(First of two parts)
The followers of my columns can treat this as the third installment on my discussion on agripreneurship, but this time I will discuss how agripreneurship should result in inclusive growth.
I also believe this article is timely because the Asean Business Advisory Council (ABAC) in cooperation with the Department of Agriculture (DA) will hold the Asean Agriculture Summit at the SMX Convention Center on October 4, which will have the overarching theme “Agripreneurship: The Gamechanger Towards Prosperity for All.” The event will be held in conjunction with the annual Agrilink: 24th International Agribusiness Exhibition and Seminars from October 5 to 7 at World Trade Center, Manila.
The speakers of the Asean Agriculture Summit include the Presidential Adviser on Entrepreneurship, Go Negosyo founder and Asean-BAC Chairman Joey Concepcion, Agriculture Secretary Manny Piñol, Executive Director of Center for Food and Agri (CFA) Business in the University of Asia and the Pacific and the Vice President of the Philippine Chamber of Agriculture and Food Dr. Rolando Dy, and yours truly.
Among the topics to be discussed in the forum are: Small farm Holdings and Land Consolidation in Agri-enterprise Development; The Agri Value Chain and Value-Added Products, and Agri Extension Services; Enabling Environment for Inclusive Business; and Leveraging on Technology and Innovation.
The topic “Enabling Environment for Inclusive Business” will surely include discussions on how to integrate smallholder farmers into the value chain, so they get to earn more on a consistent basis, and expand their asset base.
Inclusiveness not rocket science
You do not need to be rocket scientist to define or even understand the concept of inclusiveness, which simply means including stakeholders in the financial and social gains made from the value chain; that should replace the current practice of agribusiness and agro-processing/industrial companies maximizing their profitability by getting the lowest prices from smallholder farmers for their raw or semi-processed inputs.
On September 23-24, 2015, a conference on inclusive growth titled “Roundtable on Inclusive Agribusiness in Southeast Asia” was held in Ho Chi Minh City, to highlight efforts by companies to make smallholder farmers benefit from their businesses. I obtained a copy of the report on the conference and let me quote a part of it:
“Many companies and enterprises are developing, testing and scaling inclusive commercial approaches in Southeast Asia. These business models aim to engage, empower and share value with stakeholders across the value chain, with a specific focus on smallholder farmers. In practical terms inclusive agri-businesses are aiming to: create new market opportunities, secure a supply base, enhance their corporate reputation, gain legitimacy in local markets, and/or create ‘ethical’ products through the inclusion of poor or disadvantaged people.” This is a valid view.
From my experience putting into place inclusive growth as head of the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) from 2000 to 2014, inclusiveness can be achieved by creating “agripreneurs” at the farm level; and unless farmers become agripreneurs, there will be no inclusive growth from the rural areas.
To keep farmers poor, ignorant and in debt for the rest of their lives is to me a capital sin, especially if traders and processors of farm products get very, very rich at the expense of smallholder farmers. From what I have observed, only a few families and businessmen rule the agro-processing industry in the Philippines, and very little has been done to bridge the gap between the dominant companies and smallholder farmers.
The Prasad experience
One of the most viable models for agripreneurship leading to inclusiveness are the seed growing partnerships of Prasad Seeds Philippines Inc. (PSPI), where I am a strategic adviser, forged with smallholder corn farmers.
Under the agreement, PSPI has the following responsibilities: Provide the grower with farm inputs like fertilizers and labor budget as loan necessary for proper crop maintenance; provide a Package of Technology (POT) and recommendations through its field agronomists; and buy the harvested seeds in cobs at an agreed price per kilo.
Also, PSPI after the harvest period shall deduct the advances made by the farmer from the gross income, and pay the farmer the net proceeds.
The responsibilities of the seed growers contracted by PSPI are: provide land suitable for hybrid corn seed production, and possess or have access to necessary farm facilities and equipment including source of irrigation; provide labor (planting, fertilization, pesticide application and irrigation) that shall serve as his equity equivalent to about 18 percent of the total cost of production; and maintain and manage the crop in accordance to the POT and recommendations from PSPI field agronomists.
And finally, the contracted seed grower should sell the harvested seeds solely to PSPI at a jointly agreed upon competitive price per kilo.
PSPI also educates its seed growers on agripreneurship and financial literacy, and not just on becoming more efficient seed growers.
The game changer
Efficient farm practice, either initiated by the farmer themselves or with the assistance of a major agribusiness company, is just the starting point of inclusive growth in the agriculture sector. Simply put it, the formula is: Production (at the farm level)-manufacturing (processing by agro-industrial firms and cooperatives)-market (both local and export).
There should also be an ecosystem for entrepreneurship in agriculture, where all government institutions and private sector participants should converge and synergize their programs and projects, with the aim of making agripreneurship as the game changer for prosperity and inclusive growth. The “kanya-kanya” system of government agencies crafting their programs for the agriculture sector should be replaced with cooperation and sharing of knowledge and objectives, and seeking partnerships 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.
It is also absolutely necessary for all of us to accelerate and enhance the modernization and industrialization of Philippine agriculture, with inclusive growth in mind. This would entail projects like agribusiness incubation, getting research and development outputs to farmers, mentoring, farm mechanization, linking to markets, and investing in agriculture infrastructure and even low-cost credit.
So after the Asean Agriculture Summit, the end-result should be the conceptualisation of a “way forward” framework and strategy to make inclusive growth and agripreneurship the game changer to achieve a more prosperous Philippines and Asean. This Entrepreneurial Ecosystem in Agriculture should have as its major goal of ultimately making the Philippines globally competitive, especially now that the country climbed one notch higher to No. 56 out of 137 nations in this year’s World Economic Forum Global Competitiveness Index.
See you at the summit!