Understanding inclusive market-oriented development

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WILLIAM DAR

WILLIAM DAR

When bureaucrats talk about inclusive growth, they never fail to give a broad definition that it is sometimes hard to understand what the objective of the term really is.

So why not be very specific about defining inclusive growth, like Inclusive Market-Oriented Development (IMOD) for the agriculture sector?

IMOD builds on three powerful principles: that markets motivate growth; that innovation accelerates growth; and that inclusiveness ensures the poor benefit.

In the Philippines, small farmers are viewed as fragmented, lacking economic organization in terms of production, access to markets, financing and technology. This gives them less power in negotiations and makes it harder for them to integrate into major agricultural supply chains.


Small farmers are also receiving smaller and smaller shares of the value of their produce year-on-year. Take the case of rice farmers, who can expect to receive just 47 percent of the wholesale price of their product when they sell their palay (unmilled rice) directly from their farms, compared to 62 percent for farmers in India and 94 percent for farmers in China.

The reasons for these discrepancies are that farm gate prices are often determined by traders who have the funds, logistics and market connections that farmers do not have. Poor infrastructure, particularly in the rural areas, and the high cost of transportation also prompt farmers to rely on traders, who eventually gain more leverage over farmers when it comes to dictating farm gate prices.

So how can farmers access to markets? With the help of government and by properly organizing themselves into viable cooperatives, they gain access to postharvest, storage, transport and processing facilities that will help them value-add and link up with markets.

The government through the Department of Agriculture and/or local government units establishing crop trading centers and common facilities for storage is a good starting point to enable farmers take advantage of market opportunities.

And let us not forget that farmers organizing themselves into cooperatives, with assistance from which government and civil society organizations (CSOs), will give them leverage to deal with traders and big businesses. Take the case of Korea where farmers’ cooperatives own rice processing plants, supermarkets and even banks!

Farmers also organized into cooperatives can also take advantage of IMOD’s second component: innovation that accelerates growth.

Innovation, among others, means harnessing the power of Science and Technology (S&T) to increase crop production, reduce farm wastage and make farming profitable. I believe that S&T solutions can be effectively transferred from the developer or holder of technologies, which in the case of the Philippines includes government and state universities, if farmers are organized.

There are many S&T solutions to improve crop production: hybrid seeds; integrated pest management; soil rejuvenation through the Bhoochetana approach pioneered by the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT); sustainable water usage; and use of farm machineries for more efficient land preparation, planting and harvesting.

Also, farmers should be encouraged to undertake block farming or consolidate their planting activities into one contingent land production system to achieve economies of scale. I must also emphasize farmer cooperatives can facilitate block farming and the acquisition of farm machineries that most small farmers cannot afford. For example, a hand power tiller costs around P100,000 to P300,000 depending on country of origin and condition (whether brand-new or second-hand). Also, a combine harvester, that can harvest and bag palay in just one operation, costs millions of pesos.

And when it comes to technology and innovation, government extension workers can reach more farmers if they deal with cooperatives than with individual farmers.

The last and perhaps the most important component of IMOD is inclusiveness, ensuring that the poor participate and benefit. This means designing government programs that will reach out to the five million registered smallholder farmers and equip them to competently access markets and innovation.

In the country’s agriculture sector, those who are among the “poorest of the poor” are coconut farmers, coastal fisher folk and upland dwellers.

The fact that coconut farmers are very poor is an irony because the country generates about $1 billion annually in coconut oil and other products. With the demand for healthy and nutritious food, farmers can adopt hybrid seeds to increase yield, process coconut water near farms, and utilize waste products to produce geotextiles and mats. Coconut farmers can also tap fare trade markets and engage in intercropping to augment their incomes.

Coastal fisher folk and upland dwellers who are into farming, like rice farmers, also lack cold storage, blast freezers and transport facilities, making them dependent on traders who dictate farm gate prices.

My greatest fear is if IMOD does not take root in the Philippines, the country’s youth will shun farming because they will find it not a feasible proposition. And since the average age of farmers in the country is 57 with much of them poor, thousands of hectares of farmland are idled because the youth will shun farming.

With an increasing population, the pressure to produce more food is immense. As land devoted to farming has narrowed considerably, the country, like most of the rest of the developing world, faces the daunting task of producing more and more food from less and less arable land and irrigation water. IMOD can be the solution to this reality and it is never too late for it take root, literally.

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