Building better in Marawi through inclusive agribusiness

This is the third of my columns on the subject of rehabilitation of the affected Maranao communities in war-town Lanao del Sur. The first was a call for a Duterte Marshall Plan for Muslim Mindanao (23 July, 2017), and last week, Building Better in Marawi.

In both instances the message was the imperative to fast-track the modernization of agriculture and fisheries to raise productivity, create more livelihoods, raise farmers’ income in order to erase poverty and attain household food security.

And the bias was for agribusiness to purposively join hands with government to help the small producers to be more productive while helping the companies help themselves secure their domestic raw material supply chains and thereby, their global competitiveness.

My lifelong professional association with agriculture, and personal experiences as a farmer commercially raising broilers, goats, ducks, vegetables sweet corn and rice have led me to observe that the crucial constraints to our rural productivity are two-fold: inadequate farmers’ access to technology and inputs, and access to fair markets.

And the root cause is lack of economies of scale due to our small, fragmented farm holdings, made worse by limits to land holding under agrarian reform. The situation is only bound to get worse as farms are further divided among siblings with each passing generation.

Most of our farmers and fisher folk are very poor to begin with. Whatever cash they have, go to immediate food, medicine, clothing and shelter needs. Precious little is left to purchase the inputs required of productive agriculture.

On the other hand banks, although awash with cash and in spite of the agri-agra law, are reluctant to lend to small producers because of the high risks and the prohibitive transaction costs.

Finally in the market place, with low volumes to sell and unable to wait for better prices, the small guys are price-takers. The farm gate prices are invariably very low compared with market retail prices.

Obviously government efforts have not been enough; otherwise our agriculture ought to be as vibrant and competitive as our ASEAN neighbors.

One way of overcoming these constraints is for agribusiness (the input suppliers, the supermarkets, the food and beverage manufacturers and exporters) to come forward to strengthen the supply chains from the farms to the end-users provided the small producers are fairly treated as business partners (inclusive agri-business).

As a matter of fact the Philippine Chamber of Commerce and Industry (PCCI) and the Department of Trade and Industry (DTI) and a few companies engaged in poultry, bananas, pineapple, papaya, tobacco, coffee, cacao, rice, and corn are already leading the way. The rehabilitation of Marawi, including the rest Lanao del Sur, is an excellent opportunity to express solidarity with our Muslim brothers, to scale up and demonstrate what can be done.

The idea is for the small producers and agribusiness companies to get used to doing business together so that after the emergency is over the small producers get to be formally, and fairly integrated into the supply chains of the participating agribusiness companies.

The Local Government Units (LGUs) and Department of Agriculture (DA) will not be rendered useless because they will continue to perform the vital role of helping socialize/ organize the farmers into producers associations and/or cooperatives. The private companies would logically prefer to deal with disciplined organized groups rather than individual farmers to reduce transactions costs. For the farmers, they will have stronger leverage in dealing with the private integrators if they are cohesively organized into cooperatives.

Finally government through DTI and DA shall provide incentives to investors to foster competition and regulatory oversight to ensure the farmers are not shortchanged.

But in order to build better in Lanao del Sur we need to: 1) temporarily provide input subsidies to farmers, 2) consolidate production in key areas (one-town-one product or OTOP) and, 3) decisively transition from monocropping to crop diversification and multiple cropping.

Input subsidies as temporary exceptions Government procurement and physical distribution of farm inputs to farmers is not only wasteful but also susceptible to corruption as we have repeatedly learned in the past. However, given the urgency of the situation and the extremely high incidence of poverty in Lanao del Sur, a temporary exception can be justified, provided that safeguards are installed and that the program is time-bound. The subsidy should be limited to two years for annual crops and, for tree crops only up to the non-bearing establishment period (up to 4 years for coffee and cacao, and 5 years for coconut).

Private company procurement of supplies and services are very competitive and transparent. As volume buyers private companies enjoy favored customer prices, normally denied of government because of the lengthy bidding process and delay of payment. Arrangements need to be made with the Commission on Audit (COA) so that procurement and distribution of supplies and small farm equipment are coursed through the private sector to take advantage of better prices and assure timeliness of deliveries of inputs to end users.

In the past subsidized seeds and fertilizers become available to the farmers at the middle of the growing season by which time they are next to useless! Consolidation of production

in key areas (OTOP) Delivery of extension services, assembly and marketing of produce, and program monitoring and evaluation are much facilitated if production were consolidated into key production areas through the OTOP approach promoted by DTI.

There is no point in involving all 1,489 towns and 38 cities if the target volume of business can be as successfully attained in a few towns. In the case of coffee, last year we imported 140,000 tons of dried coffee berries. At 1.2 tons per hectare per year, we need to establish 117,000 hectares of new coffee farms. At 1,000 hectares per town we need to involve only 117 towns in the ten best coffee growing provinces. All we need are commitment of the LGUs to organize farmers in their jurisdictions to specialize in coffee growing as their OTOP. On the private sector side, we need the commitment of Nestle, Robina, Figaro and other coffee processors to focus their coffee promotion and buying activities in these coffee towns.

Paradigm Shift to Multiple Cropping and Crop Diversification for Higher Farmers’ Income and Ecological Sustainability

To take advantage of favorable year-round growing conditions, our farmers will be much better off if they transition from monocropping to multiple cropping i.e. relay cropping with annual crops, and intercropping, under tree crops.

In fact in rice, the relay crops after rice e.g. watermelons, squash, pechay are often much more profitable than rice, and with a shorter growing period.

The same is true with coconut. The coffee, cacao, papaya, pineapple, black pepper intercrops under coconut generate more income for the farmers than the principal coconut crop.

However, since multiple cropping is very location-specific, the government specialized research agencies and the state universities and colleges (SUCs) need to be engaged to install action research and demonstration trials to show viability of the various cropping systems and to train famers.

But the key is assurance of markets for the produce. The participation of supermarkets, food and beverage manufacturers and exporters will be pivotal.

***** Dr. Emil Q. Javier is a Member of the National Academy of Science and Technology (NAST) and also Chair of the Coalition for Agriculture Modernization in the Philippines (CAMP). For any feedback, email eqjavier@ yahoo.com.