Building the Future in Organic Farming (Part 4)

The organic industry globally has achieved compounded growth of 23 percent per annum for seven consecutive years, while the natural and organic cosmetic sector grew by a massive 39 percent in 2001 alone. Recent market research has shown that consumer demand for organics is growing rapidly worldwide. The global sales of certified organic products is expected by the UN Conference on Trade and Development to increase to 52 billion euros by 2012, up nearly half from the 30 billion euros in 2006, in turn a 20 percent increase over the previous year. Moreover, sales in the personal care market globally, including natural personal care, reached US$122 billion in 2000 and are growing at 1.6 percent. The trend towards natural ingredients is running through every segment of personal care with sales in the USA in this area reaching US$1.56 billion in 2001 and growing at 10 percent. This segment is expected to grow 6 to 7 percent annually over the next few years.

Consumer sales of organic products in the US reached US$5.6 billion in 2000, a rise of 19 percent from 1999. The organic segment is worth between US$13-US$18 billion last 2005. Natural Personal Care Market climbed to US$7.9 billion last 2009. In Europe, research across its seven countries found that organic spending would nearly double over the next 5 years. In 2006, 58 percent of its European consumers chose to use organic products. Japan on the other hand has the largest per capita consumers of organics in the world and are substantial importers of organic consumer products. Japan had a national market value of US$1.5 billion in 1998 and has a current estimated value of US$3.2 billion. The majority of organic products in Japan are distributed through a 'tei-kei' arrangement, which is a type of cooperative1. In the Philippines, as mentioned in Part 2 of this report, estimate demand for organic products would outpace local production which is expanding at approximately 10 to 20 percent annually valued at PhP250 million in 20002.

Industry associations consist of NGOs, SMEs, and farmers become the key players in the growth of organic agriculture sector in the Philippines. Based from the paper by Girlie Sarmiento entitled ‘Organic Agriculture in the Philippines - A Country Report’ dated 12-15 December 2007, many of these organic agriculture advocates and practitioners organized themselves into groups and contributed to the promotion of organic agriculture as a sustainable farming system. This can be traced back in the eighties where the existing movement at that time captured public attention. Although the term ‘Sustainable Development’ was already in popular use, the concept of organic agriculture was not yet well known.

The launch of a program on organic agriculture and appropriate rural technology in 1980 by the Farmers’ Assistance Board (FAB) captivated the interest of other advocates, and soon similar projects were established in various parts of the Philippines. New farming technologies emerged such as bio-dynamic, Low External Input Sustainable Agriculture (LEISA), Sloping Agricultural Land Technology (SALT), etc. as alternatives to Green Revolution technologies which was perceived as faltering in its aim to propel the agriculture industry forward3.

Some of the key players in the Philippines are: MASIPAG (Magsasaka at Siyentipiko Para Sa Pag-unlad Ng Agrikultura or Farmers-Scientists Partnership for Development, Inc) is an NGO, and one of the oldest organizations engaged in sustainable agriculture. MASIPAG provides services through farmer-to-farmer extension. MASIPAG is best known for its rice varieties, known as MASIPAG rice varieties throughout the country. MASIPAG has a total of 456 base peoples’ organizations, 42 NGOs, and 15 individuals in its pool of researchers/scientists.

OPTA (Organic Producers Trade Association) was established in 1995, and its members are traders, producers, academics, advocates and consumers. OPTA is active in the domestic market, and distributes products ranging from fresh to processed products. However, the majority of their products have not yet received organic certification. OPTA operates a cooperative store in Quezon City.

VCOP (Virgin Coconut Oil Association of the Philippines) is an organized association of producers and traders, established in 2004. The VCOP promotes the industry’s development in partnership with the DTI particularly when they started participating in the Export Development Council (EDC) Group under the National Cluster Team.

Other new players emerged as organic agriculture became more popular due to various promotional initiatives, training programs, conferences and advocacy. Among these are: NISARD or Negros Island Sustainable Agriculture and Rural Development Foundation, Inc. whose vision is to make Negros Island the “organic food basket of Asia”. Another NGO engaged in organic agriculture development is PDAP or the Philippine Development Assistance Program with its banner PRIME or Promoting Rural Industries and Market Enhancement Program. It supports the sustainable development of small and medium enterprises and rural industries such as organic rice, sugar and seaweed. Others are ALTERTRADE; AVDF (Alliance of Volunteers for Development Foundation); SIBAT (Sibol ng Agham at Teknolohiya) and some church-based organizations (social action centers)3.

References:

1 Certified Organic Skin Care Products, hubpages.com/hub/Certified_Organic_Skin_Care_Products

2 Canono, J.F. Philippines Organic Products, Organics Market Brief 2000. Paper prepared for Foreign Agricultural Service / Global Agriculture Information Network of the USDA

3 Organic Agriculture in the Philippines - A Country Report by Girlie Sarmiento, December 12-15, 2007

Building the Future in Organic Farming (Part 3)

The 2011 national budget of the Philippines, also known as the General Appropriations Act of 2011 was signed into law by President Benigno Aquino III last 28th of December 2010. The said national budget is 6.8 percent higher than the 2010 budget of PhP1.540 trillion (See Chart 1). It represents 18.2 percent of the projected Gross Domestic Product (GDP) this year. The approved budget assumes revenues of PhP1.41 trillion, or 15.6 percent of GDP in 2011, and disbursements of PhP1.70 trillion, or 18.8 percent of GDP, lower than the 19.5 percent last year1.

Chart 1

Amongst the top ten government departments receiving the biggest allocation from the approved PhP1.645 trillion budget, five of which were part of the National Organic Agricultural Board. The said departments are: the Department of Education (including Educational Facilities Fund) at PhP207.3 billion representing the largest government subsidy at 12.6 percent of the total budget; the Department of Interior and Local Government (including pension) at PhP88.2 billion; the Department of Agriculture at PhP37.7 billion from PhP41.2 billion which is a slight decrease of 8.5 percent in its budget due to the reduction in the allocation for input subsidies (e.g., seeds, fertilizers, farm implements and biologics) for the production of rice, corn, fisheries, livestock and high-value commercial crops with the better targeting of these subsidies; the Department of Health at PhP33.3 billion, up by 13.6 percent from the 2010 level of PhP29.3 billion; and the Department of Agrarian Reform at PhP16.7 billion which is a 20.7 percent decrease on account of the transfer of the Tulay ng Pangulo program and its fund allocation to the DPWH1 (See Chart 2). On the other hand, the Department of Environment and Natural Resources, the Department of Science and Technology, and the Department of Trade and Industry were allocated at PhP8.982 billion, PhP2.264 billion, and 2.118 billion budget respectively.

Chart 2

The Aquino administration said that they had made a reform on the 2011 budget addressing the critical gaps in social services, i.e. education, health, social welfare, and housing for the poorest segment of its population. This is to ensure that the segment will be provided greater means to have a fighting chance to build a better future. Studies have shown how the country’s per capita growth rates have lagged behind those of its neighbors and how slow its methods on poverty reduction have been. From the 2011 budget, top level priority was again given to education as there has been a sharp increase of 18.4 percent (PhP32.3 billion) from its budget of PhP175 billion last year, attributed to the construction of 13,147 classrooms and the creation of 10,000 teaching positions. It is the biggest increase allocated to education in over a decade1 (See Chart 3). The budget would also fund research and development in various state colleges and universities which is at PhP268 million increase. There is also an additional PhP222 million budget for scholarship grants for undergraduates in the Science Education Institute under the DOST, and another PhP100 million for Science Technology and Engineering Fellowship and Scholarships for the Philippines to Taiwan and Korea2.

Chart 3

From the paper ‘Education is our Future’ by Senator Edgardo Angara, also chairman of the Senate education committee, he emphasized that the field of Science, Technology, and Innovation (STI) have the potential to contribute substantially to economic growth and poverty reduction. Basic to the realization of this potential is education which is fundamental for a knowledge economy based on information technology and the country’s human capital3. One of the factors for development underlying the STI efforts, given his examples with other countries such as China, Singapore and Thailand, these countries’ respective governments have supported, funded and nurtured higher education institutions, as well as academies of engineering and technological sciences, professional engineering and technological sciences, professional engineering and technological associations, and industrial and trade associations.

In the Philippines, current efforts in promoting STI include government-initiated STI programs, budgetary allocations for agriculture R&D and higher education, and academic networking. The additional PhP268 million budget would fund SUCs that have the capability to utilize research. In 2008, the budget has funded R&D and scholarships for scientists, engineers, and students which has trickled down to the Department of Agriculture (DA), better-performing State Universities and Colleges (SUCs), the Commission on Higher Education (CHED) and the University of the Philippines (UP), likewise having received increased budget allocations for R&D.

Special support to upland agriculture has been given through the creation of a research consortium among six SUCs in the Cordillera Administrative Region (CAR). This research consortium will focus on conserving national agricultural heritage such as the rice terraces, the native textile industry and wood-based arts and crafts; improving the variety of rice and vegetables in the uplands; introducing organic farming; and creating a joint program on fish breeding. The six CAR institutions include Abra State Institute of Science and Technology, Apayao State College, Benguet State University, Ifugao State College of Agriculture and Forestry, Kalinga-Apayao State College, and Mountain Province State Polytechnic College3. Among the state universities and colleges, the Benguet State University (BSU) has become the first organic school in the country which was declared as the Organic Agriculture University4.

References:
1 General Appropriations Act 2011, The 2011 Budget at a Glance, Department of Budget and Management Publication, The President’s Budget Message, Benigno S. Aquino III, President of the Philippines, 24 August 2010
2 Senate starts 2011 Budget Deliberation, abs-cbnNews.com by Ryan Chua, 23 November 2010
3 Education is our Future, lecture by Senator Edgardo J. Angara 2008
4 Regional Conference on Organic Agriculture in Asia by Girlie Sarmiento, December 2007

Building the Future in Organic Farming (Part 2)

The increase in consumer demand for organic products over the past decade has also made parallel growths in literatures and researches dedicated to organic farming. The US Department of Agriculture GAIN conducted its own research for the Philippines and based from their year 2000 report, the organic industry of the country is estimated to be worth PhP250 million or US$6.2 million. Of this value, domestic organic industry is about PhP100 million while imports of organic products are estimated at PhP150 million. Estimate demand for organic products would outpace local production which is expanding at approximately 10 to 20 percent annually1. The said growth could be accelerated by the implementation of the Republic Act No. 10068 or the Organic Agriculture Act of 2010 signed into law last 6th of April 2010 by then President Gloria Macapagal-Arroyo2.

The positive growth of the organic agriculture in the Philippines may be contributed to the continuing interconnections between government, academe, and the industry. So as to fully understand its development, the Triple Helix Model has been utilized as its conceptual framework in this report (see Diagram 1).

Diagram 1

Based on the primary definition of organic farming, it refers to agricultural production systems used to produce food and fiber. Organic farming management relies on developing biological diversity in the field to disrupt habitat for pest organisms, and the purposeful maintenance and replenishment of soil fertility. Organic farmers are not allowed to use synthetic pesticides or fertilizers. All kinds of agricultural products are produced organically, including produce, grains, meat, dairy, eggs, fibers such as cotton, flowers, and processed food products3. Aside from the harmful pesticides, it also excludes or strictly limits the use of plant growth regulators such as hormones, livestock antibiotics, food additives, and genetically modified organisms4. Produce from organic farming is not only limited to food and fibers but also been used as raw ingredients applied to personal skin and hair care products, body and oral hygiene, insect repellant agents, room scent, etc. From the local production of its raw materials, to intensive research and development in the universities and manufacturing companies, locally-produced all-natural products are not only beneficial for the environment but also becoming an opportunity for wealth creation among the Micro, Small and Medium Enterprises (MSMEs). In addition, it provides employment and alternative source of income, improvement on the quality of life to the farmers and producers, and a beneficial commodity to the consumers.

Since the Philippines is largely an agricultural country, as Senator Edgardo Angara pointed out, government support particularly in science and technology in agriculture (and fisheries) must be prioritized. Support, especially to small and medium enterprise (SMEs), must be delivered because SMEs create around 90 percent of jobs and operate in mostly rural areas5. The signing of the Organic Agriculture Act is a step towards improvement of the country’s organic farming industry. This would possibly lead the Philippines to become the major player in the agricultural production sector in Southeast Asia through its all-natural food and high-quality organic products. As stated earlier, the plight of the farmers would also be addressed by providing alternative crop that yields to high income raw materials, aside from their regular rice and vegetable produce. It would also encourage local entrepreneurship as well as innovations from these organic outputs that would produce Philippine-made, world-class exportable products.

The Organic Agriculture Act of 2010 is a state policy to promote, propagate and further develop and implement the practice of organic agriculture in the Philippines. The policy is expected to condition and enrich the fertility of the soil; increase farm productivity; reduce environmental degradation and prevent the depletion of natural resources; further protect the health of farmers, consumers and the general public; and save on imported farm inputs. It will also establish a comprehensive program which will promote organic-farming methods through education of farmers and consumers. The State recognizes and supports the central role of farmers, indigenous people and other stakeholders at the grassroots of the program6.

The law will be carried out by the National Organic Agricultural Board (NOAB) that will provide the direction and general guidelines for the implementation of the national program. It is composed of representatives from the Department of Agriculture (DA); the Department of Interior and Local Government (DILG); the Department of Science and Technology (DOST); the Department of Environment and Natural Resources (DENR); the Department of Education (DepEd); the Department of Agrarian Reform Administration (DAR); the Department of Trade and Industry (DTI); the Department of Health (DOH); Non-Governmental Organizations (NGOs); farmers; agricultural colleges and universities; and private sectors or agri-business firms7.

On research, development and extension, its lead agency - the Bureau of Agricultural Research (BAR) will coordinate with the other agencies of the Department of Agriculture, the Department of Agrarian Reform (DAR), the Department of Science and Technology (DOST), the Department of Education (DepED), the Department of Interior and Local Government (DILG), the strategic agriculture-based state universities and colleges (SUCs), and private organizations8.

The objective of the said lead agency will develop, enhance, support and consolidate activities and related technologies for the formulation and implementation of a unified and integrated organic agriculture Research, Development and Extension (RDE) plans and programs from the national to the field level. The organic agriculture RDE plans and programs will include, but not limited to the following: research, development and commercialization of appropriate, innovative and viable organic agriculture technologies; nationwide promotion of developed and commercially viable biodegradable farm wastes and by-products through various extension strategies to accelerate the production, use and distribution of organic fertilizers; and conduct research for market development, policy formulation, regulation and certification.8.

The sum of PhP50 million budget is being allocated for the Department of Agriculture’s (DA) organic farming promotion program for the first year of the law’s implementation. The said fund will support the coordination, implementation, and monitoring and evaluation, of the research, development and extension activities on Organic Agriculture Program. The DA will subsequently allocate at least 2 percent of its annual budget for the implementation of its programs9.

Other highlights from the Organic Agriculture Act of 2010 are the following: exemption from the payment of duties on the importation of agricultural equipment, machinery and implements; identification by LGUs of local taxes that may be offered to organic input production and utilization; provisions of preferential rates and special windows by the Land Bank of the Philippines; zero-rated VAT on bio-organic product transactions, whether organic inputs or organic products; and tax Holidays and exemption for seven (7) years from the date of registration, on all income taxes. Tax incentives shall be given only to purely organic agricultural entities/farms, subject to the accreditation of the BAFPS and available to micro, small and medium enterprise10.

References:
1 Canono, J.F. Philippines Organic Products, Organics Market Brief 2000. Paper prepared for Foreign Agricultural Service / Global Agriculture Information Network of the USDA
2 Business Mirror, GMA signs Organic Agriculture Act 2010, by Mia Gonzalez, BusinessMirror.com, April 10, 2010
3 Organic Farming Research Foundation, ofrf.org/resources/organicfaqs.html
4 wikipedia.org/wiki/Organic_farming
5 Education is our Future, lecture by Senator Edgardo J. Angara
6 Implementing Rules and Regulations for Republic Act 10068 (Organic Act of 2010), Section 2 Declaration of Policy, approved by the Congressional and Oversight Committee on Agriculture and Fisheries Modernization (COCAFM) last 31 January 2011
7 Implementing Rules and Regulations for Republic Act 10068 (Organic Act of 2010), Section 7 Composition of the NOAB, approved by the Congressional and Oversight Committee on Agriculture and Fisheries Modernization (COCAFM) last 31 January 2011
8 Implementing Rules and Regulations for Republic Act 10068 (Organic Act of 2010), Section 20 Research, Development and Extension, approved by the Congressional and Oversight Committee on Agriculture and Fisheries Modernization (COCAFM) last 31 January 2011
9 Implementing Rules and Regulations for Republic Act 10068 (Organic Act of 2010), Section 25 Appropriations, approved by the Congressional and Oversight Committee on Agriculture and Fisheries Modernization (COCAFM) last 31 January 2011
10 Go Organic Philippines, goorganicphilippines.org

Building the Future in Organic Farming (Part 1)

Presented in this report are highlights of the results from the 12th global survey on organic agriculture 20111 leveraging on the Asia region. The survey was carried out between July 2010 and February 2011 from 160 countries (up from 154 countries in 2008). Data were provided by almost 200 country experts, i.e. representatives from NGOs, certification bodies, governments and researchers. The results are published in the yearbook ‘The World of Organic Agriculture 2011’ and at www.organic-world.net.

Presented in Chart 1 is the distribution of organic agricultural land by region (as of end of 2009). The data shows that the greatest share of the global agricultural land is in Oceania which is at 32.6 percent or managing 12.2 million hectares of organic agricultural land, followed by Europe at 24.9 percent or 9.3 million hectares, and Latin America at 23 percent or 8.6 million hectares. The region of Asia is nearly 3.6 million hectares that constitutes 9.6 percent of the world’s organic agricultural land. North America manages almost 2.7 million hectares or at 7.1 percent, then followed by Africa at slightly more than a million hectares that constitutes 2.8 percent of the world’s organic agricultural land. By far, the countries of Australia, Argentina and the US have the most organic agricultural land at 12 million, 4.40 million, and 1.95 million hectares respectively as presented in Chart 2. From 1999 to 2009, the world development in organic agricultural land has increased by 26.2 percent as seen in Chart 3 or an average of 2.6 percent growth per year for the past decade.

Chart 1

Chart 2

Chart 3

According to Organic Monitor2, since 1990, the global market for organic products has grown from nothing, reaching US$55 billion3 in 2009. This demand has driven a similar increase in organically managed farmland. Approximately 37,000,000 hectares (91,428,991 acres) worldwide are now farmed organically, representing approximately 0.9 percent of total world farmland. The largest amount of organic products is sold in Europe and North America. The trend in the global market for the organic food and drink is recovering from the repercussions of the economic crisis. Single-digit market growth was observed for the first time in 2009 due to economic slowdown reducing industry investment as well as spending power among consumers. The sales of organic food and drink expanded by roughly five percent to US$54.9 billion in 2009. Global revenues have increased over three-fold from US$18 billion in 2000 and double-digit growth rates were observed each year, except in 2009. Healthy growth rates are foreseen to restart as consumer spending power rises and as more countries come out of economic recession. The countries with the largest markets are the US, Germany, and France; the highest per capita consumption is Denmark, Switzerland, and Austria.

The region of Asia as mentioned earlier has a total organic agricultural area nearly at 3.6 million hectares which is a 0.7 percent increase from 2007 (2.9 million) to 2009 as seen in Chart 4. The country that provides the largest share of organic agricultural land is China which is at 1.9 million hectares followed by India at 1.2 million hectares and Kazakhstan at 134,862. Timor-Leste has the most organic agricultural area as a proportion to its total agricultural land which is almost at seven percent. The Philippines on the other hand has an estimated organic agricultural land at 52,546 hectares or 0.45 percent share of the total agricultural land area of the country as seen on Chart 5.

Chart 4

Chart 5

The region of Asia hosts a wide range of organic sector development scenarios, from early development to highly regulated. Far from the marginal position it held previously, organic is now an accepted concept and growing market trend in the region. Whilst export remains the dominant feature of sector development in the majority of developing countries in the region, local markets have emerged and are gaining ground. Primarily a market driven sector, government policy is an emerging and significant sector development factor today in many countries. Although domestic market size is still relatively small, the high value and profile associated with organic has led to civil society (consumer) calls and governments’ interest to regulate the sector. Seven markets have implemented organic labeling regulations (i.e., China, India, Japan, South Korea, Philippines, Taiwan, and Malaysia). Others, Sri Lanka and Nepal have established government competent authorities. Thailand and Indonesia have also established accreditation systems.

References:
1 Helga Willer and Lukas Kilcher (Eds.) 2011: The World of Organic Agriculture. Statistics and Emerging Trends 2011. International Federation of Organic Agriculture Movements (IFOAM), Bonn, and Research Institute of Organic Agriculture (FiBL), Frick. ISBN 978-3-940946-83-6 (IFOAM) und ISBN 978-3- 03736-192-4 (FiBL)
2 Organic Monitor, organicmonitor.com
3 US dollar = 0.71895 Euros = 48.250985 PHP; average exchange rate 2009, Source: oanda.com/lang/de/currency/average