Credit access, supportive policies crucial for agribusiness ventures
A new study has identified at least three essential elements for the success of agribusiness venture arrangements (AVAs) and sugarcane block farming (SBF), in which farmers see an increase in their income and productivity.
While AVAs and SBF have received criticism lately for reportedly not improving the lives of farmer-beneficiaries, this does not apply in all cases, said the policy note, titled “Ensuring the Success of Agribusiness Ventures in the Philippines” and published recently by the Philippine Institute for Development Studies.
Agribusiness venture arrangements are collaborations between agrarian reform beneficiaries (ARBs) and the private sector who have agreed to implement an agribusiness venture using agrarian land. AVAs cover awarded lands planted to high-value crops, primarily bananas and pineapple.
On the other hand, SBF aims to increase the productivity of sugarcane farms of members of agrarian reform beneficiaries organizations (ARBOs) by consolidating their farms into 30- to 50-hectare plantations so as to take advantage of plantation-scale production.
Recently, according to the policy note, some ARBs, farmers, and other agricultural workers have been calling for the revocation of AVAs, citing, for one, the one-sided provisions on these agreements.
But the study found cases where AVAs and SBF have proven to be beneficial to farmers, and identified key factors behind their success.
Reviewing the records of the cooperatives interviewed, the paper found that the productivity of their crops had risen and even surpassed national statistics. A comparison of the incomes received by ARBs affiliated with cooperatives before and during AVAs indicates that they are better off with the AVAs, the study authors said.
For instance, the incomes of the members of two ARBOs, Tagnanan CARP Beneficiaries Cooperative and Alberto M. Soriano Employees Fresh Fruits Producers Cooperative, had actually improved.
“The cited cases show that AVAs and SBF can be successful if essential elements are present,” the study said. These include availability of required capital; government assistance; and provision of production, postproduction, processing, and marketing needs.
Initially, the ARBs must be provided the capital to ensure that appropriate production inputs are applied at the right amount and time. For SBF, the Department of Agrarian Reform (DAR) should be the one to address the provision of credit, particularly for farmers who were issued individual certificate of land ownership awards, or CLOAs, said the paper.
If government cannot provide the needed capital, it should look into providing subsidized inputs to farmers or cooperatives. Meanwhile, for AVAs, the investors should be the one to extend financial assistance to the farmers.
“Government assistance ensures the growth of HVCs, such as banana, pineapple, and sugarcane,” stressed the study. Aside from land, security of tenure, and capital, what should also be made available and accessible are labor, farm machinery, and irrigation.
How to help
The government should also provide postproduction facilities together with market facilities and infrastructure. Sure markets and stable and optimal prices are likewise critical to ensure profitability.
“Besides these, government assistance should also be extended and the policy environment should be supportive of AVAs and SBF. Government interventions, such as lobbying for lower tariff rates of banana and pineapple, are also needed. With the lowering of tariffs, the Philippine share in the global market is expected to rise,” said the paper.
For SBF, the DAR should ensure that the support services to ARBOs are sustained. Government should also lobby for the imposition of a quota on corn syrup after 2018 to ensure that local demand for sugar will increase, it added.
To strengthen institutional mechanisms, the paper urged installing a new section within the Department of Agriculture or the Department of Trade and Industry to address the needs of the banana and pineapple industry.
And to ensure that every party upholds the contract stipulation, DAR should monitor AVA implementation regularly. “Moreover, to fast-track approval of contract for any type of AVAs, including lease and leaseback, concurrence of DAR should be only at the level of the provincial office,” the report said.