Agribusiness: Pathways to prosperity

This column is about the latest book with the above title written by Rolando T. Dy, agribusiness guru and professor of management at the University of Asia and the Pacific Center for Food and Agribusiness.

For readers who are keen to learn more about our agriculture, comprehend why we are doing miserably compared with our peers in the ASEAN, make sense of the debate on rice self-sufficiency and tariffication, and get enlightened on what we need to do moving forward, this should be good reading.

The book is a compilation of 63 stand-alone essays which are easy to understand and need not be read in sequence. Unlike many opinion pieces which are rich in conclusions but sparing of empirical evidence, these articles are well-researched and supported by robust data.

As the title suggests, the book is about investments, institutions, good governance and increased attention to food and beverage manufacturing as ways of bringing prosperity to the countryside, and to the economy as a whole.

Its recurring theme is how more attention and innovations in agribusiness

can help achieve the overarching national goal of reducing incidence of poverty as stated in the Philippine Development Plan (2017–2022) of the current administration which now stands at 21.6%. This level of poverty is embarrassingly high compared with the poverty incidences of 0.6%, 10.5%, 11.3%, and 13.5% for Malaysia, Thailand, Indonesia, and Vietnam, respectively.

Since farmers and fishermen account for two-thirds of the poor, it goes without saying that the most direct approach of eliminating poverty is raising farmers’ productivity and incomes and creating more livelihoods in the countryside.

And as our ASEAN neighbors have demonstrated, it can be done through a vibrant agribusiness sector.

Why poverty incidence in the Philippines is twice of ASEAN peers

To this query Rolando T. Dy’s posits that this is due to 1) broad-based low farm productivity and 2) concentration on few products.

Dy cites Food and Agriculture Organization of the United Nations (FAO) statistics to support the above statement. For the 10 major crops grown in the region, namely, rice, corn, coconut, sugarcane, bananas, coffee, pineapple, cassava, sweetpotato, and rubber, the Philippines trails its ASEAN peers in

all crops, except pineapple, and bananas (the latter are grown in plantation scale). And because the yields are low, the unit costs are high.

Dy offers the following solutions to address low yields and high costs: 1) research and development, 2) provincial extension hubs, 3) farm credit, 4) irrigation, 5) market intelligence, 6) land access, 7) rural infrastructure, 8) privatesector driven commodity roadmaps, and 9) farm consolidation and more favorable business climate for investors.

On the other hand, our concentration on a few products (inversely, our lack of diversification) is clearly reflected in the following trade statistics. Our agri-food exports in 2016 was a measly $5 billion. The corresponding exports of Thailand, Indonesia, Malaysia, and Vietnam were $38 billion, $32 billion, $26 billion, and $22 billion, respectively. The actual farmed areas of the five countries vary. Nevertheless, if these trade numbers are converted to export dollars per hectare, we are still the last.

The Philippines only had two products, coconut and bananas, whose export values exceed $500 million a year. On the other hand, Thailand, Indonesia, Vietnam, and Malaysia had 17, 10, 9, and 7 export winners, respectively.

Professor Dy points out that processed food exports ought to have as much priority as domestic sufficiency because exports will expand markets, add value to raw materials, create jobs, and reduce poverty. He further cautions that it will be a big challenge for the government to reduce rural poverty to 20% from 30% without product-market diversification among rural industries as our ASEAN peers have learned.

Why the Philippines lags way behind in agri-food exports

On the question why the Philippines lags way behind in agri-food exports among our ASEAN peers, Rolando Dy offers the following observations: 1) low productivity across most crops, 2) poor track record in diversification i.e. three crops (coconut, rice, and corn) occupy some 80% of our farm lands, 3) neglect of aquaculture, and 4) weak agri-food manufacturing sector affecting exports and import substitution.

And the major underlying causes of underperformance are: 1) neglect of research and development, 2) poor extension service, 3) poor infrastructure, 4) lack of long-term financing for the crops, 5) lack of meritorious bureaucracy, and 6) restricted access to land for investors.

Conclusion

A short column about the book is unlikely to do justice to this yet another authoritative and insightful contribution to agriculture and rural development by Rolando Dy.

Still and all the key strategic actionable messages from the book which our administrators, legislators, farmers, and industry leaders should take careful note of are the following:

• need to do much better in raising overall farm productivity with good seeds, irrigation, improved crop management, mechanization, and access to market; need to diversify the crop sec• tor in particular placing more investments into tree crops like coffee, cacao, fruits, oil palm, and rubber; • imperative to push aggressively for aquaculture given our huge fishery resources; • move for land consolidation and freer land market to attract more private sector investments, and provide a better business envi• ronment for food, and beverage manufacturing.

Prof. Dy may find this interpretation extreme but one clear lesson I get from the book is that our obsession with rice is misdirected — and that we have much more to gain were we to pay more attention to tree crops, aquaculture, and food and beverage manufacturing as our very successful ASEAN neighbors had done.

Finally, is there hope for the Philippines? Prof. Dy is sanguine and says YES, if it gets its act together. If government will not mess up its mandate of growth and poverty reduction. If it will sustain investments and global linkages. *****

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.

There are those who look at things the way they are, and ask why... I dream of things that never were, and ask why not?

– Robert Kennedy