some potential foreign investors in the agricultural sector are right behind our doors but are not about to knock at all.  The reason is very simple.  Our investment policies are not clear.  It seems, for them, we are a home of flip-flopping policy makers.

Indeed, in our efforts to attract foreign investments, this development leaves a bad taste in the mouth.  If not handled properly, this will send a wrong message to prospective foreign investors.  Remember, we advertised it, they bought.  Now, we want to “change horses in midstream.”  Are we trying to tell the entire world that the Philippines isn’t true as advertised?  A home of congenital liars?

In the meantime, we shall bear the brunt of the local players’ production inefficiencies by absorbing the cost of it.


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