Structure following strategy in agriculture

Structure must follow strategy, especially in agriculture. If not, critical agricultural development promises will remain unfulfilled. Let us see how this applies to the largest, and yet the poorest, agriculture sub-sector in the country today.

From the Philippine Coconut Authority (PCA) website (www.pca.da.gov.ph), we note that there are 3.5 million hectares covering 29 percent of the total agricultural land in 68 out of 81 provinces, and in 1,200 out of 1,500 municipalities. About 3.3 million coconut farmers and farm workers have average income of only P20,000 per hectare per year each. No wonder they are the poorest.

Strategy

What is our current strategy in addressing this serious problem? The PCA mandate states: “It is hereby directed… to promote the rapid integrated development and growth of the coconut and other palm oil industry.”

The emphasis on the coconut product, rather than the coconut farmer, is repeated in the PCA’s mission and vision. However, one identified PCA function is: “Ensure the socio-economic welfare of coconut and palm farmers and farm workers.”

Since our economic growth has benefited more the rich than the poor, it is imperative that we heed President Aquino’s call for inclusive growth. We must give emphasis not only to the coconut product as we have done in the past, but also to the coconut farmer. Intercropping other products not related to coconut is an obvious solution.

From an interview with Dennis Andres, PCA Operations Department Manager (cellphone 0999-4315343), we constructed the following table:

Though the investment entails both cash and labor, we have included only the cash cost. This is because labor can be provided by the farmers during their spare time.

The initial cost of P20,000 includes P15,000 for seedlings and P5,000 for fertilizers. As the seedlings mature, only P5,000 is needed for subsequent yearly fertilization. A net profit doubling the cash investment occurs as early as the second year, with this gradually increasing to four times the initial investment in the fourth and succeeding years. Intercropping either cacao or coffee (which Andres says have similar cost and net profits), will give the coconut farmer an extra P80,000 per year to supplement the P20,000 he now gets primarily from copra.

More significant is multi-level intercropping with additional products like pineapple, papaya and banana. This yields a total profit of P200,000, which can be found in places such as General Santos, Davao and Cavite. Substituting the high value rambutan for one of these products yields P300,000. This can be seen in Batangas, Laguna and other provinces.

Structure

Why has the strategy of intercropping not succeeding? The potential synergy between the Department of Agriculture (DA), where PCA is attached, and the Department of Trade and Industry (DTI) is sorely lacking. The DA covers production, while the DTI covers the industrial part of agriculture, which is processing. Food manufacturing is the largest manufacturing subsector today.

We import 90 percent of our coffee and 90 percent of our cacao. Why give other nationalities cacao and coffee jobs when our Filipino farmers need these jobs to get out of poverty?

While we have the correct strategy for agriculture, we do not have the appropriate structure to effectively implement these strategies. We need the DA and the DTI to unite in a structure that will synergistically use their expertise. In addition, we need the funding.

Land Bank of the Philippines (LBP) lends only 12 percent of its more than P300 billion loan fund directly to farmers and fishers. That leaves more than P264 billion that can be lent for intercropping. Ironically, PCA has less than P0.5 billion in its cacao and coffee intercropping budget. This covers only 20,000 of the more than 2 million hectares of coconut area currently without intercropping. This is only 1 percent of the potential area.

A structure such as a Task Force is necessary to unite DA-PCA, DTI, and LBP to implement the intercropping strategy.

On Jan. 8, the Federation of Philippine Industries (FPI) met with newly appointed Trade Secretary Adrian Cristobal. This was to recommend areas that the DTI could identify as priorities in the last six months of the current administration.

Coffee and cacao intercropping was highlighted. This entails small investments, large returns and, most importantly, addresses many of the poor who were left behind in our recent impressive economic growth. Cristobal expressed great interest in this.

This interest must now be translated into a tripartite government structure with the DA-PCA, DTI and LBP. Other members should include representatives of small farmers and agribusiness. If this structure is established under this administration, it will put the next administration on the correct path of structure following strategy. This will result in inclusive growth progressing from rhetoric to reality.

(The author is chair of Agriwatch, former Secretary for Presidential Flagship Programs and Projects, and former Undersecretary for Agriculture, Trade and Industry. For inquiries and suggestions, email [email protected] or telefax (02) 852-2112)