Modernizing and industrializing PH agriculture

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DR. WILLIAM DAR

Consider this column the fourth part of my series on agripreneurship, but I will need two parts to comprehensively discuss the need to modernize and industrialize the Philippine agriculture sector. We can also call this “agro-industrialization.”

When the topic of modernizing and industrializing the agriculture sector is discussed, what I usually hear are linking big food-based firms with small farmers, and getting the best technologies to raise food production to the tillers of the soil. If that were all that were needed, then majority of farmers today should not be mired in perpetual poverty.

Also, while there have been laws passed to modernize the country’s agriculture sector, progress has been very slow. Among these laws are the Agriculture and Fisheries Modernization Act (AFMA or Republic Act No. 8435), Agricultural and Fisheries Modernization Act (RA 10601), Cooperative Code of the Philippines (RA 9520) and the Credit Surety Fund Cooperative Act (RA 10744).

And given that the country’s population continues to grow and agriculture faces even greater challenges from the effects of climate change, we should not waste time in modernizing and industrializing the Philippine agriculture sector. Let me also mention that the country’s farmers are getting very old, with the average age pegged at 57.


Recent statistics show the country’s agriculture sector employs 11.8 million people or 35.1 percent of the country’s total work force. This implies the immense importance of the sector toward the achievement of food security and even employment generation, especially in the countryside.

But the agriculture sector’s contribution to Gross Domestic Product (GDP) has declined to 10.3 percent in 2014 from 20 percent to 30 percent in the last two decades. Also, the Philippines has become a net food importer and has fallen behind its Southeast Asia counterparts in food exports.

The Philippines only has two commodities that earn about $1 billion in export receipts every year: coconut and banana. How does that compare to Thailand, which based on the latest figures researched by InangLupa, earns $6 billion annually from natural rubber, $5.4 billion in rice, $3.1 billion from prepared fish, $2.7 billion from sugar, $2.2 billion from prepared chicken, $1.3 billion from starch, $1.2 billion from prepared shrimp, $1.2 billion from animal feed and $1.2 billion from food preparations.

Vietnam also exports coffee beans with latest statistics researched by InangLupa showing annual receipts of $3.3 billion, $2.9 billion from rice, $2.6 billion from shrimps, $2.4 billion from fish fillet, $20 billion from cashew nuts, $1.7 billion from natural rubber, $1.6 billion from prepared shrimp and $1.2 billion from pepper.

Thailand and Vietnam are champions when it comes to producing raw farm produce and those with value-added or in processed form. For raw farm produce, just look at the billions Thailand and Vietnam earn from rice exports alone.

Further, the Philippines has the lowest gross value added (GVA) average in Southeast Asia in 2010 to 2014, according to data from the Asian Development Bank: Philippines, 1.6; Thailand, 2.0; Malaysia, 2.8; and Vietnam, 3.2.

So the traditional framework of just increasing crop production that largely negates inclusive growth for farmers will surely fail to eradicate widespread poverty in the countryside. Also, while it is easy to attract businessmen to invest in agro-processing, farmers can still be mired in poverty if they are simply tapped to supply raw materials at prices that are advantageous only to traders and the processing firms. The coconut industry is one good example of big firms exporting billions, particularly coconut oil, while coconut farmers remain among the poorest of the poor.

So I see the need to employ the Inclusive and Market-Oriented Development (IMOD) strategy that shall work toward integration of production, processing and marketing. IMOD shall also work on mainstreaming stakeholders especially smallholder farmers/fisher folk in the entire value chain through meaningful participation in order for them to generate shared decisions, actions and benefits.

IMOD builds on four powerful principles: resiliency; that markets motivate growth; that innovation accelerates growth; and that inclusiveness ensures that the poor benefit through their collective action.

From IMOD’s principles, the development framework for Philippine agriculture can be composed of four pillars, four sustainable development goals and four major objectives laid on three foundations namely: conducive and holistic legislative agenda; doable plans and programs; and buttressed by enabling mechanisms. This is called the “4 x 4 x 4” or “four-cube” framework. As its pillars, the framework should be: inclusive, science-based, resilient and market oriented toward the pursuit of four sustainable development goals, namely: food security, economic security, nutritional security, and environmental security.

Each goal has its respective plans and programs, which should achieve an optimum level of productivity, profitability, competitiveness and sustainability for the benefit of smallholder farmers, fisher folk and their families. The attainment of the four sustainable development goals will ensure security in food, nutrition, economic and environment.

Before I proceed to the “nuts and bolts” of modernizing and industrializing the country’s agriculture sector, let me discuss the concept of inclusiveness in the context of the IMOD strategy.

Inclusiveness is a comprehensive social process that should include the active participation of stakeholders, most especially poor farmers and fisher folk in identifying and defining problems and the solutions, that should result in economic and social benefits to them through their collective action.

This entails undertaking dialogues and interaction with them at the barangay level, and social preparation of beneficiaries though community-organized activities. The objective is to make them the lead or main actors of programs and projects, and not mere recipients who are usually told what to do by so-called “experts.”

There is also a need to enhance social values among poor farmers and fisher folk by making them realize the importance of education, both from the traditional education system and trainings provided by government agencies and non-government organizations helping people in the farming sector.

Besides the farmers and fisher folk, other vulnerable sectors like the out-of-school youth and women have to be engaged in the participation process.

In the Philippines, smallholder farmers continue to dominate farming and their total landholding size can make them a potent force in modernizing and industrializing the country’s agriculture sector. But as of now, they comprise the highest concentration of the rural poor, who ironically, do not have enough money to spend for food.

Smallholder farmers are also fragmented and devoid of economic organization for production, market access, financing and technology. And with climate change, they face more challenges in producing crops.

Because of their fragmentation, small farmers are easily taken advantage of traders who end up dictating farm-gate prices. Relevant institutional collective mechanisms must be organized or strengthened like strong farmers associations, cooperatives and corporatives.

In my past columns, I have stated repeatedly that Filipino rice farmers expect to receive just 47 percent of the wholesale price of their produce when they sell it directly from their farms compared to 62 percent for farmers in India and 94 percent for farmers in China.

So it is truly very important that programs and projects to modernize and industrialize the country’s agriculture sector should have inclusiveness at its core. Otherwise, only big traders and agro-processing firms will be the ones that will end up getting the fruits of progress, literally.

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