Messing agriculture and our farmers' lives

SAN FRANCISCO – One other book I brought over and read on the plane is Food for Thought: How Agribusiness is Feeding the World written by Dr. Rolando T. Dy, an agri-business specialist and a professor at the University of Asia and the Pacific. The book takes a world view of agri-business with very useful information on the different world players from farming to processing and retailing. Anyone who is involved in any of the various aspects of agri-business will find the information in this book very useful.

Launched just last December 8, Dr. Dy’s book promises to be of great importance to the presidential candidates who want to understand why a succession of governments since the birth of the Republic messed up our agricultural sector and consequently, the lives of our farmers. Dr. Dy explained why hunger and poverty continue to haunt the lives of our farmers even as we stubbornly cling on to a policy of trying to be self sufficient in rice and failing miserably decade after decade.

Compared with our neighbors in Asean, we have been left behind both as a food producer and as an agricultural exporter. Reading Dr. Dy’s book can leave you feeling frustrated and a little hopeless both at our government’s and our elite’s failure to embrace the progressive policies that have made agribusiness power houses of such neighboring countries as Malaysia, Thailand and Vietnman. Indeed, our leadership position in coconut, for example, had been vastly eroded by corruption and neglect.

Dr. Dy did not just unleash a litany of criticisms on what went wrong with our agribusiness policies and programs. He cited facts and figures from official sources to prove the obvious reality of our pitiful failure in agriculture. Philippine agriculture, he pointed out, performed notably only in the 1960s and 1970s in the sense that it kept pace with its peer countries. Those were the years the late Rafael Salas launched and managed the Green Revolution by massively spending on rural infrastructure such as roads and irrigation and introducing new high yielding rice varieties.

But the early accomplishments of Mr. Salas were not sustained. The Marcos administration was distracted by the greed of those in power and the cronies close to them to worry about our farm sector. Mr. Salas himself left the country in disgust and the momentum of his Green Revolution was dissipated as public investment in the agricultural sector declined. The poor investment climate in the closing years of the Marcos dictatorship also soured the investment climate for the private sector. The ill-conceived and implemented land reform program aggravated the sector’s problems.

It was all a pity because as Dr. Dy points out, the World Bank has underscored the high growth and poverty reduction potential of Philippine agriculture. Its underperformance, according to the World Bank report cited by Dr. Dy, was essentially due to “a weak policy environment and public expenditure” which do not encourage growth and competitiveness in the sector. “Farm incomes have kept lagging non-farm incomes, mainly because of the low agricultural productivity and the slow out-migration from the sector.”

It need not be that way, the WB report pointed out. “Philippine agriculture has the potential for higher growth through crop diversification, but traditional low-value commodities continue to dominate production (and land use). At the same time, dynamic high-value products with high export potential and income growth, such as tropical fruits, are not provided with the sufficient level of government support to generate significant benefits for the sector and beyond.”

Dr. Dy blames our lagging behind our peers to a misguided rice self sufficiency program. He cites the case of Malaysia to bolster his case. “In 1982,” he recalled, “Malaysia, a resource-rich country which can afford to pay the hefty price of self-sufficiency, launched its first national agricultural policy. In this policy, three strategic directions stood out: (a) the country will reduce its rice self-sufficiency target to 65 percent from 90 percent; (b) marginal rice lands will be converted to more profitable crops, particularly oil palm; and (c) the country will import its rice gap from neighboring Thailand.

“As things turned out, Malaysia’s strategic direction proved to be the correct one. There has never been any news of food shortages in that country as income security, not rice self-sufficiency, was the over-riding strategy. Its massive investments in developing 4.5 million hectares of oil palm and the downstream industries led to rapid reduction in rural poverty.”

The problem in our case is not just that we had a rice self sufficiency program even if we lacked the comparative advantage of Thailand and Vietnam in the crop. Our problem is that government failed to support its own self sufficiency policy to give it a chance to succeed as it briefly did during the time of Paeng Salas. Agrarian Reform complicated the problems we already had.

CARP, Dr. Dy pointed out, has redistributed some 4.1 million hectares of lands to 2.4 million agrarian reform beneficiaries. But the impact on beneficiaries’ income had been marginal because a large part of its budget had been going to compensate landowners and pay for the costs of a large bureaucracy. Worse, beneficiaries lost the support systems of the landowners with no replacement access to credit provided by government. Fragmentation of land made it difficult and costly to attain anything beyond subsistence farming.

Dr. Dy is not saying land reform is bad. We just didn’t get it right. Taiwan, he pointed out, was successful because of at least three features: (a) government was well prepared in terms of land records, as well as institutional effectiveness; (b) it was done fairly quickly; and (c) the government offered viable options for land compensation, such as stocks in well-managed state corporations. It also helped that there was a strong government that mandated the bureaucracy to complete the program in rapid time.

We have had attempts over the past few years to “modernize” the agricultural sector. One such example is the Agriculture and Fisheries Modernization Act or AFMA passed into law in 1997. Dr. Dy thinks it is a good law “but it wanted to address too many objectives. It was too ambitious but little buy-in from the legislators who approved the budget. It only raised too much expectation… There was only one instance prior to 2007 that the DA budget complied with the AFMA…

“The bias was clearly in favor of rice self sufficiency, with irrigation accounting for 30 percent of the total budget allocation. By contrast, tree crops and fisheries development, marketing support, regulatory compliance for food safety, export competitiveness and R &D received much less…”

Dr. Dy ends with an epilogue in the form of a memo to the next President. The going will be difficult, Dr. Dy warns the next president, “but the pay-offs will be huge if you make the right decisions. He then makes a number of suggestions, including the need for transparency specially for NFA which he thinks, should just be a logistics provider. Good governance, he explains, is not merely giving away money for farm-to-market roads, production support, irrigation, postharvest facilities and seeds. It is knowing the impact of these programs on farmers’ profits and on the country’s competitiveness.”

I like his last suggestion to Ate Glue’s replacement: “Please set the example of a frugal life… Use this question to test your cabinet members: If government resources are you own money, and not the people’s, would you be more prudent in your spending?”

In other words, no more fertilizer scams.

Ate Glue’s carol

What lyrics of a Christmas carol keeps playing in Ate Glue’s mind?

No-el… No-el… No-el, No-el… long will I stay here beyond twenty ten…

Boo Chanco’s e-mail address is [email protected]. This and some past columns can also be viewed at www.boochanco.com