Foreign businessmen have helped Filipino farmers significantly. This is not just through expanded markets, updated technology and additional jobs. They have also advocated government agriculture policy improvements.Under consideration today is the policy on whether to implement the 2006 Biofuels Act, which stipulates that the use of coconut methyl ester (CME) in diesel should be increased from 2 percent to at least 5 percent.
Thirteen years later, we are still at 2 percent. This compares unfavorably with Malaysia’s 7 percent and Thailand’s 20 percent vegetable oil components in their diesel.
This is where the involvement of foreign businesses comes in. In a website, it states: “Arangkada Philippines is the major advocacy launched in 2010 by the Joint Foreign Chambers (JFC) to increase investment and employment in the Philippines. The JFC conducts an annual assessment of Arangkada recommendations and organizes an annual forum, where private and public sector delegates gather to launch the assessment and discuss its findings and reforms.” JFC is the partner of the Philippine Business Groups (PBG-JFC) that recently met House Speaker Alan Peter Cayetano and the deputy speakers to discuss these policy reforms. The Alyansa Agrikultura (AA) is the agriculture-based federation in the PBG that pushes agriculture issues.
An AA recommendation discussed at the Arangkada Forum on Nov. 21 was the increase of CMT from 2 percent to 5 percent in diesel. This was turned down twice by senior Department of Energy officials because it was allegedly inflationary.There are four reasons why this recommendation should be implemented now.
First, this is not inflationary. While diesel price will go up because of CMT, the total effect is deflationary. According to Asian Institute of Petroleum Studies, a peso increase in the biodiesel cost will result in at least P5 added value from the resulting increase in mileage. Just like a plant’s cost will increase because of fertilizer, the plant’s resulting increased products’ added value far outweighs the fertilizer cost. Therefore, the impact of fertilizer, similar to CMT, will decrease rather than increase overall inflation.
Second, the beneficial impact of the CMT component because of its substitution for fossil fuel (and the resulting foreign exchange savings) is significant for the environment and climate change.
Third, and most relevant to coconut farmers, the increasing demand for coconut products like CMT will increase the very low coconut prices they are getting today.
The coconut farmers constitute the poorest sector in the Philippines. There are 3.4 million coconut farmers, or 17 million household members. Last year, a coconut sold for P12 at the farmgate, yielded an income of only P20,000 a hectare. Today, it sells for only P6, with a corresponding P10,000 income.
In 2012, the mere announcement of a possible 5-percent CMT component implementation increased the coconut price by 50 percent. With actual implementation, this is predicted to be even better.
During the Arangkada Forum, Energy Senior Undersecretary Jesus Posadas stated that he favored the increase of CMT to 5 percent. However, he made a reservation that the increased benefit might go to the coconut processors and not go to the coconut farmers. Nevertheless, since he made the public statement during the forum (captured on an uploaded video in investphilippines.info
/forum2019/), the coconut farmers are looking forward to this increase. This necessary step must be taken because of economic and environment reasons. The farmers can then work for arrangements so they also benefit from this move. We will see if this will come to fruition.
This is but one example where foreign businessmen have advocated reforms that benefit Filipino farmers and agribusiness. Initiatives like Arangkada should expand and flourish, because both foreign businessmen and Filipino farmers have the same stake in seeing a better Philippines. INQThe author is Agriwatch chair, former
Secretary of Presidential Programs and Projects and former undersecretary of Agriculture and Trade and Industry.
Contact him via agriwatch_phil@yahoo.com