Building a resilient community through an inclusive local economy

In an effort to address the years of stagnation of the rice sector, the Rice Tariffication Law (RTL) was signed into law on Feb. 14, 2020. The RTL should increase the rice competitiveness of the Philippines and improve the rice farmers’ well-being.

There are, however, lots of criticisms of the RTL, mainly on its negative impact on the farmers. Due to the import liberalization of rice, the price of rice has gone down, thus benefiting  consumers, but which lowered the price of palay (unhusked rice), and thus lowering the income of rice farmers.

In Palimbang, Sultan Kudarat, there is, however, a growing community of rice farmers who seem not to be negatively affected by the RTL. A closer look at this community would show us that the seeds of an inclusive local economy have started to grow.

A rice milling enterprise has been set up called Molenaar, which is a joint venture between farmers, local entrepreneurs, and overseas Filipinos. It has a farm machinery pool consisting of tractors, planters, rotary weeders and harvesters. This farm machinery pool will soon be transformed into a social business, meaning that all profits will be spent on further developing and expanding the farm machinery pool.

Molenaar has started to break the farmers’ dependency on the rice traders. The increased mechanization of rice farming has lowered the production cost of palay. Molenaar is able to offer a reasonable price for the palay. Farmers serviced by the farm machinery pool and Molenaar are no longer at the mercy of rice traders for the price of their palay, thus making them weather the negative impact of the RTL.

This also offers possibilities for rice farmers to optimally benefit from the various components of the RTL. The farm machinery pool, which is operated in a business-like manner, is an ideal structure through which rice farmers can avail themselves of the mechanization program of the RCEP (Rice Competitiveness Enhancement Program). Experience has already shown that giving machines to individual farmers often does not result in the mechanization of rice farming. Machines which were earlier distributed by the Department of Agriculture (DA) to individual farmers were unused. Several farmers turned over their machines to the farm machinery pool for them to be managed. A business-like manner of operation will ensure that the machines are well-maintained and are efficiently used, thus serving more farmers.

This developing inclusive local economy in Palimbang is not just limited to the rice sector. The indigenous Manobo people in the highlands of Palimbang are planting vegetables, and selling their vegetables to people in the lowlands of Palimbang. This program was enabled by the Pasali Foundation through the help of the ALS-EST (Alternative Learning System – Education and Skills Training). Recently, a local entrepreneur in Palimbang has set up a fishing business. Small economic activities, such as selling cakes and pizzas — food items which are normally available in city shopping malls, have emerged.

Developing an inclusive local economy has helped make Palimbang a resilient community, despite the COVID-19 pandemic. It is a kind of resiliency that has protected the citizens from the negative economic impact of the pandemic as it has contributed to the community’s food self-reliance.

This developing inclusive local economy in Palimbang is a result of years of painstaking effort of the community, with support from overseas Filipinos, specifically from The Netherlands. To understand how this inclusive local economy evolved in Palimbang, let me walk you to a bit of the history of our work in Palimbang.

HOW IT ALL STARTED
In 2004, Pasali Netherlands won a contest by Cordaid (a Dutch funding agency) with its entry “From Brain Drain to Brain Gain.”

Nonoy Ty and two other Pasali members used the prize money to start Pasali’s work in Palimbang, Sultan Kudarat province, in 2005. Then in 2011, Nonoy asked me and my husband Carlo to help out in Pasali’s work.

We went for a visit in January 2012. We learned about Pasali’s Children Program, which helped hundreds of indigenous and Moro children go to school; the urban farming project; the water installation work; a land redemption Program; and the setting up of the Palimbang Tri-People Organic Farming Association (PTOFA), with more than 200 farmers as members.

What impressed me was Pasali’s work with Palimbang’s Dulangan Manobo tribe. Duma Bonifacio, the tribe’s chieftain, briefed us about the work that was done in his area. Achievements included improved farming methods, establishment of a corn milling machine, the stopping of illegal logging, and the planting of rubber trees. But he was exceptionally proud of the “school” (it then only offered only Grades 1 and 2) that had recently been set up. His eyes glowed when he talked about the school, and of the better future his people will face if they would be educated. He was himself illiterate, but he knew the value of education.

BRAIN GAIN
“From Brain Drain to Brain Gain” is Pasali’s call. Overseas Filipinos, instead of being a drain having left the Philippines, can actually help in Philippine development. In addition to their remittances, overseas Filipinos can contribute their expertise, know-how, network, and resources to help development work in the Philippines. Pasali is applying “Brain Gain” in its work in Palimbang, General Santos City, and other towns.

Overseas Filipinos have helped a lot to develop the work of Pasali in the Philippines. It was the money from Pasali Netherlands (the prize money, plus personal resources) which launched the work of Pasali Philippines. Engineer Felix Pulmano, one of the Pasali members who moved from Rotterdam to Palimbang, made simple machines for the work (e.g. a corn milling machine, rotary weeders). A Dutch friend facilitated the donation of metal-working machines from the Netherlands. Nonoy Ty has been an able leader of the whole work of Pasali: tapping support from within the Philippines and outside; inspiring and guiding all the work of Pasali.

In 2012, we realized the importance of putting the work on an enduring basis, so that it could continue even as funding sources from abroad dry up. We looked into ways in which overseas Filipinos could help with the work. The idea of setting up a social business came to mind. A social business is one which pursues social goals, but is run efficiently. Its profits would either be reinvested or would go to social projects.

FARM MACHINERY
Palimbang farmers asked Pasali to help them acquire farm machinery. We decided to set up a Farm Machinery Pool (FMP), to lower farmers’ costs, increase farm yields, and eventually increase the amount of land under cultivation. We conceptualized the FMP as a social business. The machines will be run by skilled operators, the management of the machines will be conducted with business-like efficiency, and the profits will be used to acquire more farm machinery and finance projects that help the community.

The FMP would consist of tractors (to plow the fields), planters and combine-harvesters. The tractors work five times faster than the hand tractors that many farmers still use. (And tractors are at least 10 times faster than carabaos). The combine-harvesters work five times faster than the rice threshers that farmers have been using, and they will reduce wastage during harvesting from more than 20% to less than 3%.

The German funding agency, Bread for the World (BfW), agreed to fund our farm machinery. It provided Pasali with one tractor, two planters, a combine-harvester, an excavator, and a small dump truck.

The donation was made to the Pasali Philippines Foundation. Pasali then set up its machinery pool as an autonomous unit with independent finances.

MOLENAAR
Pasali set in motion the establishment of a rice mill in 2013, and started milling operations in 2017. It is a set-up where local entrepreneurs, overseas Filipinos, and farmers have equal shares (each group having 1/3 of the shares) — in the investment and decision making.

The rice mill is called Molenaar Enterprises (“molenaar” is the Dutch word for “miller”). Molenaar is an “inclusive business,” which is run for the benefit of the farmers.

Molenaar buys palay directly from farmers for a good price. This palay price is higher than what middlemen pay for it. It also has a scheme of providing production loans to farmers, which are repayable at harvest.

Molenaar continues to endure challenges. Traditional rice traders tried to deprive Molenaar of palay to mill by offering farmers a higher price for their harvest. The large-scale importation of rice has led to lower retail prices. This has not hurt Molenaar, which sells most of its milled rice locally, in Palimbang or neighboring towns.

The lack of working capital is the problem that mostly limits Molenaar from achieving higher production. Much of the capital that it has is tied up in production loans; which means that less money is left for the actual buying of palay.

Molenaar, the FMP, and the Pasali Foundation are the three components of the overall plan to lift the rice farmers of Palimbang out of poverty. This combination taps the skills and resources of the farmers, the local entrepreneurs and overseas Filipinos. If this approach is successful, we will build on it to find ways for farmers of other crops to be lifted out of poverty, and to help other economic sectors of Palimbang and other towns as well.

 

Ma. Ophelia Butalid-Echaves is a founder of the Pasali Foundation, a former city councilor in Tilburg, The Netherlands, and is currently working at the Netherlands Council for Refugees.