TO SOLVE the problem of hunger, agriculture policy, together with the corresponding agriculture programs, must address all three areas identified earlier: food production, supply chain management, and food affordability through more employment and less inflation.  

TABLE 3: Agriculture comparative advantage ranking among five ASEAN countries
COUNTRY	1970	1980	1990	2000
Philippines	2nd	2nd	4th	5th
Thailand	1ST	1ST	2nd	2nd
Vietnam	5th	4th	1ST	1ST
Malaysia	2nd	2nd	3rd	4th
Indonesia	2nd	5th	5th	3rd

As an overview, DA Undersecretary Segfredo Serrano says, “The agriculture sector has gotten out of its boom-and-bust cycle, which showed only a 2.1-percent growth in the 1990s.” Indeed, from 2000 to 2004, the country achieved relatively stable growth, averaging four percent annually. But the combined effect for the last two decades still puts us in last place when compared to four other Southeast countries. A study released in June 2004 by Eliseo Ponce and Cristina David ranks the Philippines’ agriculture comparative advantage against these countries, among them Indonesia, which has been usually been identified as one of the region’s economic laggards. As Table 3 shows, the Philippine performance has been dismal for more than a decade now, with the country dropping to the bottom in 2000. 

Here’s the thing: even though the Philippines was weak in comparative advantage, it opened its markets and decreased its agriculture tariffs. For example, for several vegetables, this country went from quantitative restrictions to a seven-percent tariff rate. This rate is far lower than the tariff rates of comparable developing countries and way below the 40- percent bound rate allowed by the World Trade Organization (WTO).

What the Philippines did is the opposite of the recommended direction made in a 2004 study by Ha-Joon Chang and Ilene Grabel. This study shows that the economically successful countries, with few exceptions, did not practice free trade during their development phase. Instead, they nurtured their economies until they attained comparative advantage. Only when they were strong enough did they decrease their tariffs significantly.

“We engaged in unilateral disarmament,” says Omi Royandoyan, executive director of the Philippine Peasant Institute. “We volunteered lower rates than were required by the WTO and got little in return. What is worse is that we did this when we were completely unprepared for subsidized cheap imports.” As a result, the country’s ratio of agricultural imports and exports worsened. Between 1992 and 1993, when the Philippines was a net exporter of food, that ratio was at an average of 84 percent. In the last four years, the country has deteriorated into being a net importer of food with an average ratio of 147 percent.

“Simply put,” says Royandoyan, “for every $100 we exported, we imported $147.” 

Today we are asked to decrease even further our already low agricultural tariffs. But since protection is measured by both tariffs and the subsidies given, we should not lower our tariffs if the developed countries do not comply with their commitments to decrease their subsidies.

Federation of Free Farmers’ Cooperatives chair Raul Montemayor says that despite some government officials giving glowing reports of the July 30, 2004 WTO Framework Agreement, the developed countries once again benefited more than the Philippines did. It is true that there is a 20-percent cut in subsidies from the prior WTO Doha Round. But the new amount of $165.9 billion for the United States, the European Union, and Japan is still much higher than their actual 2000 subsidy level of $104.8 billion. Compare that to the $300-million subsidy of the Philippines, and the growl you hear this time around may be emanating from your throat.  

Unless the developed countries appropriately decrease their subsidies, the Philippines must have an agricultural tariff standstill for its agricultural outputs. Once it strengthens its comparative advantage, the Philippines can then embark on a selective and gradual tariff reduction scheme. At the very least, the government should provide the physical and business infrastructure that other countries give their farmers in order to compete globally. To achieve this, the government should provide the appropriate amount of funds — and then make sure these funds are used wisely.