Agriculture in the Philippines has receded in recent decades. This Policy Note traces the sector's weak growth to the slow expansion in the factors of production and total factor productivity. The study notes that the population growth in rural areas, declining farm sizes, and low incomes have pushed workers to shift out of agriculture. In addition, capital formation in agriculture is constrained by limited access to financing. Poor rural infrastructure and climate extremes also contribute to low agricultural productivity. To address these key challenges, this Note recommends that the government reorient its public expenditure programs and promote research and development to boost long-term productivity. It also underscores the need to improve the business climate for the agri-food system to raise agricultural investment and productivity.
