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The percentage of the population living in rural areas
declined from 68 percent in 1970 to 57 percent in 1990, and the share of the
labor force engaged in agriculture, forestry, and fishing also decreased to
less than 50 percent by the late 1980s. Roughly two-thirds of agricultural
households farmed their own land or were tenants; the others were landless
agricultural workers. Some 75 percent of agricultural value added (see
Glossary) came from crops and livestock. The remaining 25 percent came from
forestry and fishing (see table 8, Appendix). Value added in agricultural
crops grew rapidly in the early 1970s, averaging growth rates of 7.7 percent
(see table 9, Appendix). In the 1980s, however, with the exception of corn,
which was in growing demand as an animal feed, the growth rate of
agricultural production declined and was sometimes negative for bananas and
sugarcane. Low world prices combined with the high cost of inputs such as
fertilizers were two of the most important reasons.
The government pursued sometimes contradictory goals of maintaining cheap
food and raw material prices, high farm income, food security, and stable
prices, at times through direct intervention in agricultural markets. In
1981 the National Food Authority was created. It was empowered to regulate
the marketing of all food and given monopoly privileges to import grains,
soybeans, and other feedstuffs. The ability of the National Food Authority
and its predecessor organizations to stabilize prices and keep them within
the established price bands, at either the farm gate or the retail market,
has been quite limited because of insufficient funds to affect the market,
strict purchasing requirements, and corrupt practices among authority
personnel. In 1985 the role of the National Food Authority was reduced, and
price ceilings on rice were lifted. Beginning in the 1950s, government
efforts to stimulate industrial development, such as tariffs on manufactured
goods, overvaluation of the currency, export taxes on agricultural
commodities, and price controls had a deleterious effect on the agricultural
sector, making it relatively unprofitable. On the other hand, irrigation
water was distributed at below-cost prices, and fertilizer manufacturing was
subsidized.
Beginning in the latter half of the 1970s, the Marcos regime gave increased
attention to agriculture and the rural sector in general, including
agribusiness development. The Aquino government continued that emphasis,
although its policy evolved from a commodity-specific orientation to a
general, cropdiversification approach that relied more on market signals to
guide crop selection. The rice-price stabilization program remained in
effect, and a program was implemented to increase small-farmer access to
postharvest facilities such as warehouses, rice mills, driers, and
threshers.
Providing credit to the agricultural sector, particularly to small-sized and
medium-sized farmers had been a government policy since the early 1950s, one
that met with mixed success at best. By the early 1980s, there were
approximately 900 privately owned, rural banks, which were the principal
implementors of government-sponsored, supervised credit schemes. The
Masagana 99 program was initiated in the early 1970s to encourage adoption
of new, high-yielding rice varieties. No-collateral, low-interest loans were
made available to small farmers, mainly by privately owned, rural banks,
with the government guaranteeing 85 percent of any losses suffered by the
banks. In general, however, regulated interest rates made rural banks
unattractive to depositors.
In 1975 more than 500,000 farmers participated in the Masagana 99 program.
By 1985, however, the program had expired because of high arrearage and the
tight monetary policy instituted as part of an agreement with the IMF. The
program was revived in the Aquino administration's Medium-Term Development
Plan, 1987-92. According to a government report, however, as of 1988 the
program had not yet reached most of the intended beneficiaries. Government
efforts were also underway to rehabilitate rural banks, the majority of
which had experienced severe difficulties during the economic crisis of the
early 1980s and the subsequent monetary squeeze.
Data as of June 1991
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