(Part 3)
In his doctoral dissertation that was presented to the University of Navarre a few years back, Dr. Ramon de Vera, an accomplished agribusiness entrepreneur and banker, also suggested that Congress should legislate the establishment of a Board of Agribusiness Investments (BOAI) that would cater to the needs of large-scale investments in corporate farming, granting incentives to large-scale farming in the same way that Board of Investments (BoI) grants incentives to manufacturing and other industrial ventures.
Among the major tasks of this BOAI will be the facilitation of the leasing of public lands to investors in agribusiness. Part of government bonds that are being floated, despite a high-interest regime expected in the medium term, should be utilized to support key investments in agribusiness projects in the rural areas, especially in the coconut regions.
In order to facilitate land consolidation, the transfer or lease of a Certificate of Land Ownership (CLOA) should be liberalized. Farmers with CLOAs who are no longer able or interested in farming should be assisted in consolidating their holdings to sell or lease their properties to those investing in corporate farming. The ceiling on corporate farms should be removed or at least the maximum should be raised to 20,000 hectares. There are prospective investors in palm oil production that requires as much as 20,000 hectares.
In islands and provinces where abundant agricultural lands are still available — as in Mindanao, Palawan, Samar, Leyte, Nueva Ecija, Nueva Vizcaya, and Cagayan — corporate investors should be assisted by the Department of Agrarian Reform (DAR) and the Department of the Environment and Natural Resources (DENR) to develop contiguous and larger farms.
Without going to the extreme of One Town One Product (OTOP), specific crops should be identified as most suitable in the different regions. For example, coconuts are best planted in Palawan, especially in the southern portion. There should be a revisit of the practice of some regions most frequently visited by strong typhoons of planting coconut trees. For example, there have been serious proposals to replace coconut trees in Bicol with corporate farms of pili trees. Foreign investors should be encouraged to invest in corporate farming of this product, which can be even more popular than macadamia nuts in global markets if cultivated, processed, and marketed. The failed attempt of the Kennemer group to invest in large-scale planting of cacao in Palawan should be examined for lessons to be learned.
More government assistance and incentives should be given to multinational enterprises like Nestlé that has already been seriously assisting coffee farmers to improve their productivity. With the right government approach, there is no reason why the Philippines cannot follow the example of Vietnam which accomplished the feat of becoming the second largest exporter of coffee, next only to Brazil, and dethroning Colombia for second place in record time.
In the livestock sector, much can be learned from the very successful joint venture between the US-based Cargill and Joy Poultry Products (producers of Jollibee chicken products) in establishing the largest poultry operations in the ASEAN region in the City of Sto. Tomas, Batangas.
Although some progress has already been made on the following recommendations since they were made by Dr. De Vera several years ago, it is worthwhile to present them again in this article as a check list for President Ferdinand Marcos, Jr., to help him in his objective of attaining greater food security during his term.
There is a constant need in the agricultural sector, affected by numerous public agencies, to be freed from the burden of multiple and overlapping requirements for approval before any investment can be made, especially for a foreign investor.
Among the measures recommended by Dr. De Vera in his doctoral thesis are:
1. Establish a one-stop multi-agency center for corporate investments in agribusiness by both local and foreign investors.
2. Stop land acquisition and distribution to small farmers. Instead focus on infrastructures and services to help farmers work together in different forms of land consolidation. In this regard, I must compliment the Duterte Administration, not only for increasing public expenditures on infrastructures from the historical low of 2-3% to a high of 5-6% during his watch. His government also accomplished much in helping farmers by spending the largest portion of the infrastructure budget in the countryside, especially on farm-to-market roads in non-urbanized areas. As a member of a private board of advisors to the Department of Public Works and Highways (DPWH) during the tenure of former DPWH Secretary Mark Villar, I can attest to the department’s policy of deliberately avoiding projects in urban areas, especially in the National Capital Region and Metro Cebu. They made sure that most of the projects in urban centers would be undertaken by private companies like Megawide, San Miguel Corp., First Pacific, DMCI, ICTSI, etc., in tandem with foreign companies like GMR from India and Acciona from Spain.
3. Allow CLOAs to be used as security for bank loans (removing the monopoly of the Land Bank of the Philippines).
4. Encourage tree planting on idle and unproductive lands, inviting long-term investors to choose their own sites. A study of Finland’s tree planting practices can provide leads to long-term investments in this sector.
5. Set up farming support centers that will provide equipment, processing of raw materials, storage, technical support, and farmer education to the surrounding communities.
6. Set up farm products exchange centers (called “bagsakan” in the local language) in both rural and urban areas in order to reduce intermediation and inequitable distribution of revenues between the farmers and the middle men. Promote widely the digital solutions of agripreneurs like May-ani that sends to small farmers’ smart phones timely information on the prices of their products in the final markets, so that middlemen do not take undue advantage of their lack of information. There are already actual investments in these food terminals being made by such large conglomerates as the Ayalas, the Villars, and the Aboitizes. As much as possible, the Government should leave this very important role of farms product exchange centers to the private sector.
7. Establish seed banks to provide quality seeds for various varieties of crops, especially fast-growing fruits and vegetables, in order to improve the productivity of small farmers. There are joint ventures like East-West Seeds and Harbest Corp. that can help the Government with this very important service to the farmers.
8. Provide transport facilities to farming community centers to reduce intermediation in products transfer. It is obvious that farm-to-market roads benefit mostly those farmers with transport vehicles. Incentives should be given to those private companies investing in the logistics and supply chain sectors that directly benefit small farmers.
These suggestions, borne of concrete business experiences of an agribusiness entrepreneur and banker, are in some way or another, being implemented by different groups in both the public and private sector. It is my hope that they will be especially applied to alleviate the plight of coconut farmers. If we are able to attract sufficient investors and managers to follow the advice that Dr. Ramon de Vera made in his doctoral dissertation, I have no doubts that the target of reducing the poverty incidence in our country to a single-digit 9% by 2028 is attainable.
Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.
bernardo.villegas@uap.asia
