2.
9 AGRICULTURE
2.9.1 Existing Situation
The dominant agricultural activity of Cebu City centers on the production of
ornamental plants, vegetables and fruits, which comprises 94 percent of the
actual total crop production. Livestock production, on the other hand, is limited
only on a backyard scale as majority of the pasture areas is inaccesible to
livestock.
A total of about 8,415 hectares is identified as agricultural areas but only less
than 8,000 hectares are presently being utilized. By tenurial arrangements,
about 57 percent of thee agricultural lands are fully owned while 40 percent are
tenanted.
As of 1995, 16,913 households, or 7.5 percent of the city’s total household
population, are deriving their major source of income from agriculture. Seventy-
one percent (71%) of these households are self-employed; sixteen percent
(16%) are employers while only thirteen percent (13%) are working as tenants.
About ninety two percent (92%) of these agricultural workers acquired their
skills through non-formal training.
Assessment of Performance
Production of traditional crops (e.g., rice and corn) during the recent years is
noted to be becoming less significant despite experiencing an increasing
production. Not only that they were not able to meet the sufficiency level and
demand of the domestic population but also due to changing preference of
agricultural workers to shift production from traditional to high-value crops, such
as ornamentals plants, vegetables and fruits. Moreover, due to high
seasonality of agricultural production, agricultural workers instead focused their
production to crops with higher domestic demand, higher aesthetic features,
and offering better incentives on their investments.
Figure 2.9.1
Cebu City Food Production and Consumption, 1995-1998
Yet, despite the higher earning in high-value crops the average income of the
agricultural workers are still low. In fact, the magnitude of poor families is
gradually increasing during the period of 1988 to 1997 as income derived from
agriculture lagged behind as compared to city’s average family earnings as
shown in Table 2.9.01.
Figure 2.9.2
Average Earnings of the Agriculture Sector
Table 2.9.01
Estimated Poverty Performance of the Agriculture Sector, Cebu City
1988 1991 1994 1997
Total No. of Families 1/ 1,932 4,760 7,190 6,942
Magnitude of Poor Families 2/ 1,240 2,145 4,445 5,374
Incidence of Poverty 3/ 64.18 45.06 61.74 77.41
1/ The total number of families whose major source of income is agriculture.
2/ The total number of families, whose income fall below the poverty threshold and
does not satisfy the nutritional requirements (2, 000 calories) for a family of five.
3/ The proportion of families whose income fall below the poverty threshold.
The labor and farm productivity is also way behind than that of the Province
and the Region. Excluding rootcrops, chicken and carabao, Cebu City has an
average labor productivity of 1.18 kilograms per farmer as compared to the
Province’s 154.44 kilogram in 1998 as shown in Figure 2.9.03.
Figure 2.9.3
Estimated Labor Productivity of the Agriculture Sector
The contribution of the agriculture sector in generating jobs is also declining as
proportion of agriculture employment to total employment, from 9 percent in
1995 to 7 percent in 1998.
2.9.2 Development Needs
Factors Influencing the Performance
The performance of the agricultural sector did not match to its inherent potentials. This
can be attributed to a number of development factors such as;
a) Agricultural earning is very low
With dwindling production, income derived from agriculture is relatively low and
inadequate, thus contributes, in general, to the lowering of their standard of living.
This scenario discourages them to invest in traditional crop production resulting
to disequilibrium of domestic food supply and demand.
b) Economies of scale is not evident
Size of agricultural farms are also getting smaller during the recent years, while
average production cost in cultivating a farm is getting higher. Locations of farms
are also getting dispersed and scattered thus feasibility of commercializing
traditional crop production is almost nil. These factors contribute further to the
lower productivity of the agriculture sector in general.
c) Inadequate technical and financial assistance
The shift of the agricultural production towards high-value crops is timely.
However, the absence or the lack of technical and financial assistance in
commercializing production and marketing hampers further development. The
lack of technology, particularly on research and development, is also noted to be
constricting the growth of the high-value crops production.
d) Transformation of agricultural lands to non-agricultural uses
The transformation of agricultural lands to non-agricultural uses has been taken
place since early ‘70’s. The agricultural areas are also being under the threat of
urbanization, as trend of settlements in the city is going rural. These factors
indicate development. But these also contribute to the lower productivity and
incompetitiveness of the agricultural sector. Thus, encroachments of
development in agricultural areas have to be strictly controlled and monitored.
Projected Development Scenario
The shift of agricultural priorities to high-value crops and lower productivity of traditional
crop production will continue and will likely result to the declining traditional crops
production of the city as shown in Figure 2.9.04. In addition, with number of agricultural
workers continue to grow brought by urbanization of the hinterlands and with limited
agricultural lands, agricultural productivity will also continue to decline.
Figure 2.9.4
Projected Agricultural Production
As a result, the increasing gap between domestic food demand and production will
continue thus will worsen the food deficit of the city as well as affecting the sufficiency
level of populace.
Despite this projected scenario, agriculture industry will remain to be the bright spot for
poor families living in rural areas. The same holds true for the fishery sector. Number of
agriculture and fishing activities will continue to grow as settlements in rural and coastal
areas continue to proliferate. However, production is limited only on backyard scale and
is good for self-sustenance.
Meanwhile, production of high-value crops such as ornamental plants, vegetables and
fruits as well as livestock production remain to be the best alternative to counter the
declining traditional crop production.
Development Potentials and Constraints
As explain above, the major constraints faced by the agricultural sector are;
• The continuing low productivity of the sector
• Slow diversification of production and
• Weak institutional rationalization of agencies and organizations involve in
agricultural development.
These are seen to be the stumbling blocks for the development and competitiveness of
the sector.
But there is always a market niche for the city’s agriculture sector. As the city’s per capita
income will continue to improve and household expenditure pattern will continue to shift
to eating-out habit, health-conscious diet, home furnishing and recreation, demand for
high-value crops will intensify.
Also, as the Metro Cebu population continues to increase, livestock and poultry
production will also offer a bright opportunity for agricultural workers as meat and poultry
consumption will also rise. High value-crops and livestock production, however, should
gear towards commercialization in order to gain or improve competitiveness.
Priority Issues and Concerns
Given the various development issues, such as low productivity and income, limited land
for expansion and inappropriate agricultural practices, the development of the agriculture
sector hinges on how the sector will serve as a vehicle in improving the standard of living
of the agricultural workers. To do this, the sector needs to be supported with a
comprehensive program detailing the infrastructure, human development and policy
support.
Sectoral Objective
To increase income and productivity through modernization of agriculture and focus on
the production of high value crops.
2.9.3 Sectoral Strategies
The following are the sectoral strategies, which may be adopted for the City of Cebu, to
wit:
a) Agricultural industrialization policy
It is recommended that the agricultural production be focused on
commercialization and industrialization of high-value and high market- oriented
crops production. Subsidies, incentives and other form of financial and technical
assistance should be offered to attain the industrialization of these high-value
crops production. Strong financial and marketing collaboration with local farmers
through joint ventures shall be encouraged.
The specific strategies on agriculture under the Interim Land Use Plan and
Resource Management Policy Guidelines of the Hillyland Barangays of Cebu City
formulated by the Cebu City Land Use Committee are fully recommended for
adoption.
b) Development of technological capability
There is a need to intensify research and development for the agriculture sector,
particularly on high-value crops production. There is also a need to discover and
develop more local scientists and technicians.
Adopting a strong technological collaboration with local farmers through joint
ventures is also highly recommended. Training and extension services are very
limited and insufficient, thus need to be redefined and refocused along
agricultural commercialization and industrialization to be more effective.
c) Strengthening of marketing and credit support
One of the basic problems in marketing is that the kind of product produced is not
what the market exactly needs. In addition, most of the produced are of inferior
quality and are comparatively small in quantity. Therefore producers cannot
demand for higher prices since bargaining power of wholesalers and middlemen
are stronger. Pre-arranged production with the wholesaler and middlemen is also
rampant as agricultural workers turned to them for financial support during off-
production. Thus, provision of direct marketing support and credit facilities
together with the development of high-value and high market-oriented agricultural
crops need to be further collaborated among government, private sector and
farmers.
d) Provision of infrastructure support facilities
Development of water supply facilities.
Construction of more farm-to-market roads and repair of existing ones.
Construction of post-harvest facilities and market centers will also play a vital
part.
Establishment of a research and development center that will complement the
intensification and commercialization of the agricultural production is also seen as
necessary.
2.10 TRADE AND INDUSTRY
2.10.1 Existing Situation
Cebu City’s economic structure is more dependent on the service sector. It
constitutes 73 percent of the economy, far greater than the industry and
agriculture sectors, with 20 percent and 7 percent, respectively. Needless to say,
the service sector is the prime mover of the economic growth of the City the last
several years. As a result, it propelled the average income of non-agriculture
dependent families to an unprecedented level compared to the province, regional
and national rates. Wages and salaries derived from the non-agricultural activities
comprised 59 percent while only 20 percent are derived from entrepreneurial
activities. Income derived from wholesale and retail trade topped the list.
Direct foreign trade of Cebu City comprised 30 percent of the entire Visayas
figures and is equivalent to 52 percent of the entire foreign trade of Mindanao.
The city also controlled 70 percent of shipcalls and 90 percent of the passenger
traffic made in Cebu Province.
Goods imported from other countries, which the city accounted an estimated 45
to 50 percent of Cebu’s total imports, are mostly capital goods (50 percent),
intermediate goods (34 percent) and consumer goods (8 percent) as shown in
Figure 2.10.01. Exports, meanwhile, are comprised mainly of non-traditional
exports, which is about 92 to 98 percent of the city’s total exports. The city’s total
exports are estimated at 38 percent of the region’s total exports. Cebu City, to
note, is a net importer of foreign goods.
Figure 2.10.1
Cebu City Foreign Imports
Domestic trade, which the city is also a net importer, is 10 percent of the national
average values. Most of the products that the city imports are: agricultural
products (30 percent), intermediate goods (17 percent), capital goods (12
percent) and consumer goods (8 percent). All transactions are made possible
through coastwise trade.
Assessment of Performance
From 1980 to 1995, the average share of service employment increased by 2
percent annually while industry employment decreased by 0.5 percent. This
phenomenon contributed to the city’s lower poverty incidence, which fared better
than that of the regional and national averages during the years. This is shown in
Figure 2.10.02.
Being also the center of job in-migration in the region, the city’s labor force
participation rate is higher compared to the regional and national averages. In
fact, the city’s labor force participation rate is increasing faster than the city’s
population rate during the period 1990 to 1995. This is caused not only by the
better geographical location of Cebu City compared to the other cities that
attracts job in-migration but also because of the more job opportunities created
and offered by the city.
Figure 2.10.2
Estd. Poverty Incidence of Non-Agriculture Activities
Based on data from the Management Information and Computer System (MICS)
of Cebu City, with the exception of real estate and finance, majority of the
business establishments in Cebu City are still considered either micro or small
enterprises with an average capitalization of P 1.5 million or less.
Figure 2.10.3
Average Capitalization of Business Establishments, 2000
Sixty-seven percent (67%) of these business establishments are situated within
the central part of the city, which controlled about 77 percent of the city’s
economy. The central area of the city is composed of 24 north urban barangays
and 5 south urban barangays of the city, based on the conglomerate location of
the business establishments and the density of the business establishments per
land area.
During the period 1995 to 2000, it was observed that the investments in the
central area of the City are getting to be capital-intensive compared to the city’s
average investment as shown in Figure 2.10.04. This happened despite the
economic crisis that hit the city in 1998.
Figure 2.10.4
Cebu City Average Investments
Due to scarcity of available lands and a strong and bullish local economy, the
cost of doing business in the city is relatively high a compared to other cities in
Visayas and Mindanao.
The local economy is also highly vulnerable to competitiveness of the industry
and service sectors are bugging the attractiveness of the city as a major
investment destination, particularly in Southeast Asia.
As of 1998, the city’s productivity only averages about 745 US dollars per capita,
way below than the other selected cities in Southeast Asia, as identified by the
United Nations Commission on Human Settlements (UNCHS) shown in Figure
2.10.05.
Figure 2.10.5
Productivity Per Capita of Selected SEA Cities
2000
Factors Influencing the Performance
The concentration of support facilities and services in Cebu City is due mainly to
its favorable geographic location, being accessible to almost all parts of
theVisayas and the northern part of Mindanao. The population of these areas
also boosts the market potential of Cebu City.
However, the inability to invest earlier and more in research, development and
technology resulted to a show transformation of the local economy to the more
sophisticated service-oriented and skill-based industries. Also, due to the
incoherent production and services produced by majority of the existing
businesses, there are poor vertical and horizontal linkages among and between
the production and service sectors. Thus, most of the export products produced
are limited and low value-added products.
Meanwhile, most of the export products tend to concentrate only to few foreign
markets. The difficulty of businesses to access financial, marketing, material and
technological inputs also contributed to the incompetitiveness of the city’s
industry and service sectors.
Projected Development Scenario
While the concentration of support facilities and services will continue to favor the
city, they will not be enough to make the city competitive unless these facilities
and services are brought at par with world standards. The city will also continue
to attract service-oriented investments, particularly trade, as per capita income is
improving. The productivity of the industry sector, however, will continue to
decline due to scarcity of available lands and high cost of production.
The number of informal businesses, which is estimated to constitute about fifty
percent of the local economy, will also continue to increase despite the shift in
taste and preference of the domestic market to more value-added products and
services.
These informal establishments will most likely occur in densely populated
barangays and in barangays that are not easily accessible by the city’s
commercial center.
Despite the continuing industrialization of the local economy, the city may not be
able to tap or absorb its local labor force due to labor and skill mismatch,
therefore, the city needs to establish programs, trainings and curricula directed
along these needs otherwise skilled migrants may have to be tapped for the city
to remain competitive.
The transformation of the local economy into a more service-oriented and skill-
based economy will also continue to take place, but at a slower rate as compared
to other Southeast Asian cities. This is due mainly to incapability to invest in
critical factors of production of the industry and service sectors.
2.10.2 Development Needs
Development Potentials and Constraints
The apparent lack of coordination and cooperation between local and national
government agencies involved in the provision of basic services, that affect the
industry and service sectors, needs to be addressed comprehensively and
seriously.
At present, there is a need to have a clear policy and commitment in improving
the productivity and competitiveness of Cebu City’s economy. Also, the physical,
economic and social support services/ facilities should be put in place to attract
and sustain high-end investments.
The geographic location of the city remains the most valuable asset to attract
more service-related investments. In addition, the flexibility of the labor force to
adopt to new technologies is higher because of the high literacy rate of the city
compared to the other cities in the Visayas and Mindanao.
The present technology-oriented support facilities and services of the city can
provide venue of investments to those looking for vertical and horizontal linkages.
The growing per capita income, the highly dispersed expenditure pattern, the
high consumption rate and the growing sophisticated market of the city may also
trigger innovations among businesses that may create new business formations.
Priority Issues and Concerns
The transformation of the local economy into a more service-oriented and skill-
based economy should be the driving factor to improve and sustain the city’s
competitiveness. The issues affecting the trade and industry development such
as limited land for commercial and industrial use, low-technology oriented
industries, limited infrastructure support (roads, port, water), weak industrial
linkages and unstandardized support services and facilities should be addressed
comprehensively and appropriately.
Cebu City should also not compete with the existing local economies in the
region as well as with cities in Visayas and Mindanao, but instead might act as
initiator of modernization and advancement for these economies. A
complimentary effort among economies in Visayas and Mindanao, however, is
needed to sustain this goal.
Sectoral Objective
To make Cebu City a center of knowledge and skill-based industries by the year
2020.
2.10.3 Sectoral Strategies
The following are the sectoral strategies that may be adopted for the City of
Cebu:
a) Adoption of expulsion strategy
The city needs to expel industries and services that will hamper the
modernization and advancement of the local economy. Considering the scarcity
of available lands, the city needs to select the industries of the 21st century to be
located in the city, particularly in information technology, bio-technology, nano-
technology, multimedia development, website development and research
development. Appropriate relocation alternatives have to be prepared to those
that will be affected by the expulsions.
b) Advancement technology industrialization policy.
A policy tool is essential in making Cebu City a knowledge-based economy.
Policies that are pro-active and at the same time results-oriented are the needs
that will carry the city at the forefront of advancement and modernization. Thus,
an economic policy that is focused on advanced technology is a pre-requisite and
it has to be adopted by the City.
c) Expansion of commercial activities
The current coverage of the commercial activities, which is centered primarily in
the central part of the city, has to be expanded. This is not only to decongest the
central part of the City but also to spread the economic opportunities to the
outlying areas in the northern and in the southern areas of the city. Those
commercial activities that will trigger modernization and advancement will be
encouraged to put up shops.
d) Establishment of urban centers
The present retailing activities of the Carbon Public Market needs to be dispersed
as population is projected to be moving outside the central part of the city.
Establishment of minor urban centers in the north and south districts, (outside the
central area), is recommended. The gradual phase out of some functions of the
said public market in favor of the minor urban centers is seen as a good
alternative, while refocusing to wholesale market activities.
e) Provision of infrastructure support facilities
As the local economy gears towards a more service-oriented and skill based
industries, an infrastructure system that will fully support their activities is
necessary. Thus, the development of the infrastructure support facilities such as
roads, ports, mass transport, traffic system and others will be prioritized.
The conversion of government lands into more productive use will also be
considered. Information technology and science center in an advanced
technology development zone shall be better established in government lots to
minimize the investment costs so that investors can give better products and
services.
f) Development of technological capability of residents
To compliment the knowledge-based economy envisioned for the city,
development of technological capability should be undertaken. Thus, present
educational institutions in the city, particularly in the central area, need to
specialize in certain courses, those that are more oriented towards science and
technology. The local government unit can be of help by establishing on-the-job
training and research and development centers as well as in marketing and
technology tie-up.
