The impact of globalisation and liberalisation on agriculture and small farmers in developing countries: the case of the Philippines

This report uses case studies from the Philippines’ vegetable and poultry sector to illustrate the social effects of globalisation and trade liberalisation on rural producers, and on the International Fund for Agricultural Development’s (IFAD’s) involvement in the Cordillera Highland Agricultural Resource Management (CHARM) project.The authors find that trade liberalisation has increased imports of agricultural products to the Philippines. Also, the poultry industry has become more concentrated in the hands of big integrator concerns, which increasingly also control the supply of poultry feed. Consequently, contract growers and small backyard producers have become increasingly marginalised. The authors note that WTO agreements on differential tariffs on a minimum access volume (MAV) of imports and on imports above the MAV, further favours the large scale feed mills and big integrators, at the expense of small independent farmers.The authors observe that there is no horizontal integration between the sectors in the sense that e.g. corn production is not used as input to poultry feed requirements. Consequently, corn production in parts of the country remains constant despite unprecedented growth in the commercial poultry sector. While it theoretically should be possible for the two sectors to integrate horizontally, the country’s entry into the WTO diminishes this potential. The authors anticipate that the poultry sector however may experience a similar economic crisis as that currently experienced by the corn industry, when importation of subsidised chicken and chicken parts becomes the norm.The authors conclude that the observed impacts of agricultural liberalisation leave little hope for a better future for small and medium scale producers. While cost reductions can happen through economies of scale and vertical integration, this is only possible for the big enterprises.