Now You Know
Top 5 challenges faced by Filipino farmers today
[Published in partnership with PhilSEED]
According to the 2021 data released by Philippine Statistics Authority (PSA), farmers and fisherfolk remain the poorest in the country, farmers with a poverty incidence of 30%, almost double the national poverty incidence of 18.1% according to the World Bank. This is also more than three times the global poverty incidence of 8.8%, as estimated by World Bank in 2021 (9.3%, 2020). Poverty is one issue, but income inequality is another. Farmers, who mostly belong to the bottom 50% earners in the country, only share 14% of the national income. Many of these farmers are among the nearly 20 million Filipinos living in extreme poverty.
So, why are many Filipino farmers poor? Here are the five top challenges they face today:
Capital First, small-holder farmers don't have sufficient capital to afford high input costs such as fertilizers, pesticides, and other costs. As a result, they resort to microfinancing or, worse, money lenders that charge as high as 10-20% interest rate per month. This is due to many barriers in accessing formal credit institutions, such as physical access, high transaction costs, and the complexity of the process. In 2020, the banking system generated a total of $116.5 billion in loanable amounts, but banks were only able to loan 6% for the agriculture sector, which is only 10% compliance rate of the banks' credit quota as mandated by the Agri-Agra Reform Credit Act of 2009 (RA 10000).
Postharvest Facility The second challenge is the lack of, or limited, postharvest facilities. Without proper postharvest facilities, harvests are not processed or stored correctly, and farmers often must sell their produce at a reduced price to avoid spoilage, wastage, or contamination from pests and diseases. Improper handling or storage can also decrease the quality of the produce, resulting in significant income losses for the farmers. In the Philippines, postharvest losses among major farm commodities range from 10-50%.
Climate Change Climate change is undoubtedly one of the greatest challenges currently faced by farmers. Unpredictable climate patterns are having a severe impact on agricultural productivity. Rising temperatures can lead to reduced crop yields, while extreme weather events such as floods and storms are causing crop losses. The Philippines, due to its location in the West Pacific, is particularly vulnerable to climate change. According to the 2021 Global Climate Change Index, which used 2019 data, the Philippines ranked 17th in the world (it ranked 2nd in 2018) as the most affected country by extreme weather events. From 2010 to 2019, the damage incurred due to natural disasters and extreme events amounted to $8.3 billion. Typhoon Rai, which struck the Philippines in December 2021, caused over half a billion dollars ($545 million) in damage, $215 million of which was to agriculture crops and farmland. This storm resulted in 420,000 hectares of land being lost to floodwaters.
Market Access The farmers’ access to market is another varied and complex challenge. The market structure in the Philippines is highly concentrated in the hands of a few large buyers. This limits the access of small-scale farmers to the market, as they lack the capacity, like logistical capability, to compete against the larger buyers. Poor infrastructure such as a lack of roads, bridges, and transportation networks make it difficult for farmers to access markets to sell their produce. Under the 2023 national budget, the government allocated $235.75 million of its $770.89 million agriculture budget for the construction of 1,000 kilometers of farm to market roads which can hopefully improve the situation. Furthermore, the market is largely informal, and farmers often struggle to find reliable buyers for their produce. There is also a lack of information on the market, such as prices and market trends or demands. Without this information, they are unable to make informed decisions about the crops they invest in or the prices they charge.
Innovation It is essential for the development of the Philippines' agricultural sector that innovative technology and practices are adopted. This can help farmers to become more productive, efficient, sustainable, and profitable. Examples of such innovations include precision agriculture, automated systems, robotic technologies, improved crop rotation, diversified crop production, new crop varieties, inventory management, and improved marketing strategies. However, there are still gaps in the adoption, dissemination and implementation of technology that need to be addressed by the Philippine government. The country's total factor productivity growth rate, which measures the overall efficiency of the agriculture sector, is currently only 1.7% (2021), lagging behind most of the SEA countries, except for Timor Leste and Laos. This is caused by the slowdown in technological progress, and the Philippines must allocate more resources to produce, or adopt, innovations in technology, and ensure the successful adoption of these needed technologies and efficient farming practices.
The importance of Agriculture in the food sustainability and poverty reduction efforts of the Philippines cannot not be overemphasized, and the multi-faceted challenges on agriculture demand an ecosystem change that necessitates the participation of all stakeholders in collective action. A recent study has revealed that the majority of Filipino farmers do not wish for their children to pursue farming, and with the average age of Filipino farmers at 53, unless young people are convinced that there is a brighter future in farming, we will experience a shortage of farmers in the next decade.
This article is contributed and researched by Josh Mahinay, a social entrepreneur who is involved in various enterprises and social impact initiatives in the Philippines. His interest in business for social good inspired him to pursue entrepreneurial and social innovation studies at the Asian Institute of Management (AIM) in Manila and at the London School of Economics and Political Science (LSE) in London.