Professional Documents
Culture Documents
A Research Paper
Submitted to the Institute of Economics
University of Asia and the Pacific
In Partial Fulfilment
of the Requirements for the Course
Basic Economics (FOS101)
ACB 501 – D
(15:00 – 17:00)
agricultural sector. This God-given feature lets the Filipinos enjoy a rich and wide
supply of crops, livestock and poultry, fishery, forestry, and farm products that
are not only used for the country’s utilisation and consumption, but also as a
source of the large percentage of our country’s revenues1, accounting for about
an average growth rate of 14.6 percent of our GDP (Gross Domestic Product)
and an average growth rate of 4.6 percent of our GVA (Gross Value Added) 2.
Among the Philippines’ top agricultural exports include: coconut (oil and other by-
products) topping the list, followed by fresh bananas, corn, pineapple, and
sugarcane products3. However, since the agricultural sector is the most abundant
part of out country, why is that it has also the most number of people living in
poor governance: corruption and bureaucracy and the neglect in the agricultural
development. These two reasons are directly related - referring to the poor
management of the policy people whose interest have gone and continuously
(Fink, 2005). This poor management in agriculture has resulted to low levels of
poverty which constitutes the majority of the poor. This phenomenon is due to
unfortunately, pursue their personal agendas while they are in government posts.
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Objectives of this paper:
the quality of education and the maximisation of the agribusiness sector, which
are all promising. However, these studies, although having stressed the factor of
bad governance (i.e. poor management, graft and corruption, etc.), in one way or
supported by Villegas (2005) that high level of corruption, which is about 30% to
50% of funds bided for government projects, act as a deterrent not only to
economic growth but also the projects aimed at alleviating poverty. Thus, “[…] no
matter how hard and persevering efforts of both public and private sectors try:
(i.e. the investors, the not-for-profit organisations (NGOs), and other ‘helping
maximisation of the agribusiness, and so on, such efforts would just be a futile
agricultural sector7. Thus, the findings of this study hope to contribute on how the
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Scope and Limitation
This study focuses on describing how poverty in the agricultural sector can
Moreover, this initial study also covered some minimal information regarding
corruption in the other sectors of society (education, taxes, etc.) In addition, only
Rodney Fink’s study was cited and used in providing anti-corruption strategies in
sectors which constitute the rural poor – accounting for the majority of the people
________
1
United States Library of Congress. The Philippines’ Agricultural Geography. Accessed 9 May
2007. Avail. from http://countrystudies.us/philippines/60.htm
2
Villegas, B. M. “Filipinos as the Ultimate Resource.” The Philippine Advantage, UA&P. 2001. 83–
85
3
Department of Agriculture (D.A.). “D.A. to Tap Emerging Organic Food Market to Help Boost
Farmers’ Incomes”. Accessed 23 April 2007. Avail. from http://www.doa.gov.ph/.ihdel;Internet
4
Villegas, B. M. “Filipinos as the Ultimate Resource.” The Philippine Advantage, UA&P. 2001. 92
5
Villegas, B. M. “Philippine Civil Society: Main Agent for Alleviating Poverty.” The Philippine
Advantage, UA&P. 2001. 105-115
6
See for further reading: Fink, R.J. “Agriculture.” Fighting Corruption in Developing Countries:
Strategies and Analysis, Edited by Bertram I Spector, USA: Kumarian Press, Inc. 2005. 145-152.
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Refer to this for further reading: Frank-Jürgen Richter and Pamela C.M. Mar, Asia’s New Crisis:
Renewal through Total Ethical Management, John Wiley & Sons, Singapore. 2004.
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II. Review of Related Literature
“For all the magnificent testimonies to man’s superior skill and intellect in
the poor coexisting with the rich. That is why, there is a call to empower the poor
for three main reasons: for a development change, for the common good, and to
promote the dignity of the human person (Villegas, 2005). However, there are
factors why the Philippines have increasing rates of poverty. Before we deal to
resources or income. In its most extreme form, poverty is a lack of basic human
needs, such as adequate and nutritious food, clothing, housing, clean water, and
consumption levels, but also the deprivation arising form illiteracy, malnutrition,
bad health, poor access to water and sanitation, vulnerability to economic shock,
The poor are categorised under the following: tribal communities, upland
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Causes of Poverty
The Philippine Advantage 2nd Ed. Presentation, they are as follow: flawed
list (2005), says “[…] all these causes of poverty are interrelated with bad
Good governance
oversee the generally accepted set of institutional guidelines that are deemed
necessary for the direction and performance of corporations [or any particular
sector, i.e. government, etc.]. The principles of [good governance ensure the
of the board of directors (Sun, 2004). Sun (Corporate Governance, 2004), adds
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Effects of bad governance in the agricultural sector of the Philippines
revised Poverty Incidence) has shown that 60 to 80 percent of the population live
condition of the poor. From the survey of the National Statistics Office and
estimation of Villegas (2005), from the observed large difference between the
actual growth rate per capita gross domestic product (GDP) and the forecasted
or estimated trend line from the period 1971 to 1992 in Figure 5 (See Annex), we
can pinpoint that misguided macroeconomic policies failed to maximise the use
of our labour and capital resources [agricultural industry]. With the wrong and
misguided policy mix on interest rates and the peso-dollar exchange rates,
economic incentives resulted into a bias against the agricultural sector. The bias
against the agricultural sector resulted into underinvestment (i.e. both public and
private), into the agricultural sector thereby resulting into very low productivity
The policy bias consequently resulted into the slow and ill-progressive
development of the Philippine agriculture. [T]his misguided policy was critical for
of our labour force, and, at least 40% of the employed labour force is directly
dependent on the agricultural sector for income or wages. The high level of
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sector due to misguided policies (emphasis added). In fact, 49% to 52% of poor
(Villegas, 2005). The economic development literature cites the vicious cycle of
poverty: low investments lead to low productivity, then to low output and low
income which ultimately lead to low savings. Low savings lead to low
vicious cycle (Dy, 2000). Thus, to attribute the increase in the number of poor
policy bias from the 70s to 80s led to the mediocre performance of the
By looking at Table 3 (see Annex, where funds and tax evasion can be
annually through tax evasion and corruption. This huge money could go a long
way in enhancing low levels of agricultural investments in the past that have
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Corruption Vulnerabilities in the Agricultural Sector
population and, for the most part as reiterated, a very impoverished segment.
Farms in these countries tend to be small: in Africa, using Fink’s (2005) example,
more than 90 percent of the farms are in the hands of the small landholders. In
employs than a third of the labour force, and the average farm size is large (Fink,
2005). According again to Fink (2005), for both groups of countries, corruption
issues and vulnerabilities affect land title and use, credit availability, quality of
supplies, water allocation, product standards and certification, marketing, and the
agricultural sector is – due to big budget and revenues allotted in the agricultural
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III. Conceptual Model
Bad
Governance
Causing
Increase in
Flawed
Poverty in
Economic
Rural
Polices
Areas
Anti – Decrease in
Corruption Poverty in
Interventions Rural Areas
food, clothing, housing, clean water, and health services (Corbett, 2006). Tracing
the majority of whom and where poverty is are the people in the agricultural
sector, namely: the upland farmers, landless (tenant) farmers, small farm
The agricultural sector of the Philippines is rich teeming with all the export
Filipinos could ever ask for, so should the people living there supposedly, since
the rich agricultural sector is their source of living. However, they remain in
poverty. Worsening rates of poverty has long been a problem in the agricultural
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sector because of bad governance. The neglect in agricultural development
corruption to some factors, namely: land title and use, credit availability, quality of
supplies, water allocation, product standards and certification, marketing, and the
wrong allocation of funds needed for the agricultural industry to develop. Huge
313,700,000,000Php (from tax evasion and corruption) (see table 10.3 in the
annex), which could have been used to generate jobs for the majority of the poor
– who solely depend on the agricultural industry for their bread and butter. Thus,
the vicious cycle of poverty starts (see annex diagram 0.1): The neglect in
quality of goods. With low investments comes high unemployment rates due lack
of funds to pay labour fees and other maintenances; thus, decreasing the output,
then the income, and lastly the savings. When savings have been used up
triggering the incapability of eating less than three times a day, poverty then
starts to increase.
Corruption Study (PAGCS, 2006) for the Department of Agriculture. They are as
follow: 1.) the evaluation of corruption by sector by starting at the market and
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working backwards to production (warehousing, transportation, licenses, grading,
etc.) 2.) The exploring of the possibilities for the processor in granting credit to
the farmer/s where commodity chains are shortened. 3.) The promotion of
titling process. 4.) The continuous encouragement of the farmers’ entry into
avoidance of projects that allow rent seeking via hidden subsidies. Assuming
while developing the agribusiness industry, thus, empowering the poor. This is
strictly monitored by vigilant and honest people, and so the rest of anti-corruption
increase in demand for employment, and others would be given loans to start
their own small farms. If this happens, there would be an increase in investment,
in savings and consumption – good for the economy; thus, alleviating poverty in
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IV. Research Question:
What are the possible anti-corruption interventions that can court BAD
Philippines? (similar answers can also be found in the second paragraph in the
Graft Corruption Study (PAGCS, 2006) for the Department of Agriculture are as
follow:
methods; build the case for the government to monitor the problem areas while
corruption by sector. Shortening the commodity chain from the producer to the
example) and the ultimate processor of the product will be some initial practices
The exploring of the possibilities for the processor in granting credit to the
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This can be done by developing creative approaches for solving the
problem and the supply chain simultaneously. A good monitoring of the credit
granting is advisable.
will also help enhance involvement of the private sector in land survey, titling,
and real estate sales. Remove the legal and regulatory restraints to private
ownership.
are boosted, encouraging to join the competition along with private sectors, the
private sectors will be threatened in the business; thus, ending up giving bribes to
the farmers not to join. Once they give bribes, they can be filed with bribery or
and certification, the promotion of quality controls and improvement centres will
be hastened.
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The promotion of over- sightedness of private sector groups
attract them to invest in farms and other agricultural business; thus, opening jobs
for other unemployed farmers. This can be a start of a god monitoring of good
stakeholders
developing new projects so that they will be aware of what is happening in their
The avoidance of projects that allow rent seeking via hidden subsidies
Hidden subsidies are risky. They can be sometimes illegal or may have
some other business other than agricultural; thus, choosing to lease projects
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V. Discussion and Analysis
will also be presented here how to bring back the life in the agricultural sector if
makers who are in-charge in the industry. It will be helpful to quote Villegas
(2005) in uprooting and eliminating corruption (see table 3 in the annex). He said
that the high level of corruption, which is about 30% to 50% of finds, bided for
government projects, acts as deterrent not only to economic growth but also to
120.0 billion (Office of the Ombudsman, 1997). These funds, when properly
accounted for, could be used to either embark on projects which could improve
the country’s food sufficiency and/or lessen the number of families living below
the food subsistence level. Using Villegas (2005) example, these funds can be
These investments are needed in order to improve the productivity of our farm
lands. An improvement in the productivity of our farm lands can help bring down
the cost of food (Villegas, 2005). Moreover, assuming there is good achievement
productivity would help decrease the country’s high food cost. As additional
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as it will allow farmers to produce more at limited hectare, or limited, fishery,
livestock or poultry breeding stocks. When the costs of the capital invest is
spread across a high production level, then average production cost decreases.
It is through this mechanism that food costs would decrease allowing more
living below the subsistence level (indicator of the minimum demand for food of
formation is that it also allows the country to reach food sufficiency (an indicator
of food supply). For example, with improved agricultural activity farmers can
produce more. The country is not very far from achieving food sufficiency. In as
fact as of 2003, the Philippines is already exporting sugar. In the next 5 years,
the country is targeted to be rice sufficient. This means that we are currently
reaching at least 90& self sufficiency in rice (interview with Dy, R.B., UA&P in
Villegas, 2005).
Villegas (2005), an additional of P14.5 billion results into a 32% increase which is
three times the average 9.3% compounded annual growth rate from 1991 to
1997 capital formation (uses gross domestic capital formation in nominal terms)
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system framework from input supply subsystem to production, marketing, and
subsystem will affect the efficiency of the production system. Using Villegas’
production levels which, in turn, reduce the raw materials for processing and/or
marketing. This system’s inefficiency will also affect the competitiveness or scale
It is that the overall system of efficiency that counts (Dy, 2000) (Villegas, 2005).”
These restrictions are all too obvious in many agricultural sub-sectors and
and retail. This sector’s inefficiency also results into the inefficiency of about 40%
for projects for the provision of basic needs. In table 3 (see annex), an overview
of where such funds could have been assuming a corruption-free and tax
evasion-free society. In addition, these possible projects stress that poverty are
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VI. Summary
Poverty is the state of experiencing low quality of life, deprived of both the
material and non-material requirements that allows person to like a human being.
This is the reason why it is important to empower the poor, chiefly because of
three reasons, a development challenge, for the common good, and to promote
and uplift the dignity of the human person. People in the agricultural sector
covers majority of the poor. Although our country enjoys a rich supply of natural
thus, neglecting the development of the agricultural industry. This is turn, triggers
low income – low savings – then low investments again. This is called the vicious
cycle of poverty. When all these happen, farmers and all other agricultural people
will start to get poorer due to lack of money to support their needs, since the
With the huge amount of money that is lost annually due to corruptions
and tax evasions, such funds could have been used to address the different
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0
thus, increasing productivity, employment, income and output, and savings –
and enforcement.
In this study, it is also further rec know and understand the cause of
poverty in the urban areas. Because the cause of poverty in both rural and urban
share some similarities, although only a small percentage does the urban poor
share in the total rate of poverty. Lastly, it is also important to give, if any, proven
leadership itself, but in the graft and corruption and bureaucracy. We have good
and credible leaders and policy makers. The only problem is that they are all
a two-fold task. First, is the one who is corrupt who accepts the bribe, and the
other is the one who gives the bribe. Corruption only exists if two parties agreed
‘to scratch each others’ back’. But, if only one party resists and tells it to the
official who are not corrupt, then corruption ceases. By practising accountability
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1
and honesty, corruption in the agriculture, and the country as a whole, can be
removed.
ANNEXES
1. Donor identified players. Initial meetings were Those women who had an
conducted and the interest signed on.
programme described.
2. The operating document
for the cop was prepared. Meetings were held (under a Members were enthusiastic
big tree) with the 100-plus and wanted to participate.
women who became
cooperative members.
3. Seed money was identified
and payback set. Donor agency presented All coop members knew their
their financing potential and a responsibilities and accepted
business plan was adopted. the conditions.
4. Accounting of central
business. A simple accounting system
was designed and was There were no secrets in the
available. accounting process.
5. Individual accountability.
Each member maintained
books and provided a Children of illiterate parents
6. Cooperative meetings. monthly report. did books.
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Diagram 0.1
Investments
Income Output
POVERTY
2
3
2
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References:
Mar, P.C.M. & Richter, F.J. (2004). Asia’s Crisis: Renewal through Ethical
Management, Singapore: John Wiley & Sons (Asia) Pte Ltd.
Mar, P.C.M. & Richter, F.J. (2004). Why Ethics? Asia’s Crisis: Renewal through
Ethical Management, Singapore: John Wiley & Sons (Asia) Pte Ltd. 7-9.
Mar, P.C.M. & Richter, F.J. (2004). Corporate Governance: The Role of the
Board in Improving Management by Chang Sun. Asia’s Crisis: Renewal through
Ethical Management, Singapore: John Wiley & Sons (Asia) Pte Ltd. 7-9.
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Villegas, B. M. “Filipinos as the Ultimate Resource.” The Philippine Advantage,
UA&P. 2001. 83–85
Villegas, B. M. “Philippine Civil Society: Main Agent for Alleviating Poverty.” The
Philippine Advantage, UA&P. 2001. 105-115
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2
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