Agribusiness, not just agriculture
In a statement attributed to Einstein, doing the same thing over and over again and expecting a different result is insanity. This seems to be the case with agriculture in our country. The people who produce our food are still among the poorest. We still have to import much of our basic food needs. Today, the President has decided to run the Department of Agriculture himself. Unless he reinvents the job, he cannot expect to make a difference in our poverty situation, nor in our ability to produce enough of our own food.
First of all, the mission has to be defined clearly. Former Secretary of Agriculture Sonny Dominguez defined it as “to make the farmer prosperous.” For many reasons, it looks like he was not able to deliver. Perhaps it was because the strategy, if any, was not clear. Alas, perhaps, they still did the same thing over and over again. Set production targets and try to meet them.
Today, the average age of our farmers is over 60 years old, or beyond the official retirement age for pensions which most of our farmers do not receive because they are unable to pay for premiums. Their children do not want to farm; they prefer to get jobs in the city or overseas. Production of our food is really in crisis. Radical changes are definitely called for in the way we administer the job.
Perhaps it is time we redefined the industry. It is not merely agriculture or food production. We have to go beyond production to making the farmers prosperous. We must think of the job as agribusiness. In fact, we must rename the government’s support system as the Department of Agribusiness.
This will have to include fisheries, that subset in Agriculture which, ironically for an archipelago like ours, has been contributing so little to our GDP. It seems the only time it increased its contribution was when “Salas Boy” Malcolm Sarmiento headed the Bureau of Fisheries. He worked very hard to push for aquaculture fisheries, fish sanctuaries, and value-adding such as sardines production in Zamboanga, his home province. With China taking over much of our rich fishing grounds, and many politicians allowing illegal fishing practices in municipal waters, it is ironic that we are unable to produce enough marine food products and have to import them. Our fisherfolk are also among the poorest in our country.
A great deal of innovation is called for. Our rice farmers own an average of less than two hectares each. One consideration is the need for economies of scale. Our senior-age farmers cannot continue to provide manual labor as their contribution to food production for our country. In the United States, some of the success stories in farming are cooperatives. Sunkist Oranges, the US Wheat Associates, Ocean Spray brand, etc. — these organized groups work for profit, and are not just food producers. They even have their own marketing managers and market research units. And they hire their own agriculture technicians independent of government.
In Vietnam, which has a communist government, businessman Huyn Van Thon has mobilized groups of farmers who own their own land to produce rice and other food products for sale to his company at market prices. His An Giang Plant Protection Joint Stock Company (AGPPS) supplies inputs such as seedlings, fertilizers and chemicals, rents out combine harvesters, mills rice, and provides warehouse space, all on credit at low interest rates, which the farmer pays for when he sells his processed outputs. The farmer is free to sell to other buyers; but the company buys at market rates to encourage loyalty. This Vietnamese firm is so successful that the international banking group Standard Chartered Bank has bought a 30% share for over $90 million. And the farmers who still own their land are considered business partners. This firm exports rice to the Philippines (which seems to be Vietnam’s biggest rice buyer) and to as far as Africa. Of course, it helps that they have natural irrigation systems from the Mekong River.
The Vietnamese government did help by providing 40 hectares for research to the business firm, which is located near an agricultural school which became the source of technicians hired by the business firm as “farmers friends” to work with the farmers. These “farmers friends” are more than technicians. They are trained to also motivate the farmers to work smoothly together for their common prosperity.
The head of this paper’s “mother company” has stated his intention to go into “agribusiness.” Perhaps the government can work with Manny V. Pangilinan to demonstrate boldness in redirecting our agriculture into agribusiness by providing tax relief and other incentives. Since no less than the President himself has chosen to head the government’s support system, boldness in policy and strategic direction is possible.
The government’s agriculture technicians have actually been devolved into the local government units under the Local Government Code of 1991. However, as one mayor said to me once, “I am told they are in the field; but I don’t know which field.” Rural banks often require the endorsement of borrowers by these technicians, which is a situation ripe for corruption. It can result in low quality diluted fertilizers and other inputs by suppliers favored by these endorsers.
I once witnessed a government lending agency offering coffee farmers loans at 16% interest when at the time deposits were paying only 6% interest. The lending agency required approved input suppliers to keep 3% out of the 16% for their “service.” The big coffee buyer firm in the area had obviously organized the meeting with the farmers. Our poor farmers had no better alternatives.
Who should run the Department of Agribusiness? It should be someone who has a bold strategic business sense, not just an agriculture specialist who will think production and do the same things over and over again. The situation is critical. We could end up with serious food shortages sooner than later. And our food producers — the farmers and fishers — will continue to be among the poorest in our country.
Teresa S. Abesamis is a former professor at the Asian Institute of Management and fellow of the Development Academy of the Philippines.
