Effects of agricultural liberalization on farmers

1. Effects of agricultural liberalization on farmers

2. Multiple liberalization policies • IFI Sructural adjustment prescriptions • For Philippines first SAP in 1980 • WTO AoA • AFTA

3. Philippines response • Social safety nets • Modernization – Agriculture and Fisheries Modernization Act • Reduction of cereals production • Promotion of HVC • Agribusiness – farmer-peasant nexus • Problems • Framework on agricultural development • Resources and government capacity

4. Philippines agriculture performance under trade liberalization Philippine Agricultural Production (1990-2003)  Volume in million metric tons; growth rates in percent    Year Volume GrowthRate  1990 61.57  1991 64.11 4.13 1991  1992 63.84 0.42 1992  1993 65.77 3.02 1993  1994 68.53 4.20 1994  1995 62.16 -9.28 1995  1996 69.13 11.20 1996  1997 68.30 -1.20 1997  1998 57.93 -15.18 1998  1999 65.76 13.51 1999  2000 68.11 3.58 2000  2001 68.00 -0.17 2001  2002 67.02 -1.43 2002  2003 71.61 6.85 2003  Average 65.84 1.45

5. Agricultural Production Per Capita, 1990-2003 ('000 metric tons)

6. Balance of Agricultural Trade(FOB Value in million US dollars)

7. Agricultural Employment (1990-2003)

8. Assumed Implications on agricultural sector • Import surges and dumping • Price competition • Pressure on farmgate prices • Restructuring in agricultural production • Restructuring in control over land

9. ACTUAL EFFECTS –Different levels of development- not just between countries- but also among crop and agricultural sectors

10. Different levels of agricultural development in Philippines • Subsistence and commercial food production by small farmers • Traditional export crops • Modern corporate agribusiness

11. Subsistence and commercial food production by small farmers • Subsistence food production • Cereals and tropical vegetables • Small scale commercial domestic food production • Small scale, relatively low input commercialcrops such as vegetables, poultry and livestock • Negative effects of dumping and import surges of cheap imports • Cumulative effects of cheap imports on farmgate prices without reducing production costs

12. Subsistence and commercial food production by small farmers • Farmer bankruptcies further complicated by resulting increasing tenurial issues and merchant dominance, further reducing profitability for small farmers • Restructuring through crop conversion combined with contract growing, plantation leases and corporative schemes lead to peasant and farm worker economic and even physical displacement

13. Traditional Commercial crop production • Traditional export crop • Predominantly produced in small farms • Relatively low input export crop production such as sugar, coconut oil, hemp • Economic failure due to uncompetitive-ness in international markets and even in domestic market • Bankruptcies for small farmers and inefficient mills, displacement of farm workers

14. Expansion of TNC agribusiness • Modernization program and thrust for efficiency and competitiveness essentially favorable for TNCs without resorting to high government intervention in technology, capital, trading • Increase or re-concentration of land to TNC-comprador/landlord concerns through various schemes