Trade liberalization in agricultural products will surely come later than in manufactured products in the impending ASEAN Economic Community that will be given a big push in 2015 when tariffs among the ten ASEAN members of the ASEAN Free Trade Area (AFTA)  will be reduced to close to zero in varying degrees and time horizons.  But whether sooner or later, Philippine agribusiness investors and farmers are advised to start improving their productivity in farming and efficiency in logistics if they are going to survive long-term competition with our ASEAN peers like Thailand, Malaysia and Indonesia.  Dr. Rolando Dy, one of the leading agribusiness experts in the Philippines, has written extensively on how we can learn from our more successful neighbors.  In the book The Business of Agribusiness (From the Roots to the Fruits), Dr. Dy outlines lessons we can learn from Indonesia, Malaysia, Thailand and Vietnam.

          Indonesia is a perfect example of a good learner.  Not too long ago, it had practically no large-scale plantations in palm oil and rubber. Thanks to its willingness to learn from its Malaysian neighbors, it is now the world's largest player in palm oil and second largest in rubber.  It is also a global leader in markets for coffee, cocoa, spices and shrimps.  Despite a less than perfect government under the long-staying President Suharto, it was able to implement a good mix of policies that led to its stellar positions in these products:  liberal foreign investment policy in the consolidation of large tracts of land, the utilization of large plantations as nuclei for smallholder development and access to long-term financing.

          Malaysia was the pioneer in the development of plantations in palm oil and rubber.  Despite the strong nationalistic tendency under the Mahathir Government in the last century, the country was open to foreign investment  in the development  of large-scale plantations.  As the nucleus estate approach was used, smallholders obtained access to technology, financing and market.  At the same time, with the use of the plantation model of central management, the government launched the Federal Land Development (FELDA) to develop state lands for landless smallholders in rubber and later, in oil palm. 

          Later, as more lands became underutilized because of aging farmers and the migration of the rural population seeking urban jobs, the Government launched the Federal Land Consolidation and Rehabilitation Authority (FELCRA) to consolidate and develop small holdings for tree crops.  The levy on rubber exports was key in the funding of the Rubber Research Institute of Malaysia, as well as for funding rubber replanting.  Despite the very controversial manner in which  this model was misapplied in the Philippine coconut industry, it could still be tried again under better governance by the present and future Administrations, especially as we study alternative ways of reformulating and implementing our failed agrarian reform program. 

          Another lesson from Malaysia is their intelligent decision not to be self-sufficient in rice, considering their lack of comparative advantage in the efficient production of this staple product.  In 1983, under its New Agricultural Policy, the country shifted from 90 percent rice self-sufficiency to 65 percent sufficiency.  As a matter of fact, Dr. Rolando Dy was part of the World Bank team that helped in the formulation of this New Agricultural Policy when he worked in Washington, D.C. in the early 1980s.  The Policy led to the conversion of marginal rice lands into oil palm.  In like manner, rubber lands were also converted into oil palm plantations.  Those who are formulating agricultural policy for the Philippines should realize that the Philippines lacks the abundance of water resources that Vietnam and Thailand have for the efficient production of rice.  There is no economic basis for a one hundred self-sufficiency goal in rice for the Philippines. 

          The case of Thailand highlights the many opportunities lost by the Philippines in the last century for failing to focus on rural and agricultural development in its mistaken obsession with inward-looking, capital-intensive, and protectionist industrialization.  Today, Thailand (that used to lag behind the Philippines economically before the decade of the 1980s) is among the most diversified agribusiness countries in the world.  Its rural infrastructure modernization, research and development in agribusiness, contract farming schemes and enabling policies for investments are among the enduring legacies of successive governments under the inspiration of one of the best monarchs in modern times.  Thailand has become a world leader in rice, rubber, cassava, pineapple and shrimps.  Even as a late comer, it also has become a key player in sugar (which can threaten the viability of our own sugar industry), palm oil and processed fruits (in which its experts obtained many lessons from the professors of the University of the Philippines in Los Banos).

          The most recent late comer is Vietnam.   Already, it has surpassed the rest of Southeast Asia in coffee production, even besting Brazil in the export of coffee.  It is now among the top suppliers of rice, coffee, shrimp and rubber, and the leading exporter of catfish, cashew and pepper.  The government's sustained drive for productivity, diversification, adaptive research and value adding are quite admirable, considering the very low base of exports with which it started in the early 1980s.  Undoubtedly, in some countries, land resources played a key role:  Indonesia and Thailand have large land areas for tree crops.  Such is not the case, however, for Malaysia and Vietnam, which have smaller farmlands than the Philippines.  Large water resources also contributed much to the success stories in rice production in Thailand (Chaophraya river) and Vietnam ((Mekong river). Water abundance, however, was not a key factor in the tree crops development of Indonesia, Malaysia and Thailand.

          The combination of consistent and stable policies for investments, market intelligence, good rural infrastructure, responsive R&D, strong and steady agriculture bureaucracy, the drive for sound resource allocation, and inclusive strategies for rural poverty played out well for most of the crops in which our neighboring countries became world leaders.  It does not take rocket science to conclude that the Philippines failed because these factors were generally missing in our previous efforts at land reform and agricultural development.  I hope that our present and future leaders are listening to people like Dr. Rolando Dy.   His books are available at the Center for Food and Agribusiness of the University of Asia and the Pacific, Tel. 637 0912, loc. 247 or email address cfauap@yahoo.com.   The website is www.uap.asia: CFA.http://cfa.uap.asia/.   For comments, my email address is bernardo.villegas@uap.asia.