R&D will move PHL farm sector forward

7 August 2019 Philippines

The jump in the country’s innovation ranking in this year’s edition of the Global Innovation Index (GII) to 54th from 73rd last year is a spectacular feat. The latest ranking reflects the ingenuity and, more important, the resourcefulness of Filipinos. This is because the improvement in ranking was achieved despite the fact that the Philippines remains a laggard in terms of research and development (R&D) spending in Southeast Asia.

The latest data on annual public R&D spending in the Philippines remains minuscule—at less than 1 percent of GDP. The latest available figure from the World Bank placed the country’s public R&D expenditure at a dismal 0.14 percent as of 2013. This is lower than the spending of other Southeast Asian countries like Singapore and Malaysia, which set aside 2.1 percent and 1.13 percent of GDP respectively for R&D activities.

It does not help that the country’s policies hardly attract new businesses, particularly R&D firms. The GII, which was published by the World Intellectual Property Organization, noted that the weak areas of the Philippines are concentrated in the innovation input side. According to WIPO, these include the ease of starting a business, ease of getting credit, expenditure on education and global R&D companies.

If reforms are not implemented immediately, the government must start increasing its R&D budget. Many of the projects that will boost R&D activities in the country are listed in the Public Investment Program prepared by the National Economic and Development Authority. However, halfway into the term of President Duterte, the government has yet to allocate money for the PIP initiatives, many of which are expected to boost farm productivity.

The farm sector is badly in need of more R&D activities not only because of the adverse impact of climate change on agricultural production but also because there is a pressing need to increase the income of planters. Recent policies, such as the country’s shift to a more open rice market and the increase in cigarette excise taxes, make it more imperative for the government to allocate more funds for R&D. Rice farmers who will have to compete with imports may need to plant other crops, while tobacco farmers will have to make other products using their crop.

Encouraging rice farmers to plant other cash crops that are long-gestating will not work if there is no support, such as affordable credit and access to technology. Helping planters commercialize products from tobacco will require a lot of money. R&D is not a one-shot deal; it requires long-term commitment and support from the government if only to make the Philippines, particularly the farm sector, more attractive to potential investors.

The Duterte administration has set an ambitious goal of slashing poverty incidence to 14 percent by 2022. As the rate is now at 21 percent, the government must cut poverty incidence by 2 percentage points every year for the next three years. This cannot be done if this administration will not make the necessary changes in its spending priorities. Investments in R&D may not immediately yield results, but Filipinos will feel their impact beyond the term of President Duterte.