The Bigger Picture Published in 2003: Modernizing Philippine Agriculture

In 1998, when I saw that the Agricultural and Fisheries Modernization Act could not take off because of wrong interpretation from within the Department of Agriculture, I did my own interpretation as a trained integrated area development planner. I even predicted at that time that the amount of rice importation would increase if the Philippines could not implement fundamental structural reforms in the rice program.

Summary

Modernizing Philippine Agriculture is a piece of planning work that gives hope to the Philippines that agricultural modernization can be achieved very fast. The fundamental weakness of the present agricultural modernization programs of the country is the apparent lack of a solid operative structure or order that can unify the country’s agricultural modernization thrust. Since agricultural development can be best attained in unity, the main thesis of this work is that by building an integrated structure for the country’s agricultural modernization drive, the country’s splintered agricultural development undertakings can be unified into one common mass thereby enticing all the stakeholders of the country’s agricultural modernization to participate and work together to attain the common goal of strengthening the basic foundation of the country’s agricultural economy.

The planning work starts by laying down the foundation and establishing the fundamental framework of the country’s agricultural modernization agenda in Chapter 1. The goal of the Agricultural Modernization Agenda of the Philippines must be to build the globally competitive and modernized agricultural economy by operationalizing working models that will drip down to increasing farmers and fishermen’s income, creating stable employment opportunities for all the stakeholders of the country’s agricultural industries, improving their quality of life, and making quality food affordable to and adequate for every Filipino.

In pursuit of the above goal, the agricultural modernization agenda must subscribe to the essence, but not necessarily following all the details, of the Agricultural and Fisheries Modernization Act of 1997 (AFMA). In this regard, AFMA was interpreted as an integrated agricultural development structure called the Square Conceptual Framework for Agricultural Modernization. The square conceptual framework is represented by four structures in its four corners. Every structure has an interconnection with each of the other three corners of the square so that there are two diagonal connections that further provide strength in the structure. The four corners of the square are represented by the model farms for organized production, credit, and marketing, food networks for marketing and processing of agricultural products, rural industrial parks for processing of raw materials and food products, provision of support services, generating employment for a skilled workforce, and zoning of the country into strategic agricultural development zones, and farm depot as a source of farm production inputs, technologies, and farm mechanization support. At the center of this four-corner agricultural modernization structure are support services, the fuel and operating system that starts the whole mass and keeps it moving. These support services are credit, infrastructure support, research and development, information and communications systems, training and extension, cooperative modernization, transport support, and disaster and risks coping support.

The ten major strategies that will guide agricultural modernization are (1) adopting guiding framework for national agricultural modernization (2) establishment of special agro-industrial zones  (3) drawing up of plans and implementation of programs for special agricultural industries that need support, (4)  modernizing agricultural support services, which include infrastructure, farm mechanization, soils and land management, research and product development, information and communications technology, transport and product handling, and agricultural disaster management, (5) promoting investment in the agriculture sector, (6)  enhancing multi-sectoral collaboration, (7) enhancing private sector participation, (8) modernization of cooperatives, (9) improving professionalism in the small scale agribusiness sector by attracting retirees and professionals to engage in modern farming, and (10) organizational and program reforms in the Department of Agriculture (DA) bureaucracy by adopting innovations and creative thinking and imposing lighter grip on the status quo. 

The agenda shall aim to establish special zones for agricultural modernization by formulating a comprehensive modernization plan and promoting investment in these priority zones. Initially, 14 special agricultural modernization zones must put up on the basis of 1 per administrative region of the Philippines. The rural industrial parks must be preferably the center of the operation of the identified zones.  

Agriculture industries that must be modernized include rice, food handling and distribution, coconut, high-value crops, livestock, and fisheries. Comprehensive modernization plan for support services, which include credit, research and development, rural transport, irrigation, farm access, information and communications technology, and research and extension shall be laid down.

Chapter 2 is about the idea of building a coalition of agricultural modernization advocates for the purposes of cooperating with the government, assisting farmers and fishermen’s groups, and providing guidance to the private sector and foreign investors in line with the planning and implementation of agricultural modernization projects in the Philippines. A coalition of farmers’ associations, cooperatives, nongovernmental organizations, private agricultural development and agribusiness consulting groups, professional agricultural societies, consumers’ groups, academic institutions, and private agribusiness corporations shall bond to form the Philippine Forum for Agricultural Reform and Modernization (PHILFARM). Areas of cooperation among members include planning and project preparation support, multi-sectoral business collaboration, assistance to cooperatives and farmers’ association, and support in line with the development of vital agricultural industries. PHILFARM, with its wide and solid network of stakeholders, will be vital partners of the government in implementing agricultural development programs.

Chapter 3 proposes a full-blown integrated and comprehensive plan to attain national rice self-sufficiency through the development of the country’s hybrid rice sector. The project aims to establish 20 integrated milling districts for hybrid rice with a total service area of around 300,000 hectares dispersed in 14 provinces all over the country. The development of the country’s rice industry must depend on the private sector in partnership with farmers’ associations and cooperatives. A hybrid rice-milling center has a service area of about 15,000 hectares divided into production clusters ranging from 3,000 to 5,000 hectares. It is equipped with the most modern rice milling and drying facilities that can operate very efficiently with a high rate of milling recovery. The private group shall manage the center. The milling center will be opened to multi-sectoral ownership as cooperatives, government agencies, and private corporations will invest in the milling centers.

The center shall operate its own machinery pool, technical assistance service, and facilities as a meeting place for training and social gathering purposes. The center shall deliver technology transfer services to the farmers who will enlist as cooperators. As cooperators, farmers are provided with production inputs such as seeds, fertilizers, and farm chemicals, and are provided access to farm mechanization services at affordable terms. Farmers then sell their produce to the integrated milling center.

To operationalize the milling center concept, Chapter 3 presents a model corporation that will be engaged in hybrid rice. The study for the establishment of the Filipino Hybrid Corporation (FIL-HYBRID) that will provide the corporate leadership in the development of the country’s hybrid rice industry is incorporated in the Chapter. The corporation shall operate subsidiaries in hybrid seed production, farm machinery pool operation, research and development, and integrated rice milling center operation.

Chapter 4 provides the strategic direction for the country’s research and development agenda in agriculture and fisheries as a package of investment opportunities. The program direction aims to formulate a concrete research and development framework that will hasten the development of technologies and business models for the agriculture and fisheries industries of the Philippines. Furthermore, the program shall focus on transforming research organizations in the Philippines as financially stable institutions.

Furthermore, Chapter 4 draws a model government institution that will operate as a financially self-sustaining government corporation conducting research and development business, with the Philippine Rice Research Institute (PhilRice) as the model. PhilRice’s main business of conducting research and development can be transformed into income-generating opportunities. In pursuit of its mandate, PhilRice shall enter into a business collaboration with farmers’ cooperatives, private sector, and other government agencies to implement worthy business models that are products of the institute’s own research works. Possible business opportunities that the institute must initiate for the collaborative business undertaking are integrated milling centers, seed production business, farm machinery pool management, crop protection and management, and rice food product development. PhilRice can be also transformed as a financially worthy organization attracting the interest of banks for financial assistance purposes and other partners to invest.

Chapter 5 is about the modernization of the country’s food handling and distribution industry. The National Food Authority (NFA) shall become the corporate leader in modernizing this industry in partnership with the private sector and farmers’ groups. NFA must reorient its focus to address the whole food handling, processing, and distribution industry, thus departing from the agency’s grains processing and marketing business. The establishment of networks of food terminal markets, the use of geographic information system (GIS) for product positioning domestically and internationally, the operation of business subsidiaries in food processing and handling with ownerships opened to farmers and employees in partnership with the private sector using its existing network of warehouses and the development of new food product lines, are business areas NFA must explore in order to assert itself as the country’s corporate leader in the development of a globally competitive food handling and distribution industry. The grains trading function of the NFA, which is the object of privatization move, must be fully modernized to become competitive to ensure that grains are distributed to the immediate consumers at the cheapest cost.

Chapter 6 is about the modernization of the country’s coconut industry, which is on the verge of becoming a sunset industry. As the government agency with the mandate to develop the industry, the Philippine Coconut Authority (PCA) shall reorient its corporate direction to start the massive rehabilitation effort to uplift the country’s coconut industry. The agency shall also undergo internal reforms in its organization and management structures to speed up the modernization of the country’s coconut industry.

The goal of the Philippine coconut industry’s modernization agenda is to contribute in the development of the country’s agricultural economy by transforming the coconut industry as a globally competitive and stable sector in agriculture, which in effect will be capable of providing decent socio-economic support to its main stakeholders, the coconut farmers. The immediate objectives of the coconut industry modernization agenda are: (1) to increase the income of farmers by improving efficiency in coconut, copra, and oil production, diversifying coconut base farming business and developing the technical, managerial, and marketing skills in running all the businesses that are associated with a dynamic coconut industry, (2) to generate additional employment opportunities by developing the business viabilities of promising product lines of the coconut industry, which include coconut coir and peat, coconut fiber, coconut sugar, virgin coconut oil, and food, beverage and spirits, (3) to strengthen research and product development and extension delivery support to the coconut industry, and (4) to reorganize the Philippine Coconut Authority (PCA) as a financially stable government-owned and controlled corporation and the recognized corporate leader in the country’s coconut industry. At the center of the development of the coconut industry are integrated coconut product processing centers under private sector management but co-owned by coconut farmers. These centers will provide an integrated package of services, which include production assistance, credit, processing, research and product development, and marketing.

Chapter 7 is proposing a regular, rather than a reactive or palliative mitigating program to face El Niño. El Niño is a natural disaster resulting in severe water drought that is recurring and its cycle is becoming short during the last ten years. The program to mitigate El Niño must be to face the climatic phenomenon heads on. The goal of the program is to contribute to accelerating agricultural modernization in the Philippines and to create better decent jobs for Filipino farmers by transforming the problem of scarcity of water brought by the El Niño climatic phenomenon into opportunities. The program shall resort to massive commercialization of agricultural technologies and management strategies that will make scarce water resources economically productive. The main technologies to be promoted for massive commercialization are dryland rice farming, greenhouse farming, drip and sprinkler irrigation system, and the use of irrigation canals for the cultivation of pasture grasses. The El Niño mitigating program must be largely a private sector initiative.

Chapter 8 is about promoting greenhouse technology and other related greenhouse irrigation infrastructure systems for high-value crops production, which include the drip and sprinkler systems. The Greenhouse Village is conceptualized to engage smallholder farmers in the use of modern farming technologies like a greenhouse. The greenhouse village is a community of farmers organized following the nucleus-satellite model of production. A Larger greenhouse, with an area ranging from 1,500 to 2,500 square meters, shall serve as the nucleus or anchor farm capable of providing the leadership for farmers to employ better technology and management and for organized production and marketing purposes. The smaller greenhouses managed by individual farmers or two to three farmers with an area of about 300 to 500 square meters are parts of the organized production setup. The goal of the project is to contribute to the development of the greenhouse farming industry in the Philippines.

Finally, for the massive operationalization of the integrated planning framework for agricultural modernization, Chapter 9 explores the participation of local government units in agro-industrial modernization. A model provincial investment plan for agro-industrial modernization is being proposed for the province of Nueva Ecija. Since local government units have corporate powers and authorities that they must exercise with utmost expediency for local-level economic modernization, they must be also responsible and accountable in promoting financial, technological, and human resources investments coming from the government and the private sectors that are essential to propel local level development. A sound investment, however, must be based on a concrete development framework.

Projects being proposed for investment include Farm Depot as a warehouse store of farm machinery and equipment, the establishment of integrated rice milling centers located in strategic areas in the province, the establishment of the province’s agro-industrial park promoting rice as the province’s vital industry, the establishment of integrated livestock center with trading center, a slaughterhouse, and a laboratory engaged in the business of reproducing ruminants artificially, the establishment of the province’s fisheries center to organize the breeding, production, and processing of tilapia, and the establishment of the province’s food terminal market to take advantage of the strategic location of the province. Support services for housing and health care for farmers are also being proposed in the investment plan. It is an investment that will propel agro-industrialization in rural areas.

Once the unified structure for agricultural modernization is put in proper order, from the national to the local levels, the country’s agricultural economy will modernize and grow further to become internationally competitive.

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