Bernardo M. Villegas
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Qualities Of A Good Mentor
published: May 10, 2019





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Must Reading for Agribusiness Proponents

          Despite the relatively high growth of GDP and the industry sector the Philippines is experiencing these days, there seems to be a consensus that agriculture is the weakest link in our country’s development process.  Public officials as well as private sector leaders are racking their brains to address this decades-old backwardness of the sector in which over 40 percent of the population derive their living.  There are numerous suggestions about how to improve the contribution of the agricultural sector to the ongoing economic progress which makes the Philippines one of the fastest growing emerging markets in the world today.  Unfortunately, many of the suggestions, though well intentioned, suffer from the lack of evidence-based ideas.  Some are literally way off, such as trying to achieve self-sufficiency in rice.  Others are pure motherhood statements, such as increasing agricultural productivity.  Still others are incomplete, such as building irrigation systems, farm-to-market roads or post-harvest facilities.

         We are fortunate that arguably the most knowledgeable and experienced agribusiness professional in the country, Dr. Rolando Dy, just came out with a book that can be considered a kind of a wikipedia of agricultural development.  The title of the book is “Agribusiness:  Pathways to Prosperity” and was published by the Center for Food and Agribusiness of the University of Asia and the Pacific in early 2019.  Backed up by some 40 years of both academic and field experiences in leading emerging markets in Asia, this new publication is a must reading for anyone whose heart is in agriculture and wishes to address the greatest scandal of Philippine economic backwardness:  that the Philippines has the highest poverty incidence amongst its peers in Southeast Asia.  As pointed out in the Foreword to the book by Dr. Walter Brown and former Secretary of Agriculture Luis Lorenzo Jr., rural poverty is severe in the Philippines at 30 percent in the 21.6 percent national poverty incidence.  Of the total poor, farmers and fisherfolk comprise two-thirds.  The contrast with its ASEAN neighbors is stark.  Malaysia has a poverty incidence of 0.4 percent; Vietnam, 7 percent; Thailand, 8.6 percent and Indonesia, 10.6 percent.  The weighted average of these four is only 9 percent, compared to 21.6 percent for the Philippines.

         I never cease to be impressed with the figure for Malaysia, practically zero percent poverty.  The reader may want to know that Dr. Dy can be partially credited with this outstanding accomplishment of an ASEAN country in poverty eradication.  When Dr. Dy worked as an agriculture project economist with the World Bank in Washington, D.C. in the late 1970s and early 1980s, he spent the last four years in the World Bank on agribusiness projects in Malaysia.  He was part of the group that crafted the Malacca Agriculture Development projects, with rubber, oil palm and rice as the main crops.  He was the team leader of a project that provided for the development of 14,800 has of new land for rice and tree crops and the rehabilitation of existing rice land of 3,700 has.  The proposed project combined land rehabilitation and new land development for 6,900 families with 1.2 ha irrigated rice land and a 1.2 ha share in tree crops.  The project focused on the majority rural poor, the rice smallholders, and addressed two of the constraints in achieving an income above poverty level:  small size of holding and the low productivity of land.  I cite this experience of his, among many others in Southeast Asia, to illustrate the point that Dr. Dy is no ivory-tower economist but has grassroot exposure to the vital problem of poverty eradication through agricultural development.

         Among the first insights I got from Dr. Dy after he permanently returned to the Philippines from the World Bank stint was his constant insistence that the Philippines should never aim for self-sufficiency in rice, as he saw in Malaysia whose leaders had enough common sense to avoid a policy of rice sufficiency realizing that they could never be as competitive as Thailand and Vietnam in rice production.  Malaysia focused on tree crop production (palm oil and rubber) and imported as much as 40 percent of their rice consumption from their neighboring countries whose Mekong River provides almost unlimited source or water, which is essential to rice production.  Unfortunately, for decades our government officials turned a deaf ear to the advice of Dr. Dy about the issue of rice sufficiency.  It is only now, after the disastrous experience or 2018, have our leaders come to the realization that striving for self-sufficiency in rice has hurt both the rice farmers themselves and the Filipino consumers.

         Dr. Dy is not one who dabbles in generalizations.  He recently wrote an article for Business World that considers as incomplete the advice of those (including myself) who talk a lot about building farm-to-market roads, irrigation systems and post-harvest facilities. No doubt, these are necessary conditions for increasing agricultural productivity.  But they are not sufficient conditions.  Much more is needed.  A summary of additional measures for long-lasting impact of agricultural productivity is contained in his reflections in his new book about the successful Malaysian rural development strategy.  Malaysia, as mentioned above, brought down poverty incidence from 58.7 percent in 1970 and 19.3 percent in 1990 to 1.6 percent in 2014.   The lessons we can learn from this outstanding Malaysian experience in reducing poverty incidence are summarized below:

         1.  Crop choice is critical for long-term income sustainability.  Malaysia started with rubber as the main crop and later changed to labor-saving and more profitable palm oil.  Rice, an expression for food security, was managed on mechanized estate basis.

         2.  Modern plantation management is key to achieving high productivity.  Farm productivity in managed schemes must match that of commercial plantations.

         3.  Farm consolidation is crucial to achieving economies of scale in management pool, input supply, mechanization and marketing.

         4.  The leadership was focused on project implementation.

         5.  A professionalized civil service from which to draw project managers.

         6.  Commitment from the top is key to achieving results.

         It is quite clear that we do not have to reinvent the wheel.  Our ASEAN neighbors have done much to use agricultural development for poverty eradication.  I know of very few persons other than Dr. Dy who have closely scrutinized the best practices of countries around us in poverty eradication through agriculture development.  “Agribusiness:  Pathways to Prosperity” is a must reading for all who would like to contribute their share in attaining the goal of the Duterte Administration in reducing poverty incidence from 21.6 percent today to 14 percent by 2022.  Copies of the book are available at cfa@uap.asia or call (632) 637 0912 to 26 local 247.  For comments, my email address is bernardo.villegas@uap.asia.