The shift to inclusive agribusiness for prosperity

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DR. WILLIAM DAR

First of two parts
The key message I advocated during the “Prosperity for All Summit” hosted by the Asean Business Advisory Council’s (ABAC) on April 28 was very clear: Government must embrace an agri-industrialization development strategy to modernize the country’s agriculture sector and lift millions of small holder farmers and fisher folk out of poverty.

The theme of the summit was “Driving Growth Through Micro and Small Entrepreneurs in Trade, Services and Agriculture” and was part of the 50th Association of Southeast Asian Nations (Asean) Summit on April 26-29. It was also part of the advocacy of Joey Concepcion III, who chairs Asean ABAC and is the Presidential Adviser for Entrepreneurship.

Up to this day, the tack for agriculture development in the Philippines is to increase production and productivity of identified priority crops like rice and corn, while supporting the export of a few export products like coconut and banana. But sad to say, that has resulted to millions of smallholder farmers being locked in poverty and only two export products, particularly coconut and banana, earning more than $1 billion each in export receipts for the country. Meanwhile, the potential of other farm and fishery products to also earn billions of dollars in export receipts have been overlooked or not given enough support. Among these are fruits, vegetables, bamboo, coffee, cacao and carageenan.

Our goal to industrialize the agriculture sector, to create employment and income opportunities requires a concerted effort. Not only should farmers shift to more profitable commodities/crops; the government should give adequate support like research and development (R&D), provision of affordable credit, training and skills development, mechanization and even marketing support so their value-added products can reach the export market. Value-adding is a major component because farmers and cooperatives can earn more from processing raw farm produce into finished products that also have longer shelf lives.


The key here is to provide an enabling policy environment for agriculture to be grown as an inclusive business and instilling the spirit of agripreneurship because of its potential to contribute to a range of social and economic development, such as employment generation, income generation, improvements in nutrition and overall ensure food security.

Inclusive agribusiness goes beyond the farmland, although making on-farm production of crops very profitable is also essential in increasing the income of small holder farmers and more importantly, making an agribusiness enterprise competitive by way of providing it raw materials that are priced competitively.

As it is today, the inclination of government is to support subsistence farming focusing on growing enough food so small holder farmers can earn enough to feed themselves and their families. The output is mostly for local requirements with little or no surplus for export.

Inclusive agribusiness, on the other hand, should level-up smallholder farmers and mainstream them in the value chain and where there is product development and value addition. It can also be a main generator of employment and income, especially in the countryside; I mean, just imagine if numerous manufacturing establishments to process raw farm produce are established in the rural areas? That would create a bigger impact compared to just expanding the areas planted to a certain crop for mostly home consumption.

So to kick off the shift to inclusive agribusiness with social equity, there should be a coordinated shift to high-value commodities like what I have mentioned earlier (fruits, vegetables, bamboo, coffee, cacao and carageenan) in addition to rubber, coconut, mangoes, banana, palm oil, among others. This first phase will need a strong policy and operational support in terms of programs/projects so it can happen in about three years.

The next phase should also take three years and covers the following: strengthening on agro-processing and its linkages to clustered farming including R&D; strengthening linkages in the supply chains; upgrading commodity clusters; and providing access to technologies, finance, regulatory and certification systems.

The last phase should make the Philippines a stronger participant in the Global Value Chain (GVC) and presents the country as an inclusive agribusiness regional hub.

Currently, there are what I would call “weak spots” in Philippine agriculture that hinders growth, like the laws that keep land holdings small, but can be aggregated through local organizations or cooperatives. Other factors to make small land holdings profitable like finance and marketing can be addressed adequately.

Cooperatives, which can anchor the development of industries to process raw farm products, also lack strong management and clear accountability, and are even prone to abuse and exploitation. Other farm consolidation arrangements can be adopted like the idea of Land Bank of the Philippines President Alex Buenaventura of the establishment of joint venture corporations of big business and cooperatives.

The laid-back Philippine work ethic that must keep up to changing times must also now innovate or solve problems. I am not saying Filipinos are lazy; in fact, Filipinos work laboriously but must now use their time productively.

There is also this system of entitlement that keeps profit and the profit motivation out of the farms, and that only traders and consolidators are able to reap many gains from sales. If such were the reverse, most smallholder farmers and fisher folk in the Philippines would not be locked in perpetual poverty. This can be addressed if farmers are taught to produce quality and not only quantity. By linking farmers to institutional markets through reliable supply chains, then earnings will increase.

The last weakness I see in Philippine agribusiness is a few dominant companies are also run by few dominant families. Nothing dramatic has been done to bridge the gap between poor farm workers and rich businessmen. I am not saying that big business is bad; it’s that more Micro, Small and Medium Enterprises (MSMEs) must be created in the field of agribusiness.

MSMEs actually make up 99.6 percent of the 900,914 business enterprises in the Philippines, based on 2015 Philippine Statistics Authority figures. But less than 8,195 or below 1 percent are in the agriculture, forestry and fishing industries.

While getting more MSMEs involved in agriculture will definitely need policy support and various programs/projects on the part of government, we should not overlook the need to capacitate, inform and empower our smallholder farmers and fisher folk and make them more oriented toward agripreneurship.
A good first step toward retooling the thinking of smallholder Filipino farmers is the strengthening of farmers’ umbrella organization as they have the direct link to primary cooperatives and its farmer-members. Another equally important milestone is the launching by Go Negosyo and the Department of Agriculture (DA) of 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 a very good initiative of Agriculture Secretary Manny Piñol and Joey Concepcion. I will be onboard the program as adviser. One other idea that I have been advocating is agribusiness incubation.

There is actually a lot to do to make inclusive agribusiness flourish in the Philippines (literally), as we realize the importance of high-value crops for processing and industrial application. By selecting key commodities per province or region, based on natural endowments and core advantage, we can map-out potential and viable areas for inclusive agribusiness, then we can create an industry for every commodity.

In closing, let’s again be one in adopting and supporting the modernization and industrialization of Philippine agriculture thru inclusive agribusiness and seeing to it that agripreneurship is the way to liberate our farmers and fisher folk from decades of poverty.

In my next column, I will discuss, among others, the Sustainable Intensification Framework to jumpstart the shift to agribusiness and agripreneurship in the Philippines.

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