Bernardo M. Villegas
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Rescuing Coconut Farmers From Poverty

           The ongoing rapid economic growth will more quickly trickle down to the poor if we do everything in our power to rescue coconut farmers from dehumanizing poverty.  Together with subsistence fisher folks, they are the poorest among the poor.  A recent long stay of mine in the province of Mindanao brought me in closer contact with the realities of the coconut industry.  I dialogued with some civic leaders who voiced their concerns that the increasing tendency of investors to plant palm oil, rubber, cocoa and coffee may endanger the coconut industry.  Here again, we have the age-old problem of economics:  how to allocate scarce resources among competing human needs in order to attain the common good of society.  To enlighten myself on this thorny issue, I turned to my colleague at the University of Asia and the Pacific, Dr. Rolando Dy who heads the Center for Food and Agribusiness in our university.  Dr. Dy is one of the most knowledgeable economists in the field of agribusiness.

          The first fact that he presented to me is that those who are planting palm oil, rubber, cacao, coffee and other plantation crops are not cutting down coconut trees.  What they are using are either denuded forests or, as in the case of Arabica coffee, lands at high altitudes which are not suitable for coconut planting.  In fact, especially in the case of palm oil and rubber, those who are investing in them at high risks and costs (because there is very little long-term financing available in the Philippines for plantation crops) are doing the country a great service by reforesting denuded areas which are often the cause of natural calamities like floods and landslides.  Coconut farms are usually on the plains, especially close to the sea.  As he wrote in an opinion article for the Management Association of the Philippines and which appeared in the Philippine Daily Inquirer last March 25, 2013, the experiences of countries like Thailand, Malaysia and Indonesia over the last twenty or so years show that a well-managed and focused development of cocoa, coffee, palm oil, and rubber lifted millions of rural poor out of poverty and energized the domestic markets for goods and services.

          The coconut industry is in no way being threatened by plantation crops, which can make their own contribution to food sufficiency and food exports.  There are enough areas planted to coconut that, if properly cultivated and endowed with more efficient rural infrastructures like farm-to-market roads, irrigation systems, post-harvest facilities and agricultural services like extension, credit, cooperatives and technical schools, can significantly increase productivity and incomes so as to lift farmers and rural workers in coconut regions from dire poverty.  Out of the 10 million hectares of arable farmlands in the Philippines, some 3.5 million are planted to coconuts.  Unfortunately, because of the utter neglect of their sector by successive governments from the time of President Ferdinand Marcos to the present,  the productivity of coconut farms has remained abysmally low (say, in comparison to those in Sri Lanka) which has resulted in massive poverty in the coconut regions like Quezon, Aurora, Bicol and Eastern Visayas.  According to official statistics, some 36.7 per cent of farmers in general and 41.4 per cent of the fishers live below the poverty line.  Estimate of poverty in the coconut areas can be as much as 60 percent according to the National Ant-Poverty Commission. 

          In theory, coconut is called the tree of life because it is the source of raw materials for a very diverse set of industries which include edible coconut oil, coco chemicals, coco lumber, coir, coco water and the very popular nata de coco, among others.   A great deal of manufacturing can be stimulated if a regular supply of raw materials from the industry can be guaranteed.  As Dr. Dy says, however, "why would foreign (and even local) buyers design a factory for downstream products when the world's number one exporter (the Philippines) experiences high volatility in supply of the raw materials."    He continues:  "The coconut value chain is riddled with poor quality of planting materials, low farm productivity, low capacity utilization of processing plants and no price premium over the leading vegetable oil, which is palm oil.  There is also little research budget and worse, no dedicated research institute such as those for coffee, palm oil and rubber in such countries as Malaysia, Thailand and Vietnam."

          Dr. Dy is also emphatic about the need to help the farmers in the coconut regions to diversify into other food crops that can be planted between the coconut trees.  The more than 4 million farm workers in the coconut regions should be trained to think of themselves as farm entrepreneurs producing different food crops in addition to coconut as well as being engaged in other rural industries and services that can flourish in the coconut regions.  The funds from the coco levy that the Supreme Court has decided belong to the coconut farmers, supplemented by whatever billions of pesos can be budgeted in any extension of the agrarian reform law, should be utilized to build more infrastructures in the coconut regions.  Especially needed are irrigation facilities which are indispensable if other food crops are to be grown in between the coconut trees.  It is unfortunate that all efforts to endow the countryside with irrigation facilities have been exclusively focused on the rice growing areas.  Coconut has been literally the "cinderella" of Philippine agriculture, despite the fact that it accounts for a large 35 percentage of total hectarage of arable land.  Any intention of our law makers to extend the Comprehensive Agrarian Reform Law beyond 2014 should focus on rural infrastructures to be provided to the beneficiaries of the first phase of CARP.  There should be a consolidation of remaining unfragmented lands to allow the cultivation of plantation crops like palm oil, cocoa, coffee and rubber that require bigger lots for economies of scale. As especially the Malaysian success stories indicate, an alternative to large scale consolidation would be the nucleus estate approach which allows numerous small holders to be integrated into a system perfected by the FELDA or FELCRA organizations.

          Let me end with the final advice of Dr. Dy:  "We must have a deep examination of conscience regarding society's attitude towards the coconut farmers.  There must be one, unified approach to poverty reduction, not a fragmented one due to turf issues.  There must be a council for the levy fund that is guided by a board composed of farmers, processors and exporters following Southeast Asian models.  Only then will there be hope for the coconut farmers."  For comments, my email address is bernardo.villegas@uap.asia.