Successful agricultural transformations: Lessons for PH–part 2

We continue with the discussion from last week on the core elements of a national agricultural plan (“what to do”) that promotes successful rural transformation, and the elements of the on-the-ground delivery of an agricultural transformation or AT (“how to do it”).

6. Progress on enabling policies

Lesson 8: Mckinsey opines: “AT is about catalyzing transformation of a country’s rural economy… More than agricultural trade and subsidy policies are in play… Laws and regulations that influence banking, labor, infrastructure, land ownership and access, access to water, telecommunications, taxes, and insurance are also critical considerations.

“Land policy is often cited as a pivotal factor in determining whether a country’s AT can simultaneously achieve sustained progress and inclusivity (contributing to widespread poverty reduction). Land policy is a good illustration of how critical it is for policies to be dynamic-changing over time to prevent transformations from stalling.

For example, land ownership or tenure may be key at the start of an AT as a way of influencing farmers’ investment in their production. However, rental markets may soon become important as some farmers move out of agriculture into other jobs and need income from their land.”

Relating these to the Philippines, rules must be simplified to ease land leasing to scale up farm investments. The agrarian reform limit of five hectares of land is severely inadequate to encourage medium scale investors.

Finally, effective policy making needs to become more evidence-based over time. “Policymakers should invest in making use of existing data and analytics to comparatively assess the costs and likely outcomes of different potential transformation programs… Evidence-based policymaking builds better plans and integrates accountability into the systems responsible for implementing the policies.”

How to do it? The critical factor that distinguishes AT is attention to the soft side-the “how to do it” part.

These are:

Willingness to change involves the “governments, donors, farmers, companies, and civil society organizations to take risks and change behaviors to pursue a better outcome… agricultural minister arrives with a vision to transform the sector, and the momentum of good leadership spurs progress. Other times, change readiness can be encouraged through incentives, through exposure, or by showing a way forward that convinces key stakeholders.

Commitment from the highest levels of government is needed before and during the development of AT plans. Both political and financial capital are at stake for public sector investors, and securing high-level commitment will ensure the development process produces more clearly defined practical plans that have a higher likelihood of being implemented.”

Leadership alignment must also extend from the national to local level, into provinces and districts, and across multiple departments. “AT planning, leadership alignment, and budget coherency that is developed at the national level, and only in the ministry of agriculture, will fail when the interventions interact with more local governments or with other enabling issues (for example, transportation, trade, or finance).

In addition to alignment between national and local decision-makers, successful planning often includes an appropriate decision-making mandate for lower governmental.”

Leadership skill building. Mckinsey claims there is great upside to a more systematic approach to supporting key leaders, from high-level government officials to frontline employees. In the private sector, leadership training and peer networks are made available. On the other hand, in large-scale public sector AT, the ROI for leadership skill building is tremendous.

Mckinsey suggests the creation of an academy focused on building the next generation of leaders in an AT.

Managing the transformation. Mckinsey advocates: “…creating a project management office (PMO) can greatly increase the chances of carrying out a successful large-scale change program. A PMO can concentrate talent, monitor implementation, act as a source of truth, and, in general, help get things done. The office can apply accepted project management technologies to break the transformation into discrete initiatives, each with specific goals, timing, and responsibility… There is a case for using existing structures such as ministries rather than creating a temporary new organization. However, our experience shows that, depending on the country, the positives of a PMO (improved coordination, management of progress toward targets, increased ability to learn and adjust implementation over time) can greatly outweigh the negatives (high transaction costs, the potential for added complexity in political channels.”

Quo vadis the Philippines?

The country with the highest rural PI (30 percent in 2015), the lowest growth in total factor productivity, the lowest land productivity, the poorest sector diversification, and lowest agri-food export among Asean peers (Indonesia, Malaysia, Thailand and Vietnam) has a lot of soul-searching to do. Experts and academics have long suggested structural changes. Perhaps this global report can be part of a wake-up call.