New trading center paradigm

FOR INCLUSIVE growth, we must adopt a new trading center paradigm for farmers and fisherfolk. This center will not limit itself to trading. It will include technical help to improve the quantity and quality of the goods that will be traded, financial assistance so that this production will actually take place, and marketing intelligence as well as buy-back contracts so that the goods are not left rotting at the trading center.

This paradigm is being developed by the Kapampangan Development Foundation (KDF) under its chair, Manuel V. Pangilinan, and president, Benigno N. Ricafort. The concept was developed based on the successful public-private sector networking of KDF.

For example, through this networking, KDF established the only hospital in Southeast Asia that is completely free for handicapped poor patients. It concentrates on seeing-free (e.g cataract extraction and pterygium excision), smiling-free (e.g. cleft lip and palate surgery), walking-free (e.g. provision of artificial legs) and birthing-free (safe delivery of infants that also decreases our high maternal mortality rate).

Since 2008, KDF has benefited 89,517 patients. But during this work, KDF realized that what these poor people needed most was livelihood opportunities that would give them income, independence, and dignity.

Farmer livelihood

Seeing the potential for high quality fruits which should necessarily come from certified fruit trees, KDF established 23 fruit tree nurseries. It did this through working and uniting with government agencies such as the Department of Agriculture, farmer organizations such as the Alyansa Agrikultura, local government units and civic organizations such as the Rotary Club.

Seeing the underutilized lands in Central Luzon, KDF launched a One Million Coconut Tree Program with the Philippine Coconut Authority. This will be accomplished over a 5-year period with the intercropping of cacao, coffee and other products. In this and other agricultural projects, KDF found out that the biggest issue raised by the farmers was marketing. They complained that there were too many middlemen making too much money between the farmer and the consumer. This resulted in low farmgate prices for the farmer and high retail prices for the consumer.

This is documented in our book “From Seed to Shelf” published under the auspices of the United Nations Development Program. It shows how the Philippines has the largest spread between the farmer’s selling price and the consumer’s buying price. Having heard this common complaint from the farmers they deal with, the KDF is now laying the ground work for a trading center, but using a new paradigm. It has seen the limited value of a bagsakan solely concerned with trading.

The idea of an effective trading center was highlighted by President Aquino himself. In a 2012 Arangkada forum, an Alyansa Agrikultura leader asked the President what he would do to promote agriculture that would be different from previous presidents. He identified two areas: (1) concentrate on increasing farmer incomes, not just production, and (2) establish trading centers. Even in his inaugural address, PNoy pinpointed the crucial role of trading centers in increasing farmer incomes. Despite this, the 2014 trading center budget showed only a 44-percent obligation rate, as compared to 90 percent for farm-to-market roads.

Paradigm shift

The new trading center paradigm will more effectively achieve the objective of increasing farmer incomes. It will not only eliminate unnecessary middlemen. It will also conduct market intelligence to find out what products are needed and when.

Regarding production, the center will help provide technical assistance from the appropriate state universities, government agencies, and agriculture scientists. This way, the farmers will use the most recent, effective, and affordable technologies. On marketing, even before the products arrive at the trading center, the KDF will facilitate buy-back market contracts. Though the farmers are ready and willing to plant, they are fearful that what they plant may not be bought at the right price.

The center will address the farmer’s problem in a holistic manner. It will have value-added components such as feed mills and processing facilities, a market intelligence and advisory unit, and an opportunity for the farmers to co-own many of this center’s assets using a well-planned and well-phased scheme.

The KDF does not wish to do this through a dole-out from government. Rather, it will harness the networking secret of their success. Businessmen will unite with civic and non-government organizations and coordinate with government agencies for maximum income impact.

This new trading center paradigm, which is not limited to trading but includes production, marketing, and financing assistance, will become a nucleus for swift and equitable development that will radiate throughout the countryside. If this paradigm is duplicated, it will be a significant contribution to the current administration’s drive for inclusive growth.

(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, e-mail [email protected] or telefax 8522112.)