On February 27, I delivered a talk at the head office of the Philippine Center for Postharvest Development and Mechanization (PhilMech) in Munoz, Nueva Ecija, which hosted an inter-agency meeting on farm mechanization. In my talk, I also shared my thoughts on what we can learn from the farm mechanization experiences of Asian countries like Japan, South Korea, China and Vietnam, among others.
To be frank about it, the 1.23 horsepower per hectare mechanization index recorded by PhilMech in 2011 shows government must step up its efforts in modernizing the operations of farms in the Philippines to be competitive. In 1990, when PhilMech was not yet organized, the official figure reported by government was 0.52 hp/ha.
This means that over a 21-year period, the Philippines added 0.033 hp/ha per year to reach 1.23 hp/ha in 2011.
This is not to say the country does not have good scientists and engineers, but there are more important factors to increasing a country’s mechanization index than designing or innovating farm machineries. I even find it unnecessary to “reinvent the wheel.”
Based on InangLupa’s research, Japan, where the average farm size is 2.0 hectares, recorded 19.87 hp/ha in 2011, which is a vast improvement over the 3.0 hp/ha in 1968 and 7.0 hp/ha in 1990. South Korea also in 2011 had 9.38 hp/ha from 0.435 hp/ha in 1968 and 4.11 hp/ha in 1990; China 8.42 hp/ha in 2012 from 3.88 hp/ha in 1990; Thailand 4.2 hp/ha in 2009 from 0.348 in 1968 and 0.79 hp/ha in 1990; and Vietnam 1.56 hp in 2011 and 1.20 hp/ha in 2010.
Looking at the case of Japan, it added an average of 0.61 hp/ha per hear over 21-year period from 1990 to attain 19.87 hp/ha in 2011. Thailand added 0.17 hp/ha per year over a 19-year period to reach 4.2 hp/ha in 2009. Obviously, the 0.033 hp/ha per year of the Philippines over a 21-year span is, at best, a very sorry effort.
There may be some quarters who will surely point out that Japan has an industrial sector that can also manufacture farm machineries, while Thailand’s government is very generous when it comes to farmer’s subsidies. Believing in those premises would result to overlooking the necessary measures or policies needed to promote farm mechanization in the Philippines.
So let me state that, first, history has shown that the process of mechanization is driven by changes in relative prices, in particular cost of labor versus cost of capital. Or the use of machines in farms should result in more efficiency and ultimately, incomes, for farmers. Studies done by PhilMech show that we can be competitive in rice through farm mechanization that can reduce the cost of production per kilo to P7 or P5, which is the cost of producing a kilo of palay in Thailand and Vietnam.
Second, the reasons for mechanization are economic. Particularly, the driving force behind mechanization is the farmer’s effort to increase or maintain net income.
Third, mechanization is demand-driven: ultimately it is the farmer who will decide what machine to buy, from whom to buy, and how to use it.
And lastly, government should not actively get involved in the manufacture, import, distribution and repair of agricultural machinery and its operation, but provide the incentives for private sector response.
So given those four premises, how can PhilMech and other agencies involved in farm modernization and industrialization accelerate their efforts so the country can attain a mechanization index of at least 2.0 hp/ha at the end of the Duterte Administration in 2022?
One good measure to initially get farm machineries to smallholder farmers is through collective action, or by organizing them into cooperatives, organizations and associations. Agricultural machines are expensive and most smallholder farmers cannot afford to purchase on their own.
Distributing farm machines for free, with subsidy or through special lending windows to organized farmers can be initially done but eventually, the cooperatives or organizations should be trained to build up their capital so they can purchase more agricultural equipment, especially from the private sector. Besides, farm machines can help increase the net incomes of farmer organizations and this will allow them to build up their capital.
Another good concept for collective action is the “corporative” approach, where the government and private sector own collectively 60 percent of the stake in an agribusiness entity while organized farmers hold 40 percent with their lands as their equity. More on that in my future columns.
Now let me discuss one of the more critical issues in farm mechanization – technology. My position on that issue is there is no need to reinvent the wheel.
Fortunately, the design and manufacture of farm machineries have advanced in the past decades that there is no need to design new ones from scratch. There may be a need to innovate to make a design more appropriate for local conditions, like what PhilMech is also doing.
My position is we can partner with entities in Japan, South Korea, Taiwan or even China for the very purpose of technology transfer to Philippine companies for the design and manufacture of farm machines.
Looking at the state of the Philippine farm machinery industry, which is made up mostly of small and medium enterprises, there is really a need to tap foreign expertise. Many of these firms have not even graduated from building machines with hands and using second-hand imported parts, like engines.
So why not push for the establishment of joint ventures (JVs) between established Asian manufacturers of farm machines and businessmen who share the vision of improving the country’s mechanization index?
Like in the manufacturing of cars in the Philippines, there is still a need to import parts that are still complex to manufacture here like engines and transmissions. The same goes for farm machines. Of course, some parts for the fabrication of farm machines can be manufactured locally like the frames and even wheels and tires.
So technology transfer should start the process in the local manufacture of farm machines, and just imagine how much employment that can be generated from this effort.
Eventually, innovations can be introduced by the JV on the design and manufacture of farm machines to fit more of the local conditions. Kudos to Director Dr. Dionisio Alvindia of PhilMech for hosting and organizing that inter-agency meeting in farm mechanization.
Not reinventing the wheel also applies to sticking to the mechanization index in determining a country’s progress in farm mechanization. So there is no escaping the fact the Philippines has a lot of catching up to do from 1.2 hp/ha to at least 2.0 hp/ha by the end of the Duterte Administration. That translates to 0.133 hp/ha in six years which is four times the 0.033 hp/ha added over 21 years from 1990 to attain 1.2 hp/ha in 2011. So there is really a need to at least quadruple farm mechanization efforts in the Philippines, both from the government and the private sector.
Shall we do it? Can we do it? The answer is obvious. We must!