REVIEW OF RELATED LITERATURE
This research is conducted to study the trends of agricultural commodity export from 2010-2011in General Santos. To help achieve this goal, it was deemed necessary to seek the aid of existing literatures to use them as guide and reference to successfully conduct the study.
SHAPING EXPORT TREND
Export trends of agricultural goods could be established in terms of its production. There were literatures that were very specific in terms of agricultural commodity. As what the research from Takamasa Akiyama and Donald F. Larson with the International Economics Department, International Commodity Markets Division in 1989 who studied the export trends of Sub-Saharan Africa which focuses on the recent trends and prospects for SSA’s agricultural commodity exports. It is revealed that SSA’s agricultural exports dependence on coffee and cocoa has increased the country’s revenue. Furthermore, sluggish development on the agricultural products of SSA in terms of production and in export has decreased the revenue (export) to about 60%. But some literature was inclined to what the agricultural commodity export contributes to economy as what Productivity Commission in Australia(2005) studied the trends in Australian agriculture which entails to study the trends of Australian agriculture from 2003-2004. The team has revealed the agricultural development, the agricultural output has doubled over the past decades to 2003-04 and generated 4 per cent of GDP and employed 375 000 people or 4 per cent of the workforce.
Recent developments in primary commodity prices and export revenues have contributed to Sub-Saharan Africa's predicament. As well, the pessimistic outlook for the primary commodities on which they depend heavily for revenue is one of the main factors responsible for the gloomy economic outlook for these countries. Based on the study, Sub-Saharan African countries have seen sharp declines in their shares of agricultural export markets. But their export dependence on the most important crops - coffee and cocoa – has increased. The major reason for Africa's declining world market shares in primary commodity exports is not due to an unfavorable composition of commodity exports, but rather due to a failure of Africa's production to competitively meet growing world demand. Given the relatively low rates of production growth, demand from an expanding population—which grew nearly 56% from 1970 to 1985 while the population in developing nations as a whole grew 44X--strained domestic resources as well. Comparisons in the region and with countries outside the region show the importance of appropriate exchange rates and producer pricing policies, as well as support for technological advancement, for good performance in these sectors. Some countries have successfully introduced changes in these policy areas. Changes are also needed in domestic marketing systems to enable flexible responses to market demands in such areas as quality.
A research done by Rosalie Mclachlan, Colin Clark, Shellie Davis Trends in Australian Agriculture, stated that Australia’s agriculture undergone considerable change over the last few decades. Some factors that shape the trends of Australia have been changes in consumer demands and government policies, technological advances and innovation and emerging environmental concerns. In the first half of the twentieth century, agriculture accounted for between 70 and 80 per cent of total goods and services exports. Agricultural exports amounted to $28.2 billion in 2003-04 — equivalent to 22 per cent of total goods and services exports. Agricultural products make up 7 of Australia’s top 20 exports. Agricultural exports have experienced steady growth in recent decades. While the sector’s reliance on export markets has been increasing and the economy’s reliance on these exports has been declining rapidly — down from over two-thirds of total exports in the early 1960s to just over one-fifth in 2003-04. This reflects slower growth in agricultural export volumes and to a lesser extent, declining relative prices for agricultural exports. . Most of the long-run decline in agriculture’s export share has been due to sustained higher growth in other industries. Although agricultural exports have grown in real terms at a trend annual rate of 3.5 per cent since 1974-75, total goods and services exports have grown at almost twice this rate (6.3 per cent a year).
Potential of the agricultural commodity in the world market could be determined by the trends set by the product’s export performance. It is studied by Daya and Steenkamp (2005) with the Directorate International Trade: Trade Research Desk, Department of Agriculture (South Africa) entitled “SOUTH AFRICAN AGRICULTURAL EXPORTS: TRENDS, COMPOSITION, DIRECTION AND POTENTIAL”. They focus on identifying South African agricultural products with the greatest export potential. Their study reveals that South Africa holds a comparative advantage in agricultural exports compared to the world. Moreover, champions of export are Ethyl Alcohol, corn, groans and wine (bulk), rest of the products is under the categorized cluster of goods.
A report by Indiana Business Research Center Kelly School of Business Indiana University who studied the “Global Positioning: Indiana’s 2011 Export Data and Trends” with the purpose of engaging the significance of export to Indiana’s global position. As they stated in their report, the global recession adversely affected exports performance of Indiana. Several of Indiana’s export industries have had strong average annual growth rates over the past decades, but in 2011, the latter industries’ (agricultural commodities) rate of export growth diminished. Another, an assessment by the Department for International Department (Zambia Office) entitled “Trends in the Zambian Agricultural Sector”. The purpose of their assessment is to provide DFID Zambia with basic data to inform the drafting of the agricultural component of its Country Assistance Plan. They found out that “the contribution of the agriculture sector towards the balance of payments has been low. However, there has been a significant increase in the variety and value of agricultural exports, and (although relatively modest) the overall growth in the sector shown above has largely resulted from agricultural exports” (DFID 2002). Also, Zambia has comparative and competitive advantage for some goods including coffee, cotton, groundnuts, flowers and paprika.
Export trends could be comparative between the agricultural products (various) in which, a comparative analysis by European Commission between OECD-FAO, FAPRI and USDA entitled “Agricultural Commodity Markets Outlook 2011-2020” which focuses “on highlighting common and diverging trends across projections as well as identifying uncertainties that could significantly impact markets.” It is revealed that In spite of a slowdown in demand growth, consistent further investment in agriculture are needed to tackle yield stagnation, more frequent weather events etc. in order to guarantee an adequate supply response. Furthermore, “current high commodity prices result in a supply response which puts downward pressure on prices, easing from current high in nominal terms.”
Correspondingly, exports are contributing to the country’s economic growth. A research conducted by AlisiWenonalitaKautoke-Holani which is Agricultural Export Growth and Economic Development for Tonga: The Quest for Efficiency stated that to improve and recover the economic condition of Tonga it should consider its economic growth by pursuing its agricultural industry since Agriculture is the principal sector of it. Agriculture has a fundamental role in pre-industrial economic development, and transitions from agriculture to industrialization indicate that the country is in economic development. Through trade the agricultural sector of Tonga can be developed and it can maximize its benefits. To accelerate agricultural growth of Tonga, it should pursue agricultural exports. And since, the Tonga has a level of comparative advantage in agricultural production it can gain from Agricultural Trade.
From XinshenDiao, Paul Dorosh, and ShaikhMahfuzurRahman with Siet Meijer, Mark Rosegrant, YukitsuguYanoma, and Weibo Li who studied the Market Oppurtunities for African Agriculture: An Examination of Demand-side Constraints on Agricultural Growth stated that rapid growth in the agricultural sector is one of the strategy in Sub-Saharan Africa (SSA) to increased output of food crops and price of food. Agricultural exported products are one of the major sources of demand for the increased agricultural production in SSA. The average real value of SSA countries’ global exports of all goods and services increased slowly during the 1980s and 1990s, from an average of 80 billion US dollars in 1981-83 to a little over 100 billion US dollars by 1998-2000. Likewise, total exports of SSA as a share of regional GDP also increased over time. During 1981-83, total exports accounted for 23 per cent of GDP, it increased to 25 per cent during 1990-92 and 30 per cent during 1998-2000. This more rapid increase in SSA exports in the 1990s may in part reflect policies designed to promote trade during this period. Despite the increased trade orientation of SSA, the export share of the region in total world exports declined, since the latter expanded at a much faster rate. A recent study on Economic Development in Africa by the United Nations Conference on Trade and Development (2001) argues that a secular decline in African terms of trade since the early 1980s is responsible for the marginalization of the region in world trade. In the early 1980s, SSA countries accounted for about 2.56 per cent of total world exports. But this share fell to 1.39 per cent by the late 1990s. The major factor behind the downward trend in the terms of trade of SSA is the decline of prices of primary commodities relative to manufactures.
As to the Philippine agriculture is concern, Philippine agricultural export is considered to be an important factor in our national economic development, bringing to the country foreign exchange earnings as well as additional economic activities. However, there are certain issues that restrict the growth of our agricultural sector thus affecting progress in our exports.
The published papers entitled “A Vision for Philippine Agriculture”, written by the editorial staff of Development Research News (PIDS), explored these issues and provided a projection of the Philippine agricultural sector and propose methods and provisions by which these visions can be attained. Specifically, it sought to; (a) Present data and its analysis on the prevailing situation of the Philippine agricultural sector, (b) identify which particular scenario/s can best contribute to the productivity growth of the Philippine’s agricultural sector, (c) present three proposed scenarios which are most likely to occur in the agricultural sector using the Agricultural Multi-Market Model for Policy Evaluation (AMPLE) model, and (d) provide solutions which can address existing irregularities and shortcomings in the agricultural sector. It was indicated in the papers that, as of the year the papers were published, the Philippine agricultural sector follows a rise and fall patterns, having experienced a respectable growth during the post-war year followed by a decline during the 1980’s. The trend once again rose during the 1990’s and went even higher in the 2000’s. Analysis of such setting indicated that the growth of the agricultural sector will be suppressed despite of a slight increase in the growth of crops and meat. It was also determined that output in crops would generally decrease but will have significant boost in export crop products which includes mango, coconut, and banana.
The study entitled “Philippines: Food Security versus Agricultural Exports?” aims to assess the current food security situation of the country and its relation with the agricultural export trade, and explore the different alternative means to achieving food security. Specifically, this study aims to; (a) Determine if the government should efforts in increasing rice productivity to achieve food self-sufficiency or should it focus instead on increasing the production of high value crops for exports in the aim of achieving food security, (b) examine the relationship between food security and food self-sufficiency and well-being, (c) establish how agricultural export trade contributes to food security, and (d) Identify which agricultural export product/s has/have the greatest impact on the food security of the country.
The scope of the research study “Philippines: Food Security versus Agricultural Exports?” is so vast that it has presented numerous results and insights. Investigation of the prevailing food security of the country as of 2011 revealed that the Philippines is still far from being food secured, rapidly deteriorating due to the increase in food imports especially rice imports. This situation on the other hand results to the increase in the relative cost for food thus further limiting those who can afford and have access to proper food security. Analysis on the relationship between food security and food self-sufficiency shows that households that are more self-sufficient in food in general tend to be less food secure. On the other hand, expanding the productions of export crops would definitely contribute to food insecurity by reducing domestic food production. Results revealed that net returns are significantly higher for export crops such as pineapple, milkfish, mango, peanuts, and legumes (mongo) than cereal crops (palay and corn).
In addition, the study made by Tiongco and Francisco also accounted for the fact that in 2009, agricultural exports comprised 8.2% of the total value of Philippine exports the most valuable of which is coconut oil, followed by fresh banana, pineapple, and tuna. These top earners among agricultural exports have a combined share of 52% to total agricultural exports. It was also noted that the composition of agricultural exports have shifted away from the traditional commodities like sugar, tobacco, abaca and forest products, in favour of bananas, pineapples, tuna, and other non-traditional export crops. Francisco and Tiongco have concluded that agriculture does play a significant role in food security on both the macro and household levels but the government should not rely heavily upon it. Further research and studies must be conducted to assess country–level growth options such as paying attention to the agricultural export sector and estimate the economic benefits and costs of agricultural exports on the welfare of producers and consumers.
A related study that deals with the impact of the changes on the structures of the Philippines’ food retail industry on the agribusiness industry was conducted by Larry N. Digal and Sylvia B. Conception of the University of the Philippines, Mindanao Campus. The study, Securing Small Producer Participation in Restructured National and Regional Agri-Food System: The Case of the Philippines (2004), examined the implications of the changing structure of the Philippines retail food industry and analysis of this supply chain of this industries is done in order to understand how small farmers can be linked to downstream agents and be able to respond effectively to opportunities and challenges in the agribusiness system.
We all know that Philippine is an agriculture country rich in sea resources, but then being an agriculture one our country also got food commodity exports that are not marine goods necessarily. We got lands planted with crops and also industrial parts where establishments like supermarkets settle, necessary in processing these agricultural commodities. Since there are notable changes in the Philippine retail food industry and the number of Supermarkets has been increasing including those that are owned by foreign investors, we should take a look at this aspects and change what it is needed to be change or add what it is needed to be added up. The share of these supermarkets has been expanding including fresh produce and so, we are obliged to help and teach farmers the proper technique for long spoilage of fresh products since 64% of Philippine retail industry are food retailers and about 5% of the total food retailers are accounted by large supermarkets. In preparing our economy to improvement we need not only focus on one aspect but to all aspect even to the aspect with small contribution as all are counted.
Yet another research study that sought to analyze the issues that has plagued the Philippine agricultural exports sector is that done by Cristina David “Economic Policies and Agricultural Incentives: The Philippine Case” stated that during 1980s the Philippines adopted various structural adjustment and stabilization policies to correct fundamental .distortions in the economic incentives and imbalances in the external and public sector accounts, as well as to minimize the potential instability in the process of those reforms. These included trade policy reforms, liberalization of regulations on foreign investments, financial liberalization, tax policy reforms, and currency devaluation. Those policy reforms have direct and indirect effects on the agricultural sector. Many major agricultural commodities and inputs such as rice, corn, sugar, meat, fertilizers, and others, have been historically subject to quantitative trade restrictions and/or domestic price controls. Export taxes applied mostly to major agricultural exports such as coconuts, bananas, pineapples, and so forth. Most agricultural commodities are tradable whose prices are greatly affected by the real exchange rate. Not often recognized is the critical role of public sector provision of support services to agriculture, such as research and development, irrigation and market infrastructure, price stabilization, which have public good characteristics, externalities, and economies of scale. There was decline in performance of the agricultural sector in the 1980's and it cannot be readily attributed to the structural reforms themselves for a number of reasons. World commodity prices were severely depressed during this period. And, growth rates of agricultural exports declined sharply in all of the ASEAN and South Asian countries during this period.
There have been a number of recent studies analyzing the impact of structural and stabilization policies on the agricultural sector and on income distribution. Based on a general equilibrium model, Clarete (1992) simulated the impact of the tariff changes embodied in the Executive Order 470 and the currency devaluation on agricultural production and trade. On the other hand, Bautista (1992) used a multi-market model to quantify the impacts of changes in monetary, fiscal, and exchange rate policies on agricultural prices and outputs, specifically on rice, corn, coconut, sugar, livestock and fish.
Although considered to be an agricultural country, the Philippines is not a major exporter of agricultural products, as shown by agriculture’s share in the country’s total exports which is overwhelmed by the share of non-agricultural products, for instance, by a ratio of 6% to 94% in 2005 (World Integrated Trade Solution (WITS) database of World Bank.). However, agriculture plays a huge role in the country’s economy since majority of its labor force is in agriculture, comprising 37% of the total. The importance of agriculture and its international trade to neighboring countries therefore must not be ignored and must be considered in evaluating our economy.
Pasadilla and Liao in their research paper, Non-Tariff Measures Faced by Philippine Agricultural Exports in East Asia explored the effects of non-tariff measures (NTM’s) on the country’s agricultural export industry and how it affects production of particular export products. As explained in the text, NTM’s are essentially almost every trade-affecting measure, apart from tariffs. According to United Nations Conference on Trade and Development (UNCTAD), NTM’s can be classified into the following; (1) price control measures; (2) finance measures; (3) automatic licensing measures; (4) quality control measures; (5) monopolistic measures; and (6) technical measures (UNCTAD, 1994). These measures increase the cost of production for companies serving in foreign markets, raising entry barriers with higher up-front costs and diminishing the ability of firms to compete in the process (Pasadilla and Liao, 2007).
Nevertheless, Pasadilla and Liao in their research paper had stated that empirical work suggests that agricultural commodities bear a great deal of the burden of NTMs. Studies conducted by their contemporaries found that the incidence of NTMs on agriculture tariff lines is higher than in manufacturing. As to specific agricultural products, live animals, meats, dairy, and fruits and vegetables are among those with higher reported NTMs, particularly SPS and customs and administrative barriers (OECD 2005; Dean, Feinberg, Ferrantino and Ludema 2003). These studies had shown that agricultural exports especially from developing countries like the Philippines are more likely to experience more market access problems which are a financial burden to our local suppliers.
However, results of the interviews conducted to selected exporters of different agricultural products showed that despite the complexity, delay and increased cost that non-tariff measures can bring, agricultural products exporters are still willing to comply with the requirements that trading countries has imposed since the profits from exporting still outweighs the costs. Exporters in general will remain willing to comply and adjust to these NTM’s as long as trading countries follow international standards and apply them equally to all countries. According to the testimonials of the exporters, “trade facilitating” expenses imposed by the Philippine government are in fact the most cumbersome to deal with. These come in a variety of forms such as tips to government employees or outright bribes to accelerate the customs processing of their papers. Unfortunately, this practice has become part of the cost of doing business in the Philippines (Pasadilla and Liao, 2007).
A key feature of the interviews conducted as that the exporters were prominent players in the agricultural trade sector, that is, it does not reflect the condition of the remaining 99% of processors which are cottage, small and medium enterprises. Hence, it was concluded that these subsets may find it more difficult to deal with strict non-tariff measure especially due to financial, technological, and manpower limitations of these small scale enterprises. This difficulty to comply with the NTMs could eventually marginalize these smaller establishments and eventually lose their capability to gain international market access.
Yet another agricultural trade issue that is of great concern especially with our economic relationship with the People’s Republic of China is the prevailing free trade agreement that could affect the liberalization of our agricultural sector. Liberalization of the agricultural sector especially in developing countries is considered to be a very sensitive subject in international trade negotiations since it conflict with food security and brings certain social transformations especially in adjustment cost (Medalla and Balboa, 2007). The Philippines proved this point when it was the last ASEAN-member country to sign the agreement for an Early Harvest Program (EHP) with China in 2005 as part of the Chinese government’s Free Trade Agreement with the ASEAN.
Records in recent history had shown that the Philippines had already had its share of difficulties in dealing with trade liberalization in the past. A research made by Minda C. Mamgabat “Effects of Trade Liberalization in Agriculture in the Philippines: Institutional and Structural Aspects” which stated that over the entire 1980 to 1997 period, the value of combined exports and imports yearly growth is 9%. In more detailed, -4% for 1980-1984; 17% for 1985-1989; 14% for 1990-1994; and 18% for 1995-1997. The negative in trade attributed to a slowdown of the economy as it faced a foreign exchange crisis, severe balance of payment problems between mid-1983 and mid-1984, and low world prices. The peso devaluation and imposition of import controls reduced imports from 1984-1986. But this was resulted to an increase in exports in 1984 but no sustained in 1985-1986. The value of exports and imports improved in 1987 and continued in the succeeding years but the increased in imports outpaced the growth in exports. From 1990-1996 the value of imports comprised 60% of total trade and 40% for exports. Relatively large agricultural trade surpluses from 1970s continued in 1980 at 62% of agricultural export value. However, it decreases gradually at the beginning of 1981 with decline of 11%, resulted from lowering of world price. The agricultural trade balance dropped further by 34% in 1982, and 9% in 1983. In 1984 agricultural export value increased by 5% together with a 20% decreased in import value resulted in 37% increase in trade balance from 1983 level. The decline of agricultural import value in 1984 was the offshoot of peso devaluation occurred between June 1983 and June 1984 but this increased the export value and partly due to a comprehension program to improve balance of payments through expansion and import substitution. Beginning 1988 agricultural export and import values improved again. In 1997 the agricultural export accounted for almost 3% of national GDP compare to its share of about 7% in 1980, but the agricultural import share to GDP was nearly 4% compared to 2.5% in 1980.
Actual markets for most agricultural products are far from competitive and efficient implying that individual farmers (who are mostly price takers) cannot be assured of the highest price for their produce and the lowest price for farm inputs. At the same time, rent-seeking behaviors may widen the marketing margins over the normal profit levels, risks involved, and marketing costs. The interest, therefore, on the performance of the marketing systems for various agricultural commodities stems from two key concerns. First, farmers bewail of their minimum share of the marketing bill. Second, there are claims of increases in marketing margins. The stickiness of farm prices is often blamed on unscrupulous traders exploiting the market. Burgeoning consumer demand leads to scrambled marketing, but traders are able to integrate their operations and, hence, able to capture additional returns. Because of large size, market control, however, emerges giving rise to imperfect markets.
The central issue is whether abnormal profits exist or costs have increased the latter being due to added services or mere inefficiencies in the system. For the farmers, these ultimately redound to squeezed producer prices. Inefficiency is supposed to have been brought about by a traditionally oligopolistic market structure, both in the village and in urban areas near production sites, among others. Inevitably, this results in aggregate welfare losses in which economic profit accrues mainly to traders and producers seem to lose more. The implications of an oligopolistic market are overriding.
The incorporation of farmers' organization and formation of PGs to undertake marketing functions can be viewed as a cooperative strategy to minimize these inefficiencies in the marketing system and to enable farmers to avail themselves of better returns to their produce. This strategy is resorted to as an alternative marketing scheme to fairly distribute market benefits to a wider number of market participants and help maintain the competitive structure of the market through pricing and efficient resource use. It is in this light that one must document and analyze the marketing efficiency of farmers’ organizations and rural-based marketing cooperatives. As an empirical exercise, one must also determine and assess the implications of these farmer-groups/marketing associations on the social and economic well-being of farmers. The magnitude of the impact of relevant policies and programs, support services, and physical infrastructure on the performance and sustainability of these groups must be studied in depth. Lastly, an analysis of the marketing problems and constraints must be able to detail some possible microlevel solutions, as well as recommend appropriate macropolicies and development programs aimed at improving cooperative marketing in the Philippines.
Meanwhile, the research paper The Impact of ASEAN-China FTA Early Harvest Program: The Case of the Philippines with Focus on Short-Run Effects on the Agriculture Sector by Erlinda M. Medalla and Jenny D. Balboa (2007) further explored the trade liberalization issue specifically the China-ASEAN FTA and its implications on the Philippine agricultural sector specifically through the Early Harvest Program. As stated in the text, China’s EHP aims to liberalize tariffs in priority sectors of interest and to implement other trade and investment facilitation measures that are deemed to generate immediate benefits to the ASEAN and Chinese business communities. A study conducted by ASEAN-China Expert Group showed that participating countries are expected to benefit from the said agreement.
In particular, the EHP between China and the Philippines allowed the latter country to gain a total utilization value was at US$ 975,934 upon its first 5 months of implementation (DTI ASEAN-China FTA Presentation, 2006). The bulk of which came from edible fruits and peel of citrus or melons, while the rest came from edible vegetables and certain roots and tubers, and cocoa and cocoa preparations. The initial outcome of the program reflected the Philippines’ main objective which was to gain larger and easier market access for its tropical fruits, coconut products, and aquatic and seafood products in order to boost the poor performance of its agricultural sector. It was also found out that among agriculture goods, the hog sector is the most adversely affected with its output and GVA expected t contract by 3.5% and 10%, respectively. However, despite these initial positive results, Medalla and Balboa pointed out the underlying short-run impact in the form of adjustment costs. Simulation using the Chung Lee Model identified three out of the 11 sectors in agriculture that can receive short-run impact upon implementation of the EHP. These sectors which ended up with lower levels of protection are vegetables, hog meat, and meat products processing. All three products showed a significant fall in Effective Protection Rates (EPRs) whilst the remaining eight sectors either retained or slightly improved their EPRs. Citrus fruits and fruits and nuts also suffered reduction in EPR.
The research paper attributed the problem on the lack of policies and weak institutional framework governing agriculture, the most significant of which are price intervention policies in the form of export taxes in agriculture. Explicit government intervention in pricing and marketing in agriculture, with the objective of protecting the domestic economy from instability in world commodity prices, led to the establishment of government marketing agencies that had monopoly power for imports and monopsony power for exports that diverted proceeds from agricultural producers and created rent-seeking activities (Bautista et al. 2003).
In order to meet the trade challenge posted by China’s policies and programs, it was then concluded that the Philippine agriculture system should speed up the pace in implementing domestic reforms and restructuring them to maintain international competitiveness and provide a platform for sustained growth. Assistance through either technological support or product diversification affected sectors identified by the simulation was also deemed necessary. Furthermore, it is then recommended that the Philippines build its own strength and competiveness to nurture a mutually beneficial relationship with China.
The Philippines, being a country open for trade, also maintains a strong trade relationship with Western countries, the most prominent of which is the United States of America which serves as the country’s primary destination for export and source of imports in the western hemisphere. Thus, it is also important to conduct evaluation of assessment of our trade relationship with the US especially that it is considered as the most powerful country in the world. The research study, Agricultural Trade between the Philippines and the US: Status, Issues and Prospects, conducted by Liborio S. Cabanilla generally sought to describe the environment under which RP-US Agricultural trade operates. Specifically, it sought to accomplish the following: (a) Provide background information for improving the Philippines-US bilateral relations on agriculture, (b) identify key issues affecting current trade flows between the Philippines and the US, (c) determine the major factors that dictate the prospective net effects of a RP-US free trade agreement (FTA) on Philippine agriculture, and (d) Analyze the status and future prospects of RP-US agricultural trade.
The study had shown that for the period 1994-2003, the Philippines had consistently been the top 15 destinations of US agricultural exports, while the latter is considered as being the most important recipient of sugar, fishery, and coconut oil exports from the former. This is only proof of the strong ties between the Philippines and the US when it comes to being trading partners in agriculture. It had also identified several of the top agricultural product exports of the Philippines to the US which includes sugar, coconut (coconut oil and desiccated coconut), and tropical fruits. While it has also identified the top imports from US which includes grains (mostly wheat), livestock and dairy products (especially dairy), and protein meal (e.g. products of milling industry such as soybean cake) and oilseeds (mostly soybeans).
Moreover, the study was also able to pinpoint several significant US policies that affect the Philippine-US agricultural trade, most of which are domestic support programs which appropriates for local farmers. Yet another policy implemented by the US which affects the Phil-US agricultural trade is the Export Enhancement Program (EEP) which is a drive to assist local farm products in competing with exports from other countries (such as the EU) that subsidize agricultural production. Under this program the U.S. Department of Agriculture pays cash to exporters as bonuses, allowing them to sell U.S. agricultural products in targeted countries at prices below the exporter's costs of acquiring them.
Lastly, investigation on the factors that could determine the net effects of the free trade agreement between the Philippines and he US on the Philippine agriculture revealed that the effects on exports will depend on the extent of US reduction of NTBs, particularly on mangoes, carrageenan, and canned tuna. Furthermore, Philippine imports from the US will depend on its willingness to reconsider position, particularly on rice and corn. On this count, it must be noted that rice is an important wage good, and corn is a key livestock feed ingredient.
Cabanilla then came up with the conclusion that despite being a relatively poor country, the Philippines in the context of agricultural trade has a strong reason to take part on a free trade agreement with the US. That being said, the study also mentioned that much caution must be made since the increasing number of FTAs between the US and other countries may constrain opportunities for trade diversion in favor of the Philippines. A good source of optimism however is the hope that traditional exports to the US will establish stronger foothold, and the emerging export winners (e.g. carrageenan, mangoes) gain more market access. More importantly the advent of an FTA with the US should be a good reason to get Philippine agriculture better organized, in terms of policy and institutional support.
STATISTICAL ANALYSIS OF THE AGRICULTURAL SECTOR’S ROLE IN THE ECONOMY
An economic situationer is a written tool used by various economic agencies and institutions to describe and assess the state of the economy of a country or any particular region at a specific period of time and consequently conclude projections and predictions of the expected economic trend. The Philippine’s National Economic and Development Authority (NEDA) provides this information through its Regional Economic Situationer which it publishes on a quarterly basis where it reviews the Philippines’ economic performance through assessment of a region’s agricultural production, investments and exports, tourism, employment rate, and peace and order situation.
The published papers Regional Economic Situationer: First Quarter 2010 for Region XII examined these factors in an aim to present a development outlook based upon the current economic performance of the said region. Specifically, analysis of the cause and effect of significant changes in the production and cost of agricultural, livestock, and aquaculture products provided convincing statistics on the downtrend of palay and mais production in the region which was credited to the long dry spell due to the El Niño phenomenon which had greatly affected the crop production. This was then compared on how this dry season has contributed to the increase in yield of several major crops grown in the region which includes coconut, banana, mango and abaca. Mango production bulk of which was from South Cotabato had the largest increase in production at 16.77% whereas coconut and banana production had a production increase of 3.76%.
The most significant data provided by NEDA XII’s report meanwhile was on the region’s export industry which at the end of 2010’s first quarter saw a significant increase of 15.20 % at an export value of 132.427 million US dollars. Of the top ten export winners, three of which are agricultural crop export products, these are; crude coconut oil, canned and fresh pineapple, and copra having major destinations in Japan, USA, Korea and Australia respectively. Aquaculture and fish products also played a huge role in the increase in our exports, accounting for 50% of the top 10 export products of the region which includes: canned tuna, frozen tuna, pouched tuna, smoked fish, and frozen milkfish. The increase in Region XII’s export can be correlated to the increase in production in the crops, which was also cited in the situationer. That is, the increase in the production of coconut, mais, and other crops has transpired to an increase in the bulk of the products that the region is capable of exporting. This implication then greatly relates the objective of the proposed study since it focuses on the trend of agricultural export, both on its production and distribution.
It was concluded at the end of the report that the significant increase in the region’s export and investments could be an indicator that there shall be more employment opportunities in the succeeding quarters of 2010. It also projected that the production of palay and mais may not improve at least within the year due to unpredictable weather condition in the region caused by El Niño. Considering the big picture, the article saw a continuous improvement in the economic performance of the region as dictated by the trends in the export industry and other determining parameters.
A more specific statistical description of the Philippines’ economic performance especially in the agricultural commodity trade sector in 2010 is provided by an advocacy paper of the Joint Foreign Chamber. The report, Arankada Philippines 2010: A Business Perspective, The paper reviewed the background and potential of the country’s agricultural sector which comprised 19 percent of GDP in 2009 and employed 34 percent of the labor force. But the outputs made up only 8.3 percent of total Philippine commodity exports and Philippine agricultural exports were the smallest of the ASEAN-5. The paper also contained agricultural exports and imports of the ASEAN-6 (less Singapore) for 2009 and shown that Philippines had exported US$3.2 billion, a very small amount compared to Indonesia, Malaysia, Thailand, and Vietnam. Of the five economies, only the Philippines imported more agricultural goods than it exported. Agricultural exports for the other four economies made significant, positive contributions to their trade balances.
In the paper stated that about 12 million Filipinos work in the agricultural sector. Further, if the country can significantly increase its exports and imports of agricultural goods, agricultural provinces would generate much greater revenue, providing more employment opportunities, and lessen poverty in rural areas. This is much more important especially for Mindanao, the country’s breadbasket that has great underdeveloped potential for agricultural exports. Hence, new free trade agreements coming into effect in ASEAN present both challenges and opportunities to the agricultural sector thus, the ASEAN Free Trade Area (AFTA) will be fully implemented in 2010, others in subsequent years. The total estimated population of these FTA economies is more than 3.3 billion (including the Philippines), giving Philippine exporters exceptional access to extremely large markets, while also increasing the exposure of domestic markets to imported products from the FTA economies. On the one hand, the Philippines had the potential to provide large quantities of specialized food products to hundreds of millions of consumers with rising incomes. On the other hand, the survival of domestic producers will be jeopardized by inexpensive imported products.
The paper sought to imply that Philippine agriculture needed to be fully explored the multitude of new market opportunities these FTAs present. The Philippine Government had the means to inform the agricultural sector of the best new export opportunities while in consultation with the private sector, developing strategies to deal with potential threats to domestic production. As an example from the paper, what should be done when an incursion of lower cost processed poultry and pork arrives from neighboring countries such as Thailand? Are there models for local farmers to enable them to continue their present businesses of raising chicken and pigs? Thus, Philippine agriculture needs to explore fully the huge new market opportunities that AFTA and other new FTAs present for both traditional and new agricultural exports. The farming sector should be made more aware of these enhanced export opportunities, as well as the principal threats from imports, so the sector can better adjust to increased competition.
A subsequent economic situationer was also released by NEDA XII for the Second Quarter of 2011 which again aimed to provide data and other significant information related to agricultural products. NEDA XII also sought to provide both qualitative and quantitative data that reflects the economic performance of a particular region in the Philippines. In line with these goals are: (a) the assessment in terms of crop and fish production, investments, exports, tourism, commodity prices, labor and employment, and peace and order situation, (b) the necessary and significant information about the increasing and decreasing production of the agricultural products, (c) the analysis of cause and effect of the significant changes in the overall performance of Region XII based on agricultural production, and (d) present the prevailing condition and trend of agricultural production exportation of Region XII.
The Regional Economic Situationer for the 2nd Quarter of 2011 has presented a multitude of significant data and information that have effectively illustrated the concurrent economic performance of the region during the said period. Based from the report of NEDA, the favorable weather in the second quarter of 2011 resulted in increased production of most of the high value crops except for asparagus, cacao, coconut, and mango. Crop production also increased for palay and mais. As the second quarter of 2011, there was a 24% increase in palay production due to the increase in area harvested and higher yield per hectare as a result of good water supply. Corn production also grew by about 57% benefitting from the sufficient rainfall during the period. There was a significant increase in the production of some crops namely sugarcane (↑900%), rubber (↑9%), banana (↑6%), coffee (↑2%) and pineapple (↑0.36%). In the production of asparagus, coconut and mango negative growths were recorded. Decline in the asparagus plantation was due to high cost of inputs. Coconut production dropped because of brontispa (a coconut leaf beetle that feeds on leaves). And mango production was pulled down caused by frequent rains which is very critical during fruiting stage.
In fish production, among the sources of fish in the region, only municipal inland production registered a positive growth of 7.64% which is attributed to sufficient water in inland fishing grounds of Cotabato Province. Commercial fishing dropped by 5% due to less fishing trips considering the presence of strong winds and rough seas caused by typhoons Dodong and Egay. Aquaculture production dropped by 1.51% due to less area harvested and lower yield in fresh water pens and cages in Sultan Kudarat. Investments generation in all areas were rising because of favorable climate and lighter requirements for investors.
There was a total of P2.251 billion of investments generated from different areas of the region. The region had a total export of earnings of around US$ 199.275 Million in the 2nd quarter of 2011, or an increase of 23.9% over US$ 160.855 Million earnings in the 2nd quarter last year. The leading export products were canned tuna (with 26% total export earnings), coconut products (with 25% total value of exports. Domestic and foreign tourists continue to visit the region to witness unique festival celebrations as well as to enjoy the splendor of the region’s tourist spots. It was found out that the overall tourist arrivals slightly increase by 0.31% during the period. Domestic visitors increased by 0.23%. However, foreign tourist arrivals declined by about 7% during the quarter. It was concluded by NEDA that if good weather condition will be experienced in the region during the next quarter there will be a continuous improvement in crop production, specifically for palay and other crops.
Earlier studies to compare the performance of different agricultural commodities were also conducted, a good example of which is Exploratory Study on Selected Philippine Agricultural Commodity Import Statistics vis-à-vis Export Statistics of the Exporting Countries by Estela T. DeGuzman of the National Statistics Office (NSO). The study aimed to determine the difference of the statistics from the two sources on the quantity and value of selected agricultural commodities for the years 2000 to 2005. The products covered by the study consist of wholly or semi-milled rice, maize (corn), live poultry, domestic fowls, ducks, geese, frozen meat of bovine animals, apples, oranges, onions and shallots, and garlic. The study focused on the National Statistics Office (NSO) which is mandated by law to generate, compile, and publish a wide range of statistics on population, production, and establishments, among others. One of such statistics was foreign trade, which covered the import and export of goods, and mainly involves the transactions between people of the country and the rest of the world. In principle, these transactions should be recorded at the point at which ownership or the legal title to goods passes between the buyer and the seller. Results show that considerable discrepancies between import and export statistics do exist. The discrepancy may reflect both legitimate conceptual differences between Philippine imports and exports statistics of the exporting countries, as well as errors in reporting. The discrepancy is further substantiated by the results of the Wilcoxon-MPSR test, which show that these differences are significant.
As the study used the 2000-2005 foreign trade data, the discrepancy was determined in the recording of the quantity and value of selected agricultural commodities, the wholly or semi-milled rice, maize (corn), live poultry, domestic fowls, ducks, geese, frozen meat of bovine animals, apples (fresh), oranges (fresh/dried), onions and shallots (fresh/chilled), and garlic (fresh/chilled), as reported/recorded by the Philippines (importing country) and the exporting countries (e.g., China, USA, Brazil, etc). Those commodities comprised about 0.9 percent of the FOB value and 3.0 percent of the quantity (in gross kilograms) of total Philippine imports for the years as reviewed. Bautista and Tecson (1976) had drawn up a fairly comprehensive list of possible sources of difference in partner-country trade data such as, the transport costs and other charges, and differences in commodity coverage and classification.
The study involved source of uncertainty in trade data that was linked to discrepancies in bilateral-commodity trade data. Those discrepancies somehow made country totals “unreliable” and may lessen the integrity of the trade structure. Although the findings shown in the study that the difference between the Philippine import data and the exports of the exporting countries was characterized more to legitimate conceptual differences, data reconciliation with trading partner should be conducted to determine and quantify which factors really caused the said discrepancies thus, can help in explaining the discrepancy between the import and export statistics of trading partners and at the same time aid partner countries to better understand bilateral trade flows. However, the reconciled data was not able to represent changes to the officially published trade figures because reconciliation adjustments normally include a series of estimates that are not sufficiently precise to permit modification of officially published data.
Analytic studies that cover a span of 10 years or more are also conducted to provide a bird´s eye view of the trend in the Philippines´ agricultural exports sector. A research paper conducted by Habito and Briones in fact aimed to give data over the past 20 years of Philippine Agriculture. They were able to provide and reviewed the trend of the country’s performance in agricultural sector, and they related these to the policy environment.
The paper provided significant information about Philippines’ agriculture wherein many still thought that the country was an agricultural economy hence, it is not. The agriculture, fishery, and forestry directly accounted only one-fifth or 20% of the economy’s aggregate domestic output (GDP), and it was since the 1960s that the share of agriculture in the GDP had fallen below one-third. In 1981, it was said that the sector’s share had decreased to 23 percent. On the other hand, the industry especially services had significantly raised the output share than agriculture. They have also provided the data about employments created by agriculture wherein 37 percent, while the industrial sector provided close to half of both outputs and jobs in the economy.
The paper had shown a distinctive trend about the Philippine agricultural sector’s performance wherein it has declined which became desolated when taken against the performance of the country’s neighbors. The study showed some bright spots, however the general picture was remained to be disturbing. Thus, the paper implied the urgent need for determined corrective action as stated by Habito and Briones. Thus, they have provided such indications on how to make the agricultural sector more efficient in creating greater market shares through its exports more that its imports. Yet another large scale statistical assessment is a paper which relates the policy and economic situations of the Philippines over the years of successive administration from Marcos era and up to present.
Moreover, the paper reviewed the country’s economy as it relates to agriculture wherein the sector played a significant role in the economy. Given that 70 percent of its citizens lived in rural areas hence the agriculture contributed 18 percent of the country’s GDP. Two-thirds of the country’s population depends on farming for its livelihood, and about 38 percent of the labor force is engaged in agriculture. From its geography, the country consisted of 47 percent agricultural land wherein Mindanao has the greatest potential for expanded agriculture production.
The study provided also the data of the total area allocated to agricultural crops wherein it is about 13 million hectares, and of that area, coconut production accounts for the largest average harvest area of 4.25 million hectares (10.5 million acres); sugarcane, 673,000 hectares (1.66 million); industrial crops, 591,000 hectares (1.46 million hectares); pasture, 404,000 hectares (998,300 hectares); vegetables and root crops, 270,000 hectares (667,180 acres); fruits, 148,000 hectares (365,720 hectares; and 133,000 hectares (328,650 acres) for cut flowers.
Further, the paper provided information of the four commodities such as rice, corn, livestock and poultry account for about 76 percent of the country’s gross agricultural production. The paper also provided agricultural policy overview wherein here traditionally the employed labor force came up to nearly 38 percent of the labor force while accounting for barely a fifth of GDP, Philippine agriculture was considered to be inefficient. Agricultural production has not been able to manage with the growing food demand of the rapidly growing Philippine population. The Philippines formally joined the WTO in 1995, the year the country became a net food importer and in 1996, to comply with WTO rules, then President Fidel V. Ramos signed Republic Act (RA) 8178, the "Agricultural Tariffication Act." RA 8178 provided a list of sensitive agricultural products that were regulated by tariff-rate-quotas (TRQs).
Consequently, the general and agricultural trade situation stated in the study about the economic liberalization in the Philippines has pushed the country to extend its formal international economic links. The Philippines has a relatively open trading system and has some of the lowest applied tariffs in the region. The Philippines acceded to the WTO in 1995. It is a member of the G-33 and also belongs to the G-20 and the Cairns Group. As a party to the ASEAN Free Trade Agreement (AFTA), its exports to ASEAN benefit from the lower common effective tariff (CEPT) applicable to members’ products. The Philippines has also entered into and/or is currently negotiating a series of regional or bilateral FTA’s with neighboring countries to include China, Japan and Korea. It is an active member and participant in Codex, SPS Committee and OIE. The Philippines has a relatively open trading system and has some of the lowest applied tariffs in the region. Tariff exemptions are also provided by law for a wide range of imported items generally used as production inputs. About 65 percent of total Philippine export was comprised of computer and electronic components, but those products’ raw material is largely imported. Total merchandise exports in 2006 reached $47.0 billion while imports were $51.5 billion for a trade deficit of $4.5 billion.
The study also stated that as of the year 2007, merchandise exports had reached $50.3 billion while imports totaled $55.3 billion for a trade deficit of $5.0 billion. The United States is the Philippines’ most important trading partner. Last year, it exported nearly $8.7 billion worth of goods to the United States and imported approximately $8.4 billion for a Philippine trade surplus of $178 million. Other important trading partners were Japan, Korea and the ASEAN-member countries. The Philippines enjoyed healthy agricultural, fish and forestry trade relationship with the U.S. From 2003-2005, it enjoyed an agricultural trade surplus but experienced a modest deficit in the last two years. The United States was the number one market for Filipino agricultural, fish and forestry exports, with record sales reaching $992 million in 2007 representing an 8 percent increase from the previous year’s level. Major agricultural products exported were coconut oil ($314 million), fish and seafood products ($248 million) tropical fruits and vegetables ($130 million) and sugar ($71 million). The country was the world’s largest coconut oil exporter and the U.S. is its largest buyer. The majority of Philippines farms is small in size, averaging about 2 hectares and is managed by single families engaged in subsistence production. The Philippines has prioritized livestock development – specifically in upgrading the genetics of dairy/beef cattle and small ruminants; investment in pre and post-harvest facilities and infrastructure; and biotechnology research and development. Agricultural development is a priority of the Arroyo administration as agricultural households account for the highest levels of poverty and malnutrition. Performance of the sector, however, was largely a function of weather conditions. Thus, Philippine economy has greatly contributed economic developments with United States as its main marketer. Gradually, Philippines agricultural sector has becoming more efficient but not too sufficient in terms of machineries.
A more comprehensive statistical assessment of the condition of the Philippine agricultural export sector was provided by the Senate Economic Office (SEPO) in 2012 which further summarizes the factors that have contributed to the decline of agricultural exports in the Philippines. According to the report,
, the value of agricultural exports has seen a significant rise in a span of 5 years between 2005 and 2010, garnering an increase of US$ 1,409.89 million FOB value (Bureau of Agricultural Statistics (BAS), 2012). However, its share in the country’s GDP dramatically declined, from 6.03% in 1980 to a poor 2.05% share in 2010. The decrease in GDP share was due to the diversion of Philippine export products to non-traditional manufactured exports and the rapid growth of the service and industrial sector.
It was then pointed out that processed agricultural and agro-industrial products such as coconut oil and pineapple products which comprise the country’s top agricultural exports were those products that were severely affected by the increasing non-traditional manufactured exports composed mainly of electronics goods and services. From agricultural exports’ 37.68% share to the total exports in 1980, it had dropped to as low as 5.21% in the year 2001. In fact, the Philippines’ agricultural exports share to total exports is the lowest among selected ASEAN countries (Habito, 2010), only garnering a very small US$3.2 billion compared to Indonesia, Malaysia and Thailand which had over US$20 billion each (WTO, 2010).
The degrading role of the Philippine agricultural exports to the overall export industry can attributed to the increasing cost of production which equates to high product prices, which then discourages a lot of buyers and investors. Most of our agricultural exports are also in their raw form having little value-added thus local exporters cannot demand for higher prices in the world market. The market for the country’s agricultural products is also very small with USA and Japan receiving the bulk of our agricultural exports (The Philippine-Japan Economic Cooperation in Agriculture, 2004). The US received 24% of the Philippines agricultural exports mainly composed of coconut oil, tuna, pineapple and pineapple products, and seaweeds and carrageenans while Japan received 14% of the total agricultural exports which was then comprised of fresh banana, shrimps and prawns, and also a major destination for pineapple and pineapple products.
To somehow solve the problem and improve the condition of the Philippines agricultural exports, it was recommended that the government refocus its national budget which in the recent years was largely biased towards rice, and allocate resources to expand production of high value commercial crops (HVCC) which the country has revealed comparative advantage. HVCCs include as coconut, banana, pineapple products and mango including sugar, abaca, papaya, tropical fruits (dried), fruits (fresh) and fresh vegetables. Moreover, improving resources to agricultural export commodities and high-value commercial crops would then require more technical and financial support to be fully effective. The government is also urged to explore advanced technologies necessary for the growth and development of the sector and improve access of farmers to credit. Lastly, it was also recommended that the country adopt and exercise best practices and appropriate agricultural production system undertaken by ASEAN countries with higher comparative advantage and commendable agricultural growth.
General Santos City and the Impact of the Local Agricultural Trade Sector on its Economic Development
It is an established fact that the agriculture sector in General Santos City is not considered a key contributor in the development of its local economy. However, the local agriculture sector especially in the exportation of agricultural commodities have picked up in the recent years due to some policies and projects that aim to alleviate the said condition. Despite this, further improvement and changes in some of the aspects of the city were recommended to be fulfilled to gain more momentum n the drive for a stronger agricultural export sector. The following enumerates these recommendations.
From John P. McAndrew of the Columban Fathers Justice and Peace Office, our City-the General Santos City should optimize the value of agricultural and marine resources traded by farmers and fisherfolk to the City as GenSan itself is an agriculture land. We should also accelerate agro-industrial development through encouragement of private investment inflow. By these, first is we should improve our roads according to him. The improvement of Makar Wharf especially, since it is a public port in General Santos City. Investment in developing of the said port is very significant as it is the means of transportation, transporting goods and commodities by sea. Also, we need to give the Wharf a necessarily managerial and construction improvement to augment the operational efficiency and handling capacity as it is critical to the growth of the local economy if the Wharf or the port is neglected.
Next upgrading Air Services, the General Santos City is obliged to give the best improvement and maintenance to its only airport in Tambler. To him, we should improve it furthermore for our own benefit and for the benefit also of nearby municipalities and cities engaged in exporting. The new airport if develop and maintain fully would accommodate jet aircraft with high payload capacities, as it is said, "Infrastructure development is the most important factor in the development equation and those basic installation and facilities have to be in place before the economy can take off." John P. McAndrew assumes that once we improve our roads and Wharfs and airports, fish ports, and agro-processing centers, then production will increase and diversify within the city, economy will boost and more opportunities for the settlers. Port Rehabilitation and Expansion: The Makar Project in the Philippines-a study of Glenn P. Jenkins and Gangadhar P. Shukla on 1996 aims to identify the variables that would have an important impact on rehabilitation and expansion of the Makar Port in General Santos City, with these they too, wants to demonstrates the gains that could be made if international assistance be rehabilitated and expanded.
Inter-island shipping is a major industry in the Philippines because of the archaeological nature. And so, government running the country should see to it that pots and sea transportation are in good condition. Failure in this would mean loss or delayed in economy improvement. The City of General Santos being the Tuna Capital of the country should focus first and foremost as obvious on its sea transportation aspects. Sarangani Bay, being a well protected deep bay got the virtual absence of typhoons and so makes an excellent location for a port.
Makar Port, located in General Santos City's northern side of Sarangani Bay in Mindanao lies along the main north-south trading axis which skirts Mindanao on its western shore is the one local government should focus among these sea transportation aspects. The Makar, strategically located in an agricultural productive area with its hinterland extending to 80-90 kilometers inland coinciding with the productive province of South Cotabato is indeed difficult to developed knowing that it is always used not only in export purposes but also in some travelling services but developing basic infrastructure in this fishing ports equipped with docking and cold storage facilities reduces post-harvest losses so as increase supplies of aquatic product, both beneficial to all. The Makar transformation resulting to reduce post-harvest losses is also studied further in the study Fishing Ports Development II last February 2003 with their objective in developing modern fishing port complexes.
Danilo C. Israel and Rutchel Marie Grace R. Roque in the Analysis of Fishing Ports in the Philippines want us to investigate fishing port development in the Philippines in light of perceived problems of port under-utilization and marine resource depletion. The city government should aggressively pursue this port development with caution since it has strong forward and backward linkages to the coastal municipalities, regions and the national economy, also arbitrary and indiscriminate form of development can be irretrievably costly. These port developments surely help lower the significant post-harvest losses in fisheries and result to a better utilization of marine fisheries resources. Ports in the Philippines are classified as fishing ports(which are either municipal or regional, are those which primarily serve the fishing industry and function as the main collection and distribution center of fish), feeder ports(are ports constructed primarily to provide linkage among neighboring small islands and nearby urban centers and generally cater to small passenger and fishing vessels), and lastly commercial ports(are either private , which serve the needs of their owners, or public which are owned and operated by the government and cater to the general public. The adequate provision of fishing ports and post-harvest facilities is critical to the full development of the Philippine fisheries sector. The widely dispersed fishing areas of the archipelago require strategically-sited landing points, where catch can be immediately sold, stored, processed or shipped to markets. Furthermore, the highly perishable nature of fish necessitates the provision of enough facilities so that post-harvest losses can significantly reduce.
Wilbur Smith and Associates Columbia, SC, USA in association with TCGI Engineers-Manila, Philippines Sycip, Gorres, Velayo& Co. Manila, Philippines in the study General Santos City: Air Service Improvement-Environmental Assessment/Environmental Impact Statement on May 1991 aims to determine and improve Air Services to General Santos City in order to support future agricultural and industrial development of General Santos City and the surrounding area of South Cotabato Province, Mindanao.
In the study Buayan to General Santos City: More than just a Physical Change, they talk about us to consider too, the Municipal City of Buayan that is needed to be cultivated since the municipality is a part of the said city. Being near to the General Santos City proper and since the existing airport in the City is located near the eastern boundary with the Municipality of Alabel, adjacent to the Buayan River, Buayan too should be developed so that it could cope up and help the city nourished investments and took care export commodities the General Santos couldn't accommodate. As our own GenSan improved and moved to industrialization, nearby places should follow too. For the municipality, physical and cultural landscapes should be developed, seashores and bunkhouses too, farm lots should be ready for distribution and so was different houses construction. It is likely that as our own city booms more settlers are expected and so more space and establishments are needed and to be build, if still exceeds there comes the role of the nearer municipalities and cities.
For Allan Vera of Sentrong ikauunlad ng katutubong Agham at Teknolohiya (SIKAT) for the NGOs for Fisheries Reform, he said that we should facilitate the fisheries trade policies as our country being archipelago is rich in sea resources especially fishes. In his study entitled "Issue Paper on Philippine Fisheries Trade" with the objective that focuses on trading fish resources as trade has always played a significant role in the fishing industry worldwide, with different regions of the earth unevenly endowed of fishery resources and fish, fish being the most widely traded food commodity with 45% of the world catch being traded internationally. In facilitating these trade policies, Vera sates that we should identify the means to protect the local industry from dumped products and the government should provide subsidies to domestic fisheries and eliminate inefficient fishing in the industry so it would result in less fishing pressure and or increased natural resource management efforts in cultivating sea treasures.
Being dubbed as the Tuna Capital of the Philippines, General Santos City boasts of a world-class fish port and a hub of tuna canning facilities. A recent article published in the Manila Bulletin provided latest updates about Department of Agriculture’s cutting the Tuna export fee as Agriculture Secretary Proceso J. Alcala had slashed the 3 percent tuna export fee imposed in 2010 to only 0.2 percent as a means to make canned and fresh tuna shipped out of Gen. Santos City more attractive in the global market. In the article, the agriculture chief ordered the cut after the National Fisheries and Aquatic Resources Management Council (NFARMC), which suggested the impost in the first place, yielded as the clamor for its abolition spread in the fishing industry. Hence, it recommended a steep decline of the fee in a meeting held on July 22 wherein Alcala announced the reduction in a speech delivered during the 13th National Tuna Congress at General Santos City.
The article provided the situation on the impost that was slapped to industry players under Fisheries Administrative Order (FAO) 233 issued in 2010, largely on the basis NFARMC’s recommendation. Further, Bureau of Fisheries and Aquatic Resources (BFAR) national director Asis G. Perez said the reduced fee was equivalent to P1,650 or 0.2 percent of fish raw material value computed from the previous year’s average wholesale price, whichever is higher, based on price surveys of the Bureau of Agricultural Statistics (BAS.)
Commercial fishing corporations and canners have described the export levy as an additional burden and a disincentive to them since it raises the prices of tuna and its byproducts, making them less competitive in the foreign market, said the SOCSKSARGEN Federation of Fishing and Allied Industries, Inc. (SFFAII.) Outgoing SFFAI chairman Marfenio Y. Tan claimed FAO 233 was “counterproductive and inconsistent with the thrust of the government to promote exports.” NFARMC promulgated FAO 233 in compliance with the spirit of Republic Act 9147, also known as the Wildlife Resources Conservation and Protection Act of 2001, and as a means to moderate the capture of migratory tuna
Proposed policies crafted by NFARMC are sent to the DA secretary for consideration and approval. Sixty percent of the country’s tuna catch is unloaded at General Santos City, which is the country’s tuna capital. The tuna industry is presently facing hard times as a result of a ban on fishing in the high seas imposed by the Western and Central Pacific Fisheries Commission (WCPFC) since January 1, 2010. Last year, the country’s tuna production totaled 387,101 metric tons (MT), 9 percent less than in 2008. Of the gross volume, commercial fish catch accounted for 70 percent or 271,625 MT, 14 less than the record for 2008, said SFFAII. The total value of commercial fish output in 2010 was P17 billion, with SOCSKSARGEN region accounting for P10.7 billion, or 63 percent. Moreover, the articles was not able to fail the delivered updates of Total tuna exports for the same year were valued at $359.4 million, roughly P15.45 billion at the exchange rate of P43 to a dollar. Of the total volume, about 70 percent came in the canned form or 76,800 MT, with the balance of 33,688 MT fresh, chilled or frozen. Canned tuna exports in 2010 dropped by 8 percent compared to the 2009 record, SFFAII revealed.
On a different note, if the entire agriculture sector and fishing industry of General Santos is to be considered, the city’s local economy can be considered as fairly strong. The city also enjoys good rainfall, much to the advantage of local farmers, thus the City produces export quality high valued crops such as corn, coconut, pineapple, asparagus, banana and rice. It also yields quality exotic fruits, vegetables and cut flowers. The city is also a top producer and exporter of quality livestock such as poultry, hogs, and cattle (By Mindanews, Tuesday, June 26, 201, Filed under: Agriculture, Top Stories). But because of the growth of population and economy in the passing of time, some of the city's agricultural lands have been converted into built up areas in order to allocate the growing need of habitations and working spaces of human. Other than a strong agricultural sector, the fishing industry is also strong in General Santos City thus making Gensan the Philippines' tuna capital. The city has the capacity to produce in abundance high-quality tuna products which are being marketed locally and internationally.
With increasing demand for fish spawned by the increase in population, the fifties and sixties brought the motorized fishing into the area resulting to the increase of catch from 150-300 kilograms per fishing trip (BRC Newsletter - General Santos City: Business Resource Center, Notre Dame of Dadiangas College, March-April, 1992, p. 4.). This further improved with the use of a pump boat which could carry a load of 800 to 1,000 kilograms (Business Resource Center, 1994: 2-34). Tuna fishing serves as a main livelihood not only to the small fisher folk and fish workers but also to the small tuna producers commonly called here as tuna hand liners. But this livelihood is now threatened due to the inevitable globalization (Pamalakaya FarSouth Mindanao and Fisher folk Resource Development Center). Big local and foreign tuna producers and exporters have denominated all the more the Tuna Fishing sector, which is from catching or harvesting, to processing and marketing/exporting of the produce. It can not only be found in General Santos but also in the entire Tuna Fishing Sector of the country. Small fisher folk and fish workers who are still employing the primitive way of catching tuna are definitely no match with the big players who do not only have capital but also enjoying as well as support of the government.
SOCKSARGEN is teeming with both marine and inland water resources. Because of SOCSARGEN’s contribution to the tuna production, the Philippines ranks second in Asia and 7th in the world as leading producer of sashimi grade tuna. Fishing, particularly commercial tuna fishing is the prime industry in General Santos City and is in fact largely. While there is a promising tuna production, the benefits of it do not actually go to the fisher folk and fish workers but being cornered essentially by the dominant players. Because of the large volume of daily catch, the tuna canning industry became the leading support industry in the processing, marketing and exportation of this prime product. Fishing is a PhP50 billion industry in the Philippines, contributing about 4% of the country's GNP (Pamalakaya FarSouth Mindanao and Fisher folk Resource Development Center). But the real beneficiaries of the importation and exportation of fishes and even the fishing vessels/boats/materials are not the marginalized fisher folk but the big businessmen and their collaborators in the government.
Continuing this fast pace of growth, General Santos City by the nineties was considered the fastest-growing city outside Manila joining the ranks of highly urbanized cities in the country "outpacing older cities like Baguio, Iligan and Cotabato" with an intercensal growth rate of 5.3 per cent considered "one of the highest in the country." Now, with the advocacy of the General Santos City’s gateway concept as part of the growth corridor of SOCSARGEN, the economic resources and potentials of this growth corridor define its comparative advantages as a development area. Even though General Santos City becomes the tuna capital of the Philippines and that greatly contributes to the GNP of our country, we could not deny that there are lots of problems remain. However, these problems by themselves are not insurmountable. From the grievances of the fisher folks and fish workers for the unjust policies that would mean the natural death of the small tuna fishing depending on the former for their livelihood and subsistence. It is not wrong to be more advance in technologies and in fishing process, only if ordinary citizens could also benefit unto the importation and exportation of fishes and even the fishing vessels/boats/materials and not only the big businessmen and their collaborators in the government. Given the significant role that agricultural commodities play in all of our lives and their vital importance for millions of the world’s hardest working and most vulnerable people, increased attention and concerted action are long overdue.
