Strong remittance flows still to dent rural poverty

By Cai U. Ordinario, Business Mirror

Posted at Jan 24 2011 10:33 AM | Updated as of Jan 25 2011 12:36 AM

MANILA, Philippines - Despite overseas Filipino worker (OFW) remittances being one of the major driving force in the economy, the Philippines has yet to fully benefit from the potential of remittances to reduce rural poverty, according to a policy brief released by the Institute for Migration and Development Issues (Imdi).

The study, “Harvests Coming from the Sea,” authored by Ma. Cristina Carmina B. Gregorio and Jeremiah M. Opiniano, stated that rural poverty has persisted despite the fact that two-thirds of workers abroad come from rural areas.

“The links between overseas migration and agriculture in the Philippines has yet to be fully explored, and the development potential from such relationship has not yet been maximized,” they said.

“The positive effects of such investments in agriculture [include] migrant investors in agriculture learning new farming techniques and persisting in their interest in agriculture.”

The authors said that while there have been calls directed to OFWs to invest their remittances in agriculture, the amount of remittances invested by OFWs in agriculture has not been able to lift most rural poor from poverty.

And in some cases, remittances even widened the income gap between families engaged in agriculture without any OFW member/s and families engaged in agriculture with OFW member/s.

The study stated that for one, farming families with OFW family members can buy land and make big purchases out of the remittances they receive, but farming families without access to these remittances have continued living in their current state year in and year out.

What is needed, the report stated, is for these remittances to be accompanied by public and private investments on agrarian reform, improving roads, irrigation centers and public facilities; giving farmers a level playing field in marketing and selling their produce, and addressing fundamental asset-reform issues such as ownership of land, management of fishing areas, and clarifying issues of ancestral domain.

“Improving the agricultural sector, with the help of overseas remittances, runs in tandem with improving the rural nonfarming economic sector. Improving the rural nonfarming sector is not only a means to sustain the ongoing efforts of rural households to have as many income sources, but to provide more dynamism into the overall economic activities of rural areas,” the study said.

Further, Imdi said that since developed rural regions, especially those near Metro Manila, had more overseas migrants and remittances, overseas migration’s benefits have largely been absent in poorer regions.

Rural regions with high underemployment and poverty incidence rates got less money from abroad, according to data obtained by Imdi. The data showed that the farther a rural area is from Metro Manila, the lower amount of remittances it receives and the higher underemployment there is.

“Since underemployment indicates low-paying, low-quality jobs, the situation entraps many rural folk into poverty and makes these people unable to work overseas,” Imdi said in a statement.

The authors said that estimates on incomes by overseas migrant families from the government’s 2006 income and expenditures survey show that 60 of 77 provinces had more overseas remittance incomes compared with the total incomes of provincial local governments.

The income gap, which Imdi refers to as “an income buffer for rural areas,” is “mind-boggling,” with P348.524 billion of migrant family incomes versus P50.482 billion for incomes by provincial LGUs in 2006