Five Reasons Why Agribusiness Matters

The Center for Food and Agribusiness (CFA) launched Dr. Rolando T. Dy’s latest book, Agribusiness and Rural Progress: Actions for Poverty Reduction, last March 21. The new book pushes for poverty reduction through a revitalized agribusiness sector. Its 86 articles cover the global and ASEAN fronts, local and regional perspectives, rural development, governance, and commodity focus.

 

For the Philippine economy, poverty is an agricultural phenomenon. In 2015, the national poverty incidence was at 21.6%, the highest among ASEAN peers. Three quarters of the poor are in the rural sector where farming and fishing are the main livelihoods. The book notes that high rural poverty can be attributed to unproductive traditional agriculture and fisheries. It is an offshoot of a lack of investments, weak institutions, poor governance, and unfavorable policies.

Many people are not familiar with the depth and breadth of agribusiness. Thus, Dr. Dy* shares five reasons why agribusiness matters:

Agribusiness has linkages with the three main economic sectors: agriculture, manufacturing, and services. Agriculture is the main source of food and of raw material for food manufacturing.

1. Agribusiness contributes a third of the country’s gross domestic product (GDP). It directly contributes eight percent of GDP; agri-food manufacturing provides 10%. Its indirect contribution (that is, forward and backward linkages with manufacturing and services) is estimated at 35% at current prices in 2016. Food and beverage household spending alone accounted for 42% of household spending in 2016.
2. Agriculture is the second biggest employer, with 10.5 million workers, equivalent to a little over a fourth of the total employed in April 2017. The services sector employed 22.3 million (55% of total employed) and the industry sector, 7.4 million (18%). These sectors employ those related to agribusiness industries such as fertilizers, storage, transportation, farm machinery, wholesale and retail trade, and packaging products. For example, Jollibee and McDonald’s are in agribusiness; they buy and process farm goods (for example, meat), process and package them in their commissaries, and distribute the products in retail outlets.
3. Fresh and processed agri-food exports reached US$5.1 billion in 2015. The biggest export is coconut oil, which contributed US$1.2 billion, followed by fresh banana with around US$1 billion. Other exports in the top five are pineapple (fresh and processed products), tuna, seaweeds and carrageenan, and tobacco (manufactured). Emerging products include coconut water and niche dark chocolates.
4. Agribusiness has the potential to turn around the high poverty incidence in the country of 21.6% in 2015 through higher productivity, farm diversification, and agri-industry. Currently, rural poverty incidence is 30% (or nearly 17 million people). A dynamic agribusiness means a robust economy.

Source: Philippine Statistics Authority
* Dr. Dy is the Executive Director of UA&P’s Center for Food and Agribusiness. He has been an observer of international agribusiness development for 40 years. Among his experiences are engagements in the ASEAN countries, especially Indonesia, Malaysia, Thailand, Vietnam and the Philippines. His earlier books include Agribusiness and Inclusive Growth: An Expert’s Advocacy (2015) and Food for Thought: How Agribusiness is Feeding the World (2009). To know more about agribusiness, you may join this program: http://www.uap.asia/academics/continuing-education/agribusiness-executive-program/