Philippine Agriculture and the High Incidence of Poverty and Unemployment

A paper written by Pablito P. Pamplona, Ph.D published at www.ppdci.org.  This is a very relevant article not only among policy-makers but also to us farmers.

Philippine Agriculture and the High Incidence of Poverty and Unemployment

Pedrito P. Pamplona, Ph.D.

 INTRODUCTION
 

When the National Statistics and Coordinating Board (NCSB) came out in May 2012 with data indicating the high incidence of poverty and unemployment in the country President Benigno C. Aquino III opened the venue for recommendation on how to overcome these problems.  Various recommendations were published in the newspapers, many dealing on how the manufacturing, industry and service sectors should help solve the problems.   The State-of-the-Nation Address of President Benigno Aquino III on July 2, 2013 discussed very little on how the agriculture industry should be used as a tool of overcoming unemployment and poverty.  Hence, this recommendation.

This paper discusses the current state of the agriculture industry which cause high incidence of poverty and unemployment.  Roughly 60% of the Philippine population depends on income and employment in agriculture with generally very low productivity bringing low farmers’ income below the poverty threshold level.  The reasons for these low productivity and income are discussed.  Recommendations are made to develop a modern agriculture industry responsive to provide the need for high income and employment.  These include the utilization of the vast idle upland and the conversion of upland grown to crops with low productivity to commercial tree crops with high productivity and farmers’ income.  Moreover, an intervention is needed to overcome the decreasing productivity of the coconut trees causing the poor coconut farmers increasingly become poorer.  The major components include promoting adequate fertilization, massive production and distribution of high yielding hybrid seed nuts and intercropping of high value crops when possible.  Suggestion is made on how to best use the P70 billion unfrozen coconut levy fund.

                                               

1/ The author is a retired Professor and Director of Research of the University of Southern Mindanao in Kabacan, Cotabato.  Early this year, he received the DA-Khush Award of Distinction – the highest award given to a crop scientist by the Federation of Crop Science Society of the Philippines (FCSSP) to honor individuals whose outstanding contribution to crop science and the industry in the Philippines have made significant impact on agriculture, particularly in improving the welfare of the small Filipino farmers.  Previous to this, he received the National Outstanding Agricultural Scientist Award and the Outstanding Philippine Civil Service Award both in Malacañan Palace.  He is currently involved in diversified commercial tree crop farming and in the establishment of demo /model farms for the upland poor farmers including the IPs (Indigenous Peoples) to follow.

1. II.                ONCE A GREAT AGRI-COUNTRY, NOW NO MORE

In coming out with the effective strategies on how the agriculture sector shall help overcome unemployment and poverty, it is important to look back at where the Philippine agriculture was, the shortcomings committed so as not to perpetuate but correct them.

The Philippines was once a great agricultural country in the 1970s to the early 1990s.  It was looked up by other developing countries as model in agricultural

development and productivity.  One time during those years the Philippines surprised the whole world by overcoming rice shortage using an innovative strategy.  It tapped the expertise and resources of the large business communities, mostly base in Makati, to helped produced surplus rice for the country for several years.

The author is reminded of UP Los Baños where he finished both his master and doctoral degrees.  UPLB was then a model for agricultural research and education.  Many of his classmates at UPLB were from developing countries of Asia, Africa and Latin America.  Majority where scholars of their government studying the Philippine success stories in agriculture to serve as models in their country.  Well-equipped facilities, mostly grant from the World Bank and highly-trained educated professors at UPLB, many with advanced degrees from the top agricultural universities in USA, taught dynamic and relevant strategic lessons in agricultural development.  These world-class scientists made many outstanding scientific breakthroughs.  Examples are Dr. Emerita de Guzman who discovered the 100% production of makapuno nuts in every coconut tree; Dr. Ramon Barba who discovered the flower induction of carabao mango paving the way for the current leadership of the country in the commercial production of carabao mango.

Presently, few foreign graduate students come to UPLB mostly studying rice production in cooperation with IRRI.  Philippine agriculture and its agricultural education system become outdated; less relevant to the needs of developing countries.  It failed to implement critical and strategic measures to maintain its leadership in agriculture.  It is no longer the source of advance knowledge, technologies and innovations responsive to the new and changing opportunities of modern agriculture – more diversified and with the enclosure of upland commercial tree crop farming for high farm productivity, farmers’ income and employment.  Neighboring countries have responded better to these new opportunities.

Leadership in agriculture demands not just quantity but quality manpower – top caliber scientists and updated modern R & D facilities.  In these areas the Philippines is now lagging behind its neighbors.  The country for decades has the lowest expenditure to R & D approximately ¼ of what the neighboring countries spent in relation to the country’s GDP.  It lacks critical high level of manpower to conduct R & D and occupy managerial position in upland agriculture for a highly productive and competitive commercial tree crop farming.  Few scientists who finished advance degrees specialization in these crops in 1970 to 1980s have now retired leaving a vacuum of scientific leadership in the development of these crops towards high productivity and global competitiveness.

In the frequent visit of the author to neighboring countries, he noted that UPLB is no match even to the regional quality manpower and facilities of agricultural universities and R & D centers in Malaysia and Thailand.  After decades of neglect, Philippine agriculture remains largely a rice, corn and coconut industry of decreasing productivity and farmers’ income.  It is a country of both large idle and underutilized uplands and uplands grown to crops with low productivity and farmers’ income causing widespread poverty.

1. III.             LOW FARM PRODUCTIVITY DOMINATES PHILIPPINE AGRICULTURE

Due to the failure of the Philippines to upgrade its agricultural commensurate to meet the opportunities of the time, it has now been overtaken by neighboring countries in farm productivity, agriculture export, net agricultural export and overall per capita income as shown in Table 1.  A careful study of the economic development of these neighboring countries shows that much government resources have been poured in during the last three to four decades in crop diversification and with the enclosure of high income commercial tree crops for job generation, poverty reduction and for global competitiveness.  Consequently, these countries have transformed the predominantly depressed to productive upland communities through highly profitable commercial tree farming side by side with crops for food security.

Table 1.  The Philippine agriculture/economic situation compare with its neighbors.  The Philippine has the lowest agric productivity, agricultural export and food export compare to the neighboring ASEAN.

COUNTRIES	FARM PRODUCTIVITY US$, (2009) (Income/ha/yr)*	AGRICULTURAL EXPORTS (US$ BILLION, 2009)*	NET AGRI GOOD EXPORT OR IMPORTER? US$ BILLION***	2009 CAPITA INCOME (US$)
Philippines	340	4.0	Net importer = >1.0	2,600***
Indonesia	650	11.0	Net exporter = 12.9	4,161
Thailand	1760	31.0	Net exporter = 16.6	8,051
Vietnam	1063	34.0	Net exporter = 5.6	2,942

*    Asian Development Bank

**     University of ASIA and the Pacific

***    Fitch data (March 2013)

Farm productivity is an indicator of the farmers’ income – what a farmer in the Philippines gets from his land which is limited to three ha under the Agrarian Reform Law.  The Philippines farm productivity as indicated in Table 1 is only US$ 340/ha per year, meaning that a farmer with three hectares, earns US$ 1022/year or equivalent to P 43,869/year – much below the poverty threshold level of P93,852 prescribed by the NSCB for 2012.  Almost all coconut farms and many of the agricultural uplands are grown to crops with low productivity.

Poverty level in the Philippines is the highest among the neighboring countries mainly because the farm productivity of the Philippine agriculture is very low; roughly one-half that of Indonesia, one third of Vietnam and one-fourth of Thailand.   Thailand which depended on the Philippines for the agricultural education of its leaders up to 1980s is now the acknowledged world leader in crop diversification to high income upland tree crops.  It surpassed both Malaysia and Indonesia in the volume of rubber produced – one of the major reasons for its becoming the main center in the ASEAN for car and light vehicle assembly.

One of the indicators of the progress of the agricultural industry is the production of food surplus for export.  The agricultural export of the Philippine is still in one digit, the three other neighboring countries are having big double digits (Table 1).  Consequently the Philippines is the only net food importer with the lowest GNP in the region.  Among the biggest food export of Indonesia, Malaysia and Thailand is the vegetable oil in the form of palm oil.  The Philippines on the otherhand imported P27.50 billion of palm oil from Malaysia in 2012.  This is expected to increase to over P54.0 billion in the next eight years unless there is a bold step to expand oil palm farming to benefit the Filipino farmers.  The importation of palm benefits the already rich Malaysian farmers.

1. IV.              TREE CROPS PROVIDES HIGH JOB GENERATION AND INCOME

Unlike the Philippines which remain largely a rice, corn and coconut country during the last three decades neighboring countries converted their idle uplands as well as land grown to crops with low productivity to diversified high income commercial tree crops.  Among these crops are rubber and oil palm (Table 2).  In addition, Indonesia planted over a million ha of cacao; Vietnam planted almost a million ha of coffee.  Almost all vacant agricultural uplands in Malaysia, Thailand and Vietnam are now planted to these crops.  In the late 1980s, Malaysia made the bold decision that uplands grown to low income crops including large areas devoted to rainfed rice will be converted to high income oil palm under a World Bank loan.  The decision was recently cited as a landmark in agriculture as farmers were liberated from poverty by deriving income from oil palm more than enough to buy rice but with surplus for other expenses.  The Philippine have planted limited areas of rubber and oil palm of 165,000 and 72,000, respectively and of low productivity as this is not back up adequately by R & D.

Table 2.  Comparison of neighboring countries on areas planted to high income tree crops.

COUNTRY	AREA (‘000 HA) PLANTED		FULL-TIME JOB GENERATED (Person/Year)
	RUBBER	OIL PALM
Thailand	2,434	850	1,642,000
Indonesia	3,414	1,000	6,707,000
Malaysia	1,248	6,000	3,624,00
Vietnam	850	-	425,000
5.      Philippines	165	72	118,500

But why rubber and oil palm?  For two main reasons – job and high income generation.  Both crops are unbeatable in rural job generation (Table 2).  Tree crop farming requires generally more than twice manpower than in rice, corn and coconut farming.  Every two hectares of these crops generate one whole-year-round quality farm job – twice that in rice and corn; three times that in coconut production which are largely seasonal.  Harvesting of the milky substance of rubber known as tapping is done every other day, one ha/day and one laborer to a ha the whole-year-round.  This mean a two-hectares rubber farm need a laborer everyday.  Oil palm fruits known as fresh fruit bunches are harvested every 10 to 15 days requiring two laborers/ha.

Secondly, using modern agricultural practices any of the two crops can provide a small landholder with 2.5 hectares high income more than twice the amount indicated by the NSCB in the poverty threshold level of P93,500/year.  The income of a typical oil palm or rubber farmer owing 2.5 ha is enough to allow him to buy nutritious food for his family, build a concrete house, buy a four wheel vehicle and send his children to college.  A hectare of any of these two crops when adequately attended provide a monthly income of not less than P6,000/month or P72,000/ha per year.  Well-managed farmers using updated technologies provide a net income of over P10,000/month or P120,000/year.  The high income from these crops transforms the farmers in neighboring countries from poverty to prosperity.  That’s why Thailand, Indonesia, Malaysia and Vietnam beat the Philippines in overcoming poverty.  They have already met the target under the Millennium Development Goal on poverty reduction as prescribed by the United Nations to half poverty by 2015.  The Philippines which has a poverty level of from 33% in late 1990s has to reduce this to 16.60% in 2015; poverty today is still at 27.6% making reduction to 16.60% nearly an impossible dream.

1. V.                 OVERCOMING THE DECREASING PRODUCIVITY OF THE COCONUT TREE

Coconut trees occupy 3.56 million hectares, about 1/4 of the more than 12 million hectares of agricultural crop lands of the Philippines.  It is the source of livelihood for over 20 million Filipinos in the upland.  Coconut was once the pride of the Philippines agriculture.  In the 1970 to 1980 a typical coconut farmer was a proud farmer with fairly good income.  During those years, the children of coconut farmers became scholars supported by the coconut levy fund pursuing degree courses with expenses not at his worry.  Not anymore – the income of a typical coconut farmer today with a farm of 2.5 ha is below P40,000/year less than half of what is prescribed in the poverty threshold level.  The national yield of coconut trees of 80 nuts/tree per year is among the world’s lowest – 2/3 of that of Indonesia, much below the irrigated coconut trees of India and those in the elevated beds of the swampy plains of Thailand producing over 200 nuts/ha per year.

Comprehensive and concerted technology transfer program in coconut farming is sadly lacking.  Consequently, the application of strategic science-based technologies and knowledge to produce high coconut yield is foreign to most coconut small landholders.  Traditional practices base on misconception of what is the coconut trees still exists.  These are the findings of this author while working as a consultant of a foreign aid donor to the victims of typhoon Pablo in a predominantly coconut province of Mindanao.

Inadequate fertilization and lack of program to use the high yielding hybrids are the major reasons keeping the coconut farms in low productivity.   As with any other agricultural crops, adequate fertilization ensures high and sustainable yield of the coconut trees over many years.   Scientific studies show that adequate fertilization of the coconut trees could increase the current yield to at least 2.5 times with the cost of fertilizer representing only 10 to 15% of the added benefits.  Most coconut farmers however don’t fertilizer.  They have the perceptions handed down from generation to generation that if they fertilize the trees and someday stop ferti

lizing the coconut trees will be offended (“magtampo”) and stop bearing fruits or become barren.   Lack of fertilization causes the draining through nut production of nutrients like nitrogen, phosphorous, potassium, magnesium, chlorine and calcium in the soil and is causing the decreasing yield of coconut over the years.

Research findings of the author as shown in Fig 1 leaves no doubts that when the neglected coconut tree is provided with TLC (tender loving care) – meaning, the hybrid tree is adequately fertilized, it response positively by providing the farmers with high yield and income.

The current norms for planting and replanting of coconut trees by most coconut farmers is with the use of traditional late maturing and low yielding coconut varieties.  Even the seed nuts distributed by the government to the Pablo typhoon victims where nine millions of coconut trees were uprooted is of this norm.  Agriculture is now at the modern era of using hybrids to shorten the period to maturity and dramatically increase the yield of crops four or more times over the traditional varieties. The use of hybrids pushes the corn and rice to high yield – almost at national sufficiency level.  It is now a common farmers’ practice to use seeds of hybrid rice, corn, oil palm, hybrid rubber, sugar cane to increase yield.  This is not so in coconut farming in the Philippines.

In 2011, the author accidentally discovered in one of his foreign study tours on ASEAN agriculture that the Philippine developed technology of hybrid coconut production virtually abandoned in the Philippines was pick-up by Malaysia.  The Malaysia government commissioned a private company to mass produce and distribute hybrid seed nuts to small farmers on plant-now-take-care (PNTC) shown in Figure 2.  This dramatically increases the coconut yield four times and the income of the farmers above the poverty threshold level.  The technology of hybrid coconut seed nut production use in Malaysia was developed in the Philippines through a World Bank loan, each and every taxpaying Filipino is now paying that loan benefiting the Malaysian farmers – not the pitiful Filipino coconut farmers.

Urgent and appropriate intervention is needed to change the existing recipes towards making the poor coconut farmers increasing become poorer with time so they will not contribute to the widening gap between the rich and the poor.  These component recipes are lack or adequate fertilization, absence of program for planting and replanting of old senile trees with early and high yielding varieties or hybrids plus the World Bank prediction of the decreasing price of coconut oil in the next decades.

Increasing yield through the use of hybrid and adequate fertilization still provide the greatest hope of the coconut farmers to cope up with the decreasing price of copra.  Even if the current price of copra is decreased by 20% but that the yield of coconut is increased three times, a coconut farmer will still have higher income.  Intercropping of crops like cacao, banana and other fruits can increase productivity and farmers’ income but not as much benefits as the planting of hybrid seed nuts and adequate fertilization.

1. VI.              CAN PHILIPPINE AGRICULTURE BE GREAT AGAIN?

It is not whether it can but the urgent necessity that every Filipino should help and support President Benigno B. Aquino III to direct the utilization of the resources of the state in restoring Philippines agriculture to its past glory for two major reasons, namely: (1) agriculture provides the greatest hope of the country to fastract the solution of solving the two major problems of high incidence of unemployment and poverty,  (2) provide the flatform for an emerging middle class among farmers to help sustain or accelerate the growth of other industries – manufacturing, industry and service and in ensuring the overall economic growth of the country which benefits almost all Filipinos.

Some recommendations which President Aquino should implement and leave as a legacy of bringing the Philippine agriculture towards regaining its pass glory in order to help overcome poverty and unemployment are as follows:

1. Provide matching resources to meet the challenges and opportunities of the coconut industry.  These include massive production of hybrid seed nuts to support replanting of old senile tree and implement a comprehensive technology transfer program particularly on plant nutrition for high sustainable productivity and yield.  The unfrozen levy fund or part of it should be utilized for this purpose.  Part of the levy fund should be used to provide scholarship to children of poor and deserving coconut farmers with the aim in view of building manpower who could provide leadership in building prosperous coconut farmers.  Suspended collection of the coconut levy should now be restored to ensure future adequate funds for modernizing the coconut R & D manpower and facilities.  Proper use of levy fund is what made rubber and oil palm world-class competitive commodities in Malaysia and Indonesia.  The Philippine should learn from these countries the proper use of levy fund of coconut not as a “milking cow” of politicians.
2. Implement a comprehensive, integrated and holistic agricultural development program and to include large-scale commercial tree crop farming utilizing the more than one million ha of grass and brushlands of the country for oil palm, coffee and rubber  production.  Moreover, uplands grown to low productivity and income crops should be converted to high income crops.  In line with this activity the full implementation of RA 10089 or  the Philippine Rubber Research Institute and the passage of the Bill creating the Philippine Palm Oil Research Institute each to start with an amount appropriation of not less than P500 million/year.  Provide considerable fund to help small landholders access planting materials of hybrid oil palm and hybrid rubber trees and provide adequate technology generation and dissemination support.
3. Increase considerable the government allocation for R & D in agriculture commensurate to the challenges and opportunity of the time – four times or more of the current allocations.  Funds adequately the massive development of high caliber S & T and managerial manpower in commercial tree crops farming particularly in oil palm and rubber. UPLB, USM and some selected universities in the country should be equipped with adequate and best manpower and adequate R & D funding resources matching what neighboring countries are providing their agricultural research centers and universities.

1. VII.           SUGGESTIONS TO BUSINESS LEADERS

Some successful business leaders expressed desire to help solve the current problems of the country – high incidence of poverty and unemployment.  Their assistance to liberate a landed but poor farmer or an IPs (indigenous peoples) can make big differences.  It is not a difficult and expensive assistance.  Just provide a farmer with quality hybrid planting materials of rubber or oil palm and small amount for land preparation and planting all to cost not more than P50,000/ha and at one time, in a year of planting.  Provide him the resources to integrate food crops – cassava, vegetables, rice and corn while waiting for the tree crop to mature in three to five years.  In five years the income from the 2.5 ha farm is expected to be above the poverty threshold level.  Such has been proven in adjacent countries.  It is being done with astonishing by many LGUs on limited scale due to limited fund in the provinces of Cotabato, Maguindanao, Bukdnon and Sultan Kudarat.  Properly cared rubber and oil palm of 2.5 or more ha are capable of providing higher income for a farmer to buy enough food for his family, buy manufactures goods – TV, refrigerators, cars, built a concrete house and support his children to college.  A businessman can start with few farmers others with great philanthropic hearts can start with hundreds if not thousands of farmers, thus contributing to a strong Philippine economy.