Role of agriculture in economic development 2022

Agriculture was the lone driver of economic development among sectors, as the Philippines dived into recession amid the coronavirus pandemic. But despite its surprise performance, it is still getting a meager budget for 2021. 

The Department of Agriculture (DA) in the Philippines initially asked the Department of Budget and Management (DBM) for an allocation of P280 billion for next year, more than 4 times its 2020 budget of P65 billion.

“But global experience shows that while ensuring the availability of key inputs remains important, reorienting significant public spending toward investments in public goods – including research and development, infrastructure, innovation systems, market information systems, and biosecurity systems – results in faster poverty reduction and greater productivity gains through an overall modernization of agriculture,” the World Bank said.

Effect on primary sectors

The ripples of the slowdown are gradually moving to the primary sectors which are already reeling under an unprecedented confluence of pressure. Real agricultural and allied gross value added (GVA) grew by 2.9% during 2011-12 to 2017-18, while in the National Agricultural Policy (2000), it should have been around 4%, to attain an overall economic growth of 8%. 

A highly skewed and unprecedented monsoon, erratic rainfall, and extreme natural events are creating havoc as far as farms and farmers are concerned which in turn are likely to disrupt supply chains, fuel inflation and have a negative impact on consumption, all of which can further dampen the prospects of revival of the economy.

Investment and jobs

Third, in the Economic Survey 2018-19, the working age population will continue to rise through 2041. Therefore, there is an urgent need to increase the job-to-investment ratio which is currently very low.

Some estimates say that ₹1 crore investment in India can create only four formal jobs. What has been less noticed and assessed in any survey is that inter-state migration has a huge impact on personal consumption expenditure. Giving a policy nudge to in-situ employment creation is a must for a stable income and spending. Also, there must be efforts to have an accurate picture.

of unemployment data in order to have a policy that is closer to facts. Fourth, there is a need to reconsider the few distorting reforms that are often stated to revive the short-term chaos in the long run. Finally, the sweet spot created by low oil prices in the past is slowly taking its turn to hit the economy to further cut down aggregate demand.

“Transforming agriculture and food systems is always challenging. But the country’s new vision for agriculture, its current thrust for diversification and use of modern technologies, and its effective management of food supply during this pandemic clearly indicate that the country is well-equipped to overcome the challenge.” –

Key Takeaway

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