Second of two parts
Countries with strong agribusiness sectors are, not surprisingly, also export powerhouses when it comes to raw and processed agricultural products.
Research conducted done by InangLupa, which I founded and head, proves this point. Using figures from 2014, InangLupa’s research showed that the Philippines imports more farm products than it exports.
In 2014, the Philippines exported $6.7 billion worth of farm products but imported $8.6 billion, for a deficit of $1.9 billion. The amount of farm products imported by the Philippines annually may even be understated by as much as $1 billion because of smuggling, which I believe is still rampant.
On the other hand, Thailand shipped abroad $38.4 billion in farm products the same year and imported $12.9 billion for a surplus of $25.5 billion; Indonesia $38.8 billion in farm exports and $17.5 billion in agricultural imports for a surplus of $21.3 billion; Malaysia $26.2 billion in farm exports and $18.3 billion in agricultural imports for a surplus of $7.9 billion; and Vietnam $24.8 billion in farm exports and $13.4 billion in agricultural imports for a surplus of $11.4 billion.
So what’s wrong with the Philippine agricultural sector? My answer is simple – in the past 50 years, the country has been focusing on rice production but most rice farmers, ironically, are poor. So there must be a need to give equal importance on high value crops, which can give farmers and agripreneurs the opportunity to export and earn more. Today, almost 80 percent of government support to agriculture is in rice production. With a concrete roadmap on agri-industrialization, the government must now invest highly for high value agriculture.
And it is through inclusive agribusiness that smallholder farmers, fisher folk and entrepreneurs can add value to their products and access the export market.
One of the strategies that should be employed for inclusive agribusiness to flourish in the Philippines is the sustainable intensification framework that has three components: Socio-economic intensification; Ecological intensification; and Genetic intensification.
The first component is socio-economic intensification and covers developing markets, building social capital, creating sustainable livelihoods, understanding barriers and providing an enabling environment. The simple explanation for this is, smallholder farmers and fisher folk should widen their networks that should also result to their accessing markets, which eventually should lead to their socio-economic advancement. Eventually, smallholder farmers and fisher folk should, by gaining access to markets, gain sustainable livelihood.
For ecological intensification, steps should be taken to improve soil and water management, include integrated nutrient management in farms, diversify cropping systems, and undertake efficient agricultural practices.
Overall, those should result in increased crop yields that takes into account the long-term sustainability of soil and water resources, which can achieved, among others, if farms shift to multi-cropping from mono-cropping. Diversification of Philippine agriculture is key to sustaining economic security and environmental security.
Genetic intensification’s aim is to make crops achieve higher yields, attain resiliency to pests and diseases and climate change, and improving nutrition. Greater investments must also be given to research and development (R&D) and innovation to keep us smart and competitive.
Using the sustainable intensification framework, the first step to making inclusive agribusiness flourish in the country is to diversify to other crops, or more specifically to cash or export crops.
I am not saying the Philippine abandon rice farming; rather there should be further production intensification and mechanization in favorable irrigated rice growing areas to drive down costs. Those less productive upland and rainfed lowland rice farms will be diverted to the growing of higher value vegetables, fruits, ornamentals and industrial tree crops like coffee, oil palm, rubber, cacao and hybrid coconuts.
The massive shift to high value crops should be accompanied by the establishment of more Micro, Small and Medium Enterprises (MSMEs) involved in agribusiness. Also, there are already existing laws that can spur the establishment of more MSMEs in the country: Go Negosyo Act (Republic Act 10644); Farm Tourism Development Act (RA 10816); Youth Entrepreneurship Act (RA 10679); Magna Carta for Micro, Small and Medium Enterprises (RA 9501); and the Barangay Micro Business Enterprises Act (RA 9178). We should have big programs to mentor and enhance agripreneurs including the younger generations wanting to be engaged in inclusive agribusiness, like the Kapatid Agri Mentor Me Program (KAMMP), which will apply the model of Kapatid Mentor Me, a 12-week coaching session for micro and small entrepreneurs, but aimed at creating agripreneurs. This is an initiative of Agriculture Secretary Manny Piñol and Joey Concepcion of Go Negosyo. I will be onboard the program as adviser.
Strategic programs and projects should also be put into place to establish agro-industrial hubs, agribusiness incubation programs and regional/provincial growth centers.
Also, there is a need to strengthen the Department of Agriculture-Agribusiness and Marketing Assistance Service services on marketing related concerns to include: conduct of investment missions; agribusiness information generation and dissemination; and conduct of domestic and international fairs and exhibits. The Department of Agriculture and the Department of Trade and Industry must jointly formulate a roadmap for agri-industrialization.
Large corporations can also provide interest-free capital for agripreneurship as part of their corporate social responsibility (CSR) portfolios.
To conclude this two-part column-series, let me enumerate the eight “action points” to for inclusive agricultural growth that should result in inclusive agribusiness flourishing in the Philippines.
No. 1 is irrigation, which is very basic because it would be impossible to achieve optimum production in farmlands without water. So far, only 1.72 million out of the 10 million hectares of farmlands in the Philippines are covered by national and communal irrigation systems, while another 1.3 million hectares are considered irrigable.
No. 2 is mechanization and the Philippines is also behind its Asian neighbors with a level of 1.02 horsepower/hectare compared to Vietnam’s 1.56 hp/ha and China’s 4.10 hp/ha.
No. 3 is infrastructure and logistics like post-harvest facilities, trading centers and farm-to-market roads (FMRs) that should complement the establishment of processing centers by both the private sector and government. So far, there are seven operational trading centers while five are under construction and nine are in the pre-construction stage. Also, with financial assistance from the World Bank, the DA is constructing 213 kilometers of FMRs while another 840 kilometers are being programmed.
No. 4 is credit and there are three major programs in place: Agricultural and Fisheries Financing Program for small holders in provinces selected by the program; Agrarian Production Credit Program for cooperatives, farmers organizations and rural banks; and the DA-Sikat Saka Program covering 25 major rice producing provinces for smallholder rice farmers. Credit has to be made more accessible and affordable.
No. 5 is empowerment and capacity development to harness the potential of human capital like addressing skills development of farmers and developing relevant educational curriculum and innovative pedagogy for various interest groups. The end result should be a farmer possessing the following qualities: efficient producer; team player; scientist/technologist; businessman/entrepreneur; and environmentalist.
No. 6 is adaptation to climate change and this starts with sustainable management of natural resources and ecosystem restoration, according to the Food and Agricultural Organization. Also, the “Hypothesis of Hope” of the International Crops Research Institute for the Semi-Arid Tropics that I headed from 1999 to 2014 states the need to practice ecological agriculture as climate change will have minimal effects to it, adopt recommended improved soil and water management practices, and adapt better drought and heat tolerant crop varieties.
No. 7 is R&D, and science and technology, which will require the use of science tools to advance agriculture like biotechnology.
No. 8 is agribusiness and markets.
In summary, only agribusiness poses no conflict between agriculture and industry, and can be made inclusive so millions of smallholder farmers and fisher folk can be lifted from poverty toward prosperity.