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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Stitch who wrote (8108)	2/25/1999 10:12:00 AM
From: Dayuhan	Read Replies (1) \| Respond to of 9980

Stitch, Different labs, different observations, as always. Cebu, Davao, and a few other cities outside Manila have seen considerable growth, but they are hardly rural. And while the progression of growth is, as you say, natural, there are factors at work that have greatly distorted the pace and direction of the progression. One of these is the continued control of huge tracts of agricultural land by absentee landlords that make little or no effort to increase or even sustain their productivity. The hired laborers working these lands have little incentive to be productive, and overseers are frequently ripping off both workers and owners. In a free market economy these resources would naturally migrate into the hands of those with the knowledge and initiative to make them productive. This has not happened. One reason why it has not happened is that a distorted price structure has made agricultural production largely uneconomic. This vicious circle began with two Marcos initiatives. One was the introduction of rice strains that required large quantities of expensive imported fertilizers and pesticides; these increased output per unit of land, but also increased costs, especially as oil prices rose and the peso devalued. On top of this, the effort to stimulate export production by holding urban wages down made it necessary, for reasons of stability, to control the price of rice: to let it rise to levels that would make production economic would have resulted in urban insurrection. The farmers were stuck between a rock and a hard place. During this period rice dealers stepped in to provide credit, frequently on usurious terms: farmers got their fertilizers and pesticides, but had to sell their crop to their creditors at unattractive prices. While the price controls have now been removed, this system has remained in place, and the main benefit of price increases has gone to the middlemen. I don't know much about the dynamics of agricultural production in Malaysia, but the migration to urban jobs suggests that it is not very remunerative. Is their any reason why producing food should generate less economic reward than producing consumer goods? Why is it so difficult - in many cases nearly impossible - for the farmer to enter the middle class? Surely the demand and need for the goods they produce is as real as that for the goods produced by the industrial worker. Steve