Scenarios and Options for Productivity Growth in Philippine Agriculture: An Application of the Agricultural Multi-market Model for Policy Evaluation (AMPLE)

Sustaining and accelerating agricultural growth remain a development imperative in view of the persistent rural poverty and emerging threats to food security. Currently, agricultural policy is skewed toward domestic protection for self-sufficiency and production support through subsidies rather than toward raising productivity. However, growth through expansion of inputs (including land area) may be less sustainable compared with growth through improvement in productivity.

In this study, the scenarios for Philippine agriculture under alternative development strategies were evaluated using a new supply and demand model, i.e., the Agricultural Multi-market Model for Policy Evaluation. The model simulations suggest that under the business-as-usual or the reference scenario, agricultural growth is headed for a slowdown. Trade liberalization alone has a mixed impact, with the prominent agricultural importables suffering a contraction. On the other hand, accelerated growth in productivity is a potent strategy to restore output growth, leading to improved outlook on production, exports, and consumption, even when combined with trade liberalization. The productivity route toward growth may be based on a mix of traditional and innovative instruments such as investments in R&D, extension, rural infrastructure, protection of the resource base of agriculture as well as human capital formation, and institutional reforms.