Bernardo M. Villegas
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UP Vanguard Centennial Agribusiness Webinar (Part 2)

             The second strategic direction for improving Philippine agricultural productivity is Diversification.  With a few dissenting voices still focused on a 100 self-sufficiency in rice, there is general agreement among Filipino economists that we have been overly rice-centric in our approach to agriculture.  For decades, over 60% of the budget in agriculture has been spent on the rice sector.  This is understandable from the psychological point of view since rice is the main food item, especially of the lower-income households who constitute the vast majority of the population.  I still remember the national trauma when there was a serious rice shortage during the 1970s.  On the humorous side, you had popular figures like Asia’s Queen of Song Pilita Corrales and world-renown Filipino boxer Flash Elorde appearing on TV advocating the eating of corn as a substitute for rice because they, the Cebuanos, get their talent and strength from corn!  We should, however, counteracted emotions with reason, and followed what the leaders of our neighboring nation, Malaysia, did.  In the 1980s, advised by a team of agribusiness experts from the World Bank (which included Dr. Rolando Dy who later headed UA&P’s Center for Food and Agribusiness), the Malaysian policy makers defined rice sufficiency as partial sufficiency, giving room always for imports of rice from their neighboring countries Thailand and Vietnam who have almost unlimited access to water (the most critical ingredient in rice production) because of the ocean-like Mekong River.  Scientific reason told them that they would never be able to match the cost effectiveness of the rice producers in these two neighboring countries.  They then proceeded to devote most of their land to palm oil (in which they became a world power) and rubber.  They made so much money in exporting palm oil and rubber that they had more than enough to import whatever rice they were not able to produce.

            We did the right thing in turning vast tracts of land in Mindanao to banana and pineapple plantations in which we have a geographical advantage.  Instead of obsessing on 100% rice sufficiency, we should have added many more tropical fruits to these two items in which, with the help of the multinationals we became a world leader.  We could have diversified into coffee, cacao, avocado, durian. mangoes, and other high-value tropical fruits and vegetables that contribute to the $30 to $40 billion exports of agricultural products by our ASEAN neighbors (compared to our measly $7 billion of agricultural exports). The exemplary ASEAN country in product diversification in agribusiness is Thailand.  Beyond bananas and pineapples, this ASEAN country exports large amounts of rubber, grains, sugar, tapioca, frozen shrimps, canned tuna and a variety of fruits and nuts. In the 1970s and 1980s, there were a good number of Thai agricultural students who studied in U.P. Los Banos.  They learned how to grow and cultivate a good number of tropical fruits and flowers from the eminent guru of horticulture, Dr.  Ramon Valmayor.  When they returned to Thailand, they got all the support for their Government to implement what they learned in the Philippines.  The rest is history:  Thailand became a leading exporter of fruits and flowers, the growing of which they learned during their studies in the Philippines.  A similar story is told of those Thai students who learned advanced technology of growing rice from the famous International Rice Research Institute (IRRI) in Los Banos, who then went back to their country and were instrumental in getting Thailand to produce a surplus of the product to export to the Philippines. The missing factor in our country was strong government support. 

In fact, the need  for the Philippines to diversify into other high-value food products should  be motivated, not only by the possibility of earning more foreign exchange, but even more importantly to satisfy the demand of a population of 112  million (and counting) for fruits and vegetables as our economy transitions from a low-middle income economy to a high-middle income economy in the next two years and to finally a high-income economy (with a per capita income of $13,000) in the next twenty years.  It is a well-known phenomenon that as incomes of individuals and households increase, they spend less and less of the food budget percentage wise on carbohydrates like rice and corn and more and more on fruits, vegetables and meat products.  Product diversification in agriculture is a must for a growing domestic market.

            If we address the problem of consolidating the millions of small coconut farms into larger units, we can also simultaneously address product diversification because coconut farms are very suitable for intercropping with some fruit trees (cacao and coffee) as well as high-value vegetables and livestock.  As regards products like lettuce, cabbage, ginger, onions and even papayas, the large tracts of land devoted to coconuts in the province of Quezon would be ideal for intercropping because of the proximity of the province to the huge markets of the National Capital Region and CALABARZON.  In fact, we should channel the increased interest of the so-called “plantitos” and “plantitas” in high-value gardening to the growing of these vegetable and fruit products in all the empty spaces that exist in provinces like Batangas, Cavite, Laguna and Quezon.  Short courses on gardening can be given to these non-farmers by companies like East West Seeds and Harbest that actually conduct training programs for those who want to plant the seeds that they market to urban gardeners.  In Taiwan and China, urban gardening provides substantial supply of high-value products to the city dwellers.  In fact, some of them even go to the extreme of producing these food items in vertical gardens of condominium units, using the technology of hydroponics.  

            In fact, the reference to hydroponics should remind us that there is much that still has to be done to “industrialize” the agricultural sector.  We keep on talking about the advent of Industrial Revolution 4.0 but our economy has hardly gone through Industrial Revolution 1.0 and Industrial Revolution 2.0 which, respectively, involved the introduction of machines and electricity to the production process.  Industrialization of agriculture means the increased mechanization of farming and the increased processing of the raw materials from agriculture.  During the UPVanguard webinar, Dr. Briones pointed out that there is already evidence of the decreased supply of Philippine labor willing to work in the farms.  This is especially happening in the sugar industry where the so-called “sacadas” have practically disappeared.  There is a great need to mechanize sugar farming.  What has happened in the modern plantations of bananas and pineapples in Mindanao must increasingly be applied to the other crops.  And what happened to the burgeoning chocolate candy industry in Cebu and Davao must also happen to the other raw materials that come from our agricultural and fisheries sector.  And like in the coconut industry, the processing should lead to manufactured products that give higher and higher incomes to the farmers such as the upgrading from copra and coconut oil to coconut sugar, water, milk and VCO. In the increased processing of the raw materials from agriculture, there is much that can be contributed by the micro and small enterprises that are put up especially by women in their homes and in small factories.  The pastillas, polvoron and piyaya products from different regions, not to mention the numerous snack items produced by micro entrepreneurs should be given all the support, as is already being done by the Department of Trade and Industry and NGOs like GoNegosyo of Joey Concepcion and company. This industrialization process in agriculture can go a long way in addressing the problem of poverty, both in the rural and urban areas.  To be continued.