Agripreneurship for inclusive growth

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DR. WILLIAM DAR

(Second of two parts)

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The Asean Agriculture Summit 2017 held on Wednesday at the SMX in Pasay City was a resounding success!
And I also attributed this to the ideas shared on how to modernize and industrialize the country’s agricultural sector anchored on an entrepreneurial ecosystem!

The summit was held to showcase the success stories in the region when it comes to agriculture, agribusiness, agripreneurship and inclusive growth, and how we can learn from them. As we know, Asean is a thriving economic community where agriculture and agribusiness contribute significantly to the economies of most of its 10 member-states.

The papers presented in the summit showed that a country with a thriving agriculture sector and agro-industries has lesser poverty; for example, Thailand’s rural poverty incidence is 13.9 percent and its national poverty incidence is 10.5 percent; Indonesia’s is 14.2 percent in the rural areas and 11.3 percent at the national level; and Vietnam’s is 18.6 percent at the rural level and 13.5 percent at the national level. Sad to say, the Philippines has a poverty incidence of 30 percent in the rural areas and 21.6 percent at the national level.

The countries that lead in farm exports in Asean also do not rely on just two or three major crops, and this proves that diversification to high-value crops is among the keys to developing a country’s farming sector and agro-industries.

Indonesia has six main crops planted primarily for the export market like oil palm, rubber, coconut, cacao, coffee, and cassava. In the case of the Philippines, only one of the three dominant top crops is for the export market, which is coconut. The other two are rice and corn, and we do not export either.

In the case of Thailand, which is the world’s top rice exporter, that country is still No. 1 in exports for rubber, cassava starch and canned pineapple, and No. 2 in sugar exports.

For Vietnam, at least 200,000 hectares each are devoted for export crops like rice, rubber, coffee, cassava and cashew.

Malaysia and Indonesia are agriculture and agribusiness powerhouses because both countries host large corporate plantations. Thailand may not have as much corporate plantations but many of its agribusiness firms are into contract farming. On the other hand in Vietnam, the government plans and directs R&D and extension for the benefit of smallholder farmers.

If the Philippines can diversify more to high-value crops and other commodities that have export potential either in processed or raw form, we can definitely improve the country’s total factor productivity for its farming sector hence more export earnings.

USDA data shows that the total productivity factor or TFP for the Philippine agriculture sector was 1.87 percent from 2001 to 2013, which is a big improvement over the 0.18 percent during the 1980s and 0.53 percent during the 1990s.

However, during the 1990s, Malaysia’s TFP was 3.01 percent, 1.88 in the 1990s, and 2.85 from 2001 to 2013. Vietnam’s was 1.17 in the 1980s, 2.33 percent in the 1990s and 2.53 percent from 2001 to 2013.

The Philippines, ironically, also imports more food products than it exports. Analysis by U&AP and data from UN Trade Map show the Philippines exported $5 billion worth of farm products, and imported $11 billion.

What must be done

So what must be done? During this summit, the answer that came out for us is to accelerate modernization and industrialization of the country’s agriculture sector anchored on an entrepreneurial ecosystem, which should also involve actively and systematically most if not all smallholder farmers in the Philippines.

The issues that are worthwhile addressing as we modernize and industrialize the country’s agriculture sector should include increasing level of productivity right at the farms, which could be addressed by investing heavily or doing massive technology transfer, mentoring and training of farmers for adoption and commercialization of technology, and even financial literary or how to handle money wisely.

Low productivity at the farm level can also be addressed through consolidation or forming blocs or clusters of production to achieve economies of scale. When small parcels of farmlands are consolidated, farmers can organize themselves into producers’ organizations or cooperatives that can acquire farm machineries and access credit.

The formula for inclusive growth through agripreneurship is simple: No. 1 high productivity at the farm level; No. 2 manufacturing or processing by agro-industrial firms and cooperatives; and No. 3 tapping both the local and export markets.

And I agree with what Dr. Rolando Dy, a very good colleague of mine, said in the summit that, “Agribusiness promotes inclusive growth by stimulating production, creating farm and non-farm employment, and reducing rural poverty.”

At present, there are already established big agribusiness firms that have partnered with smallholder farmers, and more big firms should do the same. And I must emphasize that a real “partnership” should also result in smallholder farmers getting assisted by the big companies to increase their production, through technical assistance, training or provision of affordable credit.

According to Dr. Dy and the Philippine Statistics Authority, agribusiness makes up one-third or 35 percent of the country’s economy or GDP. Also, 33 percent of the labor force is employed in the agriculture sector while 55 percent of the population is dependent on farming.

The way forward

So “The Way Forward” is to accelerate the modernization and industrialization of Philippine agriculture anchored on an entrepreneurial ecosystem, so the country can become an agriculture powerhouse in both the Asean and world markets, within a framework that is competitive, productive and sustainable.

So the three keywords here are competitive, productive and sustainable.

So again, I ask: what should be done?

My first answer is we should get all our acts together, or converge and synergize our programs, projects and efforts! Two keywords here are converge and synergyze!

So we must change the system of government agencies crafting their own programs for the agriculture, or we must converge and synergize our efforts that should result in cooperation and sharing of knowledge and objectives, also with the private sector and non-government organizations. More importantly, the smallholder farmer must be made an active participant and beneficiary in the value chain.

While the Department of Agriculture is the main agency that takes the lead to modernize and industrialize the country’s agriculture sector, other agencies involved in trade and industry, science and technology,
development of human capital, training and mentoring, and even provision of credit, should have programs and projects under the framework of the “Entrepreneurial Ecosystem in Agriculture” in the country.

Competitiveness, sustainability

Making smallholder farmers achieve higher productivity, profitability, and sustainability through R&D, innovation, agribusiness incubation, credit support and investments in irrigation and the extension and delivery system, should be followed by the establishment of rural-based agro-industries, which eventually should aim for the export market.

While MSMEs make up 99.6 percent of the 900,914 business enterprises in the Philippines, less than 8,195 or below 1 percent are in the agriculture, forestry and fishing industries. So I believe there is still a need to emphasize the importance of establishing more MSMEs in the agriculture sector, especially if we will take into account that rural poverty is still very high in the Philippines. Mentoring will be key and there is a need to organize an Asean Agripreneur Mentors Network.

After the Philippines conquers more markets here in the Asean through agripreneurship, I believe we can supply other Asian countries, Europe and North America with quality and competitively-priced farm products.
From the papers delivered by the respected experts in the forum, we can all conclude and strongly say that agripreneurship is the game changer for inclusive growth and prosperity in the Philippines.

Wednesday’s summit on agripreneurship will definitely not be the last – the event was actually the “first step” of a million-mile journey toward establishing an agripreneurial ecosystem in the country. So plans are afoot for the holding of the Philippine Agripreneurship Summit in April next year, where all of us and more participants should conceptualize the framework to establish an “Entrepreneurial Ecosystem in Agriculture.”

Let me thank Asean Business Advisory Council Chairman and Presidential Adviser for Entrepreneurship Joey Concepcion for organizing the summit and the strong support of Agriculture Secretary Manny Piñol.
Truly, agripreneurship is the way forward!

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