Bernardo M. Villegas
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Reasons for Optimism in Agriculture (Part 2)

          Secretary Dar, in his position as Acting Chair of the Land Bank, is also bent on implementing the very enlightened policy of encouraging the consolidation of the small farms received by the agrarian reform beneficiaries (usually one to two hectares each) into larger units to achieve economies of scale through what former President of Land Bank Alex Alcantara called corporativism.  This involves having large organized corporations partner with thousands of small farmers in the production of high-value crops.  The small farmers lease their small farms to a central estate (similar to the nucleus estate followed by the Malaysian in the palm oil industry) which will supervise the planting of the crop and purchasing the produce for processing and actually marketing the finished products.  The small farmers will benefit from the rental income, wages of members of the families who will be hired by the corporative and a share in the profit of the corporative.  This model can be perfectly suited to the coconut industry so that higher-value products other than copra or coconut oil (whose prices are at the lowest levels these days) can be exported to the world market, such as coconut water, coconut milk, coconut coir, coconut charcoal and a host of other products from this tree of life.  Already there are working examples of this model such as Cardinal Agri Products, Inc. in Brooke’s Point, Palawan and Axelum Coconut in Medina, Misamis Oriental.  In fact, Axelum is so successful that it has decided to go public with an IPO with the help of First Metro Investment Corporation.

         Secretary Dar is asking help from the private sector to address the challenge of the Philippines in diversifying aggressively into high-value crops following the examples of Thailand and Vietnam.  He realizes that it will have to be the Government that has to take the lead in addressing the problem of agricultural productivity in the highly-politicized crops like rice and corn.  Still much has to be done to help the small rice and corn farmers to significantly increase their productivity by being endowed with more farm-to-market roads, irrigation systems, post-harvest facilities, agricultural extension and other support services by the State.  Hopefully, a great part of the proceeds from tariffs imposed on rice will be used to fund these much-needed support services which have been sorely lacking in the past.  It is the State’s responsibility to subsidize palay farmers, not by keeping domestic rice prices at high levels and thus hurting the millions of rice consumers in the Philippines but by spending more on rural infrastructures.  The subsidies should have taken the form of abundant rural infrastructures to help the farmers to be more productive and cost effective.

         Another highly politicized crop is sugar, especially in the Western Visayas region.  Here, there will have to be one form of tariffication of imports from countries like Thailand which produces sugar at much lower costs than our sugar producers.  Proceeds from these tariffs should also be used by the State to help sugar producers to consolidate small sugar farms and to accelerate the process of farm mechanization which is unavoidable if we are to attain the productivity of our ASEAN neighbors.  Besides, farm workers in the sugar industry are getting scarcer because of alternative job opportunities.  There is also room for greater crop differentiation in the traditional sugar producing regions.  An added complication is the increased urbanization of such provinces as Batangas, Tarlac and Pampanga that used to be large sugar producing provinces.  Land prices in these provinces have reached such high levels that it does not make sense for the owners  to continue planting sugar. 

         Since the resources of the Department of Agriculture are limited, Secretary Dar has decided to rely heavily on the private sector (large, medium-scale and small businesses, cooperatives, and NGOs) in addressing the challenges in the agribusiness sectors other than palay and corn.  These are the higher-value crops that can comprise vegetables, fruits, tree crops, livestock, and aquaculture.  As discussed in the first part of this article, this category can also include coconut which can be one of  the highest-value crops if we move away from the copra-coconut oil model and  consider coconut as truly  the tree of life which can produce the most varied products such as coconut water, coconut milk, nata de coco, coconut wine, coconut coir and coconut sugar.  Fortunately, there are already business enterprises that are investing in producing these high-value products from the coconut tree.  Coconut water and coconut milk are already very much appreciated in the markets of advanced countries, as Coca-Cola and Pepsi Cola have already demonstrated.  China is already beginning to import bigger quantities of fresh coconut and coconut water.  I hope that the example of Cardinal Agri Products in Palawan will be replicated in all the coconut regions such as Quezon, Bicol, Eastern Visayas and Northern Mindanao.  (To be continued).