DMT: Key to inclusive growth

Poverty is widespread in the countryside. Stories abound on the causes. In the 1950s, the government sent thousands of settlers to Mindanao. Only land and roads were given, no management set-up and crop choices. The move did not solve poverty.

Farmers buy under-certified seedlings (“wildlings” and “askals”) such as rubber, coffee, cacao and fruit trees. They later complain of low income from low yield. But that is not the only story. Poor seedlings are exacerbated by poor handling at transport, low input use, and poor crop maintenance. Lack of management know-how and low capital, not land, are the root causes of countryside poverty.

Enter the develop-maintain-transfer (DMT) scheme.

What is DMT?

Develop means a management group—be it a private company or professional management group—will be responsible for land development and crop establishment of the project. This will ensure proper area selection, consolidation, land preparation, drainage and irrigation, and planning of the crop. It will hire workers in the area or the farmers themselves or children of farmers.

Maintain. The group will ensure that good agricultural practice (GAP) is applied on the crops from planting to the first few years of harvest. They will supervise and teach the farmers and workers on proper crop maintenance.

Transfer. The group will transfer operations management to individual farmers or farmers’ cooperatives. By that time, they have been trained in GAP.

Why DMT?

It is urgently needed to ensure that projects for poor farmers are done well according to global farming standards. In the process, high productivity and high incomes are achieved.

The strategic need for DMT is an offshoot of a very weak extension system at the local level as well as poor access of resources from banks of the small farmers.

The weak transfer of research to the fields as well as high focus of resources by the government on rice self-sufficiency has diverted resources to more promising but difficult projects.

Who will pay?

The government will hire the professional group, or the private company to develop schemes. Development cost will be paid by the farmers over a long period.

Is DMT new?

It is not.   Malaysia’s Federal Land Development Authority (Felda), a government body established under the leadership of then Deputy Prime Minister (later Prime Minister) Tun Abdul Razak, first started the scheme in 1958.

It applied top private plantation standards on state lands by hiring private contractors to develop plantations for small holders, starting with rubber and later oil palm.

Scheme management is paid for by the government. Public infrastructure, such as roads, was subsidized.

In 1966, the Federal Land Consolidation and Rehabilitation Authority (Felcra) was created along a similar setup but instead of new state land development.

It was tasked to consolidate small holdings, many of which were idle, unproductive or abandoned.

DMT would be a good system for unproductive coconut lands.

Note: Felda and Felcra were corporatized in 1996, and their management mandates have changed.

In Philippine context, what now?

There are no public institutions like Felda or Felcra in the Philippines. The government must look beyond itself, and go for private companies with experience, or retired plantation executives, or foreign consultants.

What are the potential crops? Many. These include coconut, cacao, coffee, oil palm, rubber, banana, pineapple, aquaculture, and perhaps fruits such as avocado and jackfruit.

Next steps?

1. Define what lands to cover. These can be agrarian reform lands, ancestral domains, integrated forest management agreements, pasture and fishpond leases, and mariculture parks.

2. Define which government agency will commission DMT. The National Anti-Poverty Commission (NAPC) can lead a cluster of government agencies. But the DMT budget must be within NAPC. A new agency would be a fiscal drain. A one-stop shop like the Philippine Economic Zone Authority (Peza) for DMT proponents is imperative.

3. The idea needs a champion who will adopt the concept and carry through this advocacy. Orphaned, this will not prosper. Who is the rural advocate among our political leaders? The President himself?

4. Private funding can be obtained but an exit mechanism should be defined. The Land Bank of the Philippines can fund the transfer from private developers to smallholders/smallholder groups once the gestation period is attained.

Of course, a developer incentive should be tucked in when the transfer is implemented as a “counter land reform” where people are drawn back to the rural areas from the urban centers.

(This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author is the vice chair of the MAP Agribusiness and Countryside Development Committee, and the executive director of the Center for Food and AgriBusiness of the University of Asia & the Pacific. Feedback at [email protected] and [email protected]. For previous articles, please visit map.org.ph.)