Assessment, Issues and Challenges

Inadequate provision of irrigation

Irrigation plays a vital role in the development of agriculture as well as in the attainment of food sufficiency. As of the end of 2009, irrigated agriculture comprised about 1.54 million hectares of land or about 49 percent of the estimated irrigable area of 3.126 million hectares. Around 765,000 hectares are served by national irrigation systems (NISs), while communal irrigation systems (CISs) and private irrigation systems (PISs) serve around 558,000 and 217,000 hectares, respectively. According to the National Irrigation Authority (NIA), it spent about PhP119 billion from 1983 to 2009, representing around 78 percent of its total approved appropriations for the same period. Despite this, only less than half of the total potential productive areas have been irrigated (see Table 5.4)

While over 1.6 million hectares remain undeveloped for agriculture, these same areas are threatened by ongoing changes in land use (e.g., conversion into housing developments, golf courses, etc.). It is unclear whether such conversions are warranted by real long-term development trends or these are merely responses to the artificially repressed state of agriculture and the protractedly unsettled status of property rights in agricultural land. Therefore, it may be a prudent course to protect productive land from rapid and irreversible conversions to nonagricultural uses.

Unsustainable use of irrigation water

Because irrigation is the largest use of water in the country, a primary concern should be to optimize the productive use of water in irrigated agriculture to attain its full benefits and minimize waste. There is currently no incentive to conserve irrigation water, although payments are made on a per-hectare basis regardless of the actual water consumption needs of the crops. Subsidies disguise the true cost of providing irrigation services. In order to promote conservation and the sustainable use, treating water as an economic good provides the basis for putting into place mechanisms that capture its economic value, since water is a finite and limited resource with competing uses and users.

Table 5.4. Status of Irrigation Development as of 31 December 2009

Source: NIA as of June 2010

NIA's delicate system and financial performance

NIA's operation has rarely been profitable as the agency's operating expenses far exceed its operating income. In order to improve the agency's fiscal position, strategies to increase collection efficiency of irrigation service fees (ISFs)15 were implemented, particularly instituting incentive policies on ISF back-account collections. The net effect of such schemes resulted in a steady increase in NIA's corporate income, and although the agency still runs annual net deficits (cash and noncash expenses), the deficits decreased from PhP648 million in 2000 to only PhP24 million in 2009.

With respect to the agency's organizational restructuring, the DBM-approved Rationalization Plan is in its third year of implementation (part of a five-year phased implementation period). This saw the gradual turnover of operation and maintenance (O&M) activities, partially or wholly, from NIA to irrigators' associations (IAs). Despite significant achievements over the years, NIA still has to maintain momentum in order to achieve the sustainable fiscal stability needed to perform its mandate.

Weak performance of irrigation systems

The performance of most of the NISs and CISs has remained poor. Causes include inadequate O&M, lack of routine repair and ineffective management of available irrigation water sources due to financial, technical and institutional deficiencies. Irrigated cropping intensity of NISs nationwide averaged far less than the 200-percent target applied in project preparation. In addition, most of the service areas are dysfunctional and badly need rehabilitation.

________________________________________________________________________________________________

15  ISF is a means to generate revenues to cover operations and maintenance (O&M) costs. Personnel costs account for around 80 percent of NIA's operating expenses. Substantial staff resources (up to 40 percent of field staff time) are spent on collecting ISF from individual farmers.