Agricultural Diversification and the Fruits and Vegetables Sub-Sector: Policy Issues and Development Constraints in the Philippines

Roehlano M. Briones
JEL codes: 

Fruits and vegetables comprise a large and dynamic sub-sector within Philippine
agriculture. However the countrys agricultural development strategy continues to
emphasize traditional crops. Evidence points to a significant role for fruits and
vegetables in agricultural diversification and rural development. They represent a
significant set of high-value activities, some of which are produced within organized
supply chains. As the economy develops, fruits and vegetable should become
increasingly important, both as a share in agricultural output and in the food basket.
Diversification could be pro-poor as it may raise incomes of smallholders and workers.
In the Philippines, the major fruit crops are banana, mango, pineapple, and
calamondin; the major vegetables are tomato, garlic, onion, cabbage, and eggplant.
There are clear benefits to both producers and consumers from the expansion of the
sub-sector; fruits and vegetables output has indeed grown more rapidly than agriculture
as a whole. However there remain impediments in reallocating resources to the high
value crops. Agribusiness supply chains have arisen to overcome some of these
obstacles, though these chains may be inadvertently promoting inequitable and
unsustainable patterns agricultural growth.
Despite numerous policies and programs to overcome these impediments and
promote agricultural growth and diversification, constraints to development persist.
These include: resource degradation; weak protection and tradability of land rights;
distortionary policies in favor of traditional crops; geographic dispersion, inadequate
marketing and logistics infrastructure; failure to realize scale economies in marketing;
and inadequate supply of producer services such as agricultural credit, technology
innovation, and technical assistance to smallholders. Policy change and institutional
reforms are essential for the fruits and vegetables sub-sector to realize its potential for
agricultural diversification and rural development.