Resounding message

His message may have been overshadowed by the Glorietta disaster and the presidential pardon of Joseph Estrada, but everyone who heard it got the message loud and clear — the local agricultural sector has not been getting its fair share of attention from the government.

Philippine Long Distance Telephone Co. chairman and First Pacific Co. managing director/CEO Manuel Pangilinan definitely knows what he’s talking about when he criticized the step-child attention being given to agriculture despite its strategic importance to the economy. First Pacific owns Indofood, which owns and runs a 400,000-hectare palm oil plantation in Indonesia successfully.

The importance that agriculture plays in the domestic economy is beyond debate. As pointed out by Pangilinan, the agricultural sector accounts for about two-thirds of the labor force and 40 percent of the gross domestic product. Seventy percent of the poor live in rural areas and a stagnant agricultural sector worsens rural poverty and forces massive migration to the cities, he said.

He also attributed the poor performance of Philippine agriculture to laws that are not investor-friendly, particularly the constitutional limitation to foreign ownership of land and the agrarian reform law which restricts the size of landholdings and makes transfers of title illegal.

When I asked him whether there was any plan on the part of Indofood to invest in the Philippines, MVP says the only way that this can happen is if involves large-scale commercial farming to achieve economies of scale and to justify investments in agriculture.

But right now, both the Constitution and the CARP law militate against catalytic commercial farming in the Philippines which requires significant hectarage, large investments, and long gestation, he said.

In order to revive commercial farming, MVP recommends a review of Section 27 of the CARP law which provides that “lands acquired by beneficiaries may not be transferred, sold, or conveyed except through hereditary succession, or to the government, or to the Land Bank of the Philippines, or to other qualified beneficiaries, for a period of 10 years.” He proposes an amendment of this provision to allow landholders to sell or otherwise dispose of their landholdings precisely to allow consolidation of land and achieve economies of scale.

MVP’s message could not have come at a more opportune time. There are now proposals in Congress to extend CARP implementation after it expires next year. And MVP’s recommendation — a change in attitude away from the romantic notion that the tiller must be the landowner of that producer-cooperatives are the only viable form of large-scale agriculture. Specifically, he proposes that without  abandoning CARP’s noble intent of helping the rural poor, the more appropriate approach is one that is not prejudice against commercial farming.

Our legislators know it, but many refuse to acknowledge the glaring truth — that many CARP beneficiaries are no longer in possession of the lands granted to them. Even before the lapse of 10 years, many have assigned their rights simply because they were not prepared to be farmers and businessmen at the same time. Only a small portion of CARP’s budget was spent for support services. Success of CARP was being measured based on the hectarage of lands distributed to farmer-beneficiaries, simply because this measure is easier to quantify.

According to MVP, while CARP in its various reincarnations has been around for 50 years, the program has yet to produce the desired results. Are farmers better off as CARP beneficiaries? In Negros, the few beneficiaries who have decided to keep their lands don’t even have the money to pay real property taxes.

Comparing results

During its first-ever financial briefing after going public, GMA Network made a very interesting comparison of its income statement entries and ratios vis-a-vis its staunch competitor ABS-CBN Broadcasting Corp.

GMA noted that while ABS’ gross revenues where higher at P14.5 billion during the first nine months of 2007 compared with GMA’s P8.8 billion, ABS’ net income as a percentage of total revenues was lower at eight percent in contrast with GMA’s 20 percent. ABS’ production cost as a percentage of revenues was higher at 33 percent compared with GMA’s 31 percent. Looking at the major financial ratios (gross profit margin, EBITDA margin, net income margin, return on assets, return on equity, current ratio, GMA is way ahead.

There is however one thing that GMA does not take for granted — that ABS management is giving GMA stiff and interesting competition. ABS’ profitability is improving and if the analysts prove correct, it will not be long before GMA sees tough competition in terms of profitability. Competition in the broadcasting industry is good for the viewing public — soon, every station will have to go digital which means better reception, and better and more shows to choose from.

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