Farm-to-market roads (FMRs) provide 'last kilometer' connectivity for bringing inputs to farmers and taking their production to distant markets. The quality and quantity of these roads has a big impact on transport costs for farmers
good roads close to farms lower production costs and raise the prices that farmers get for their products. As part of the government's 'Build, Build, Build' initiative, the Department of Agriculture (DA) has accorded FMRs high priority and has invested heavily in recent years in roads to enhance accessibility and trigger economic activity in remote agricultural areas. In recent years (2019-21), FMR projects received about 18 percent of the DA's total budget. FMR construction is also a component of several special projects. For instance, under locally funded projects, total constructed FMRs as of 2017 have reached 392 km, while foreign-assisted projects have built an estimated 2,072 km as of December 2017. The World Bank was requested to carry out a rapid Public Expenditure Review (PER) focusing on the DA FMR Development Program. While this exercise would be useful under any circumstances, it is especially timely in view of the 'Mandanas ruling' of the Supreme Court. This ruling requires the central government to increase the Internal Revenue Allotment (IRA), the share of government tax revenue going to the Local Government Units (LGUs), starting in 2022. Since it will be sharing more revenue with the LGUs, the central government intends to devolve more responsibilities to them for administering and funding projects and programs. Exactly how this devolution will affect the FMR Development Program is yet to be precisely defined, and the PER is intended to help plan this process.