Philippines Agriculture Public Expenditures Review: With a Special Focus on the Implications of the Mandanas Ruling for the Agri-food System

Abstract

The recent positive policy directions embodied in the New Thinking and One DA agenda have not yet fully translated into a shift in public expenditure patterns in the Philippine agriculture sector. One result is that agricultural growth remains low, and poverty in rural areas, where farming remains the main source of income, has stayed high. Underinvestment in public goods in agriculture, vital for inclusive growth, also drives the lack of growth. The continued bias supporting rice production has come at the expense of other agricultural products. The situation could worsen with the ongoing devolution resulting from the Mandanas Ruling of the Supreme Court unless the shift in the agriculture budget from central government to local government units (LGUs) accompanies clear changes in expenditure policies. To take full advantage of the opportunities arising from the new strategic directions and to devolve more responsibilities to LGUs, agricultural public expenditure policies must deal with challenges in three dimensions. First is the challenge of aligning expenditures with the ambition of the New Thinking. The second challenge is improving the currently low effectiveness of public spending, which is one factor behind the relatively low agricultural share in the government’s overall budget. The third challenge is successfully implementing the financial and functional devolution resulting from the Mandanas Ruling. This Philippines Agriculture Sector Public Expenditure Review (AgPER) aims to (a) help the government evaluate the direction of spending policies under the New Thinking strategy and (b) consider the best way forward in devolving agricultural services to LGUs as a result of the Supreme Court’s Mandanas Ruling.