Get farmers out of poverty

by Boo Chanco (The Philippine Star) – Aug 12, 2019

Newly installed Agriculture Secretary William Dar is on the right path. He is targeting to double farmers’ income in five years and grow agriculture production by at least three percent annually.

And just in the nick of time. We are losing our farmers simply because being one is to be condemned to poverty. This is particularly true of rice farmers.

According to Sec. Dar, his marching orders from President Duterte is to boost the performance of the agriculture sector. Finally, someone up there noticed. Our agri sector expanded by an average of only 1.1 percent in the past decade.

“If your production growth is only 1.1 percent, how are you going to feed your population that’s growing at 1.8 percent? You will always have a deficit,” Dar said in his first news briefing.

Because of decades of neglect, Dar now has the ambitious goal of uplifting the livelihood and the quality of life of our farmers and fishermen by the end of Duterte’s term or in less than three years.

Dar is talking about crafting programs around eight paradigms: modernization of agriculture, industrialization of agriculture, promotion of exports, farm consolidation, road map development, infrastructure development, higher budget and investments for agriculture, and legislative support.

Top priority is the implementation of the Rice Competitiveness Enhancement Fund (RCEF). The P10-billion fund was created to improve the competitiveness of the local rice sector. This has been made urgent as rice imports, whose tariffs fund RCEF, are now allowed.

Dar also wants more private sector investments in agriculture. I imagine this means encouraging our food manufacturing industry to work with farmers in producing basic crops they need as ingredients for their products.

Jollibee and San Miguel are the better known companies involved in contract farming as part of their raw materials supply chain. Carlos Chan, who manufactures the Oishi snack food brand, told me he is happy with his contract farming arrangements in Bukidnon for their cassava needs.

As agribusiness academic Rolly Dy of UAP puts it, there is no need for farmers to be poor. He echoes Sec. Dar in saying “there are ways of making smallholder Filipino farmers and fisherfolk more prosperous…”

As I landed in Kuala Lumpur late last week for a holiday with my Singapore-based son and his family, I thought about how the Malaysians improved the lives of their poor farmers many decades ago.

When I was taking some graduate units at the forerunner of UAP in the early ’80s, we studied FELDA or the Malaysian program that successfully improved the lives of their farmers.

The program called for the development of state lands for the landless. Government, through FELDA, provides management scheme along private plantation lines. Administrative cost is shouldered by Malaysia’s federal government from treasury funds and loans from the World Bank.

FELDA uses private contractors to develop the estates. Each settler has about four hectares of rubber, and later oil palm. A loan paid over 20 years with interest capitalized during the crop gestation covers development costs. Settlers received dividends after deducting development costs.

But Dy says our conditions here, with CARP, makes the FELDA experience not applicable.

With CARP, Dy says we should think of allowing ownership or easy leasing up to 25 hectares so that investors can consolidate under one management. The current five hectares is too small.

Economist Calixto Chikiamco has another take on our situation.

“The real problem is fragmentation of lands and overregulation by the Department of Agrarian Reform (DAR) of CARP lands. This is aside from the problem of collective CLOAs, which hound 50 percent of all CLOAs.

“The problem of collective Certificate of Land Ownership (CLOA) has spawned a second generation problem, which is, without a law on succession, the CLOAs become dead capital. Why? Because the heirs are either missing, have gone abroad, are OFWs, or in some instances, fake.

“Therefore, these lands cannot be sold, mortgaged, leased without all the heirs signing the deed. Nearly impossible.

“In other countries, those who don’t till the soil lose their ownership rights after a certain period, or they have only the eldest to own the lands. We now need a land reform for land reform. Very tough nut to crack.

“On the problem of fragmentation of lands, we are proposing two solutions:

“A bill amending CARP to allow for the retention of agricultural lands from five ha to 24 hectares for individual farmers and up to 100 hectares for corporations whose primary purpose is agribusiness and agriculture.

“This bill will be opposed by the leftists and bleeding heart populists who say that the farmer will be displaced.

Social justice has already been rendered to them when they got the lot, but some farmers may not have the management skill, capital, and technology to make the land more productive. We have to allow the Coasian process of more efficient farmers buying out inefficient ones to proceed…

“On the consolidation of bigger lands for plantation agriculture, we are proposing that either Landbank or NDC do the consolidation. NDC used to do this, starting in the Commonwealth era. This is why we have two successful agricultural crops today, pineapple and banana.

“Under this scheme, Landbank or NDC will consolidate lands by leasing them from the farmers and then turning around and subleasing them to agribusiness investors. Landbank or NDC can provide some social protection by giving the farmers lease income and also may require that one member of the farmers’ family be employed by the investor.

“Overall, the first best solution is still a private, pro-market solution because we have to assume our government and its institutions are incompetent and corrupt (which they are). We can’t copy the Malaysian model because our institutions and problems are unique to us.”

We need drastic moves to make our agricultural sector contribute to our economic development. But I wonder if even the Duterte administration has the political will to oppose the vested interests that have kept our farmers poor.