Farmer Poverty, Why Can't We Eliminate It?

MANILA: How can higher yields guarantee farmer prosperity? Good question! (original image from me, early morning shot)

We are attending the 1-2 February 2017 stay-in Agri-Industry Forum at the Dagupan Village Hotel in Dagupan City sponsored by the Department of Agriculture of Regional Field Office 1. As the invitation letter from Regional Director Valentino C Perdido says:

The Forum aims to bring together our different stakeholders and foster exchange of business ideas, experiences and information for the advancement of the agriculture industry and for newbie entrepreneurs to be motivated and inspired by successful entrepreneurs.

I'm interested because I believe that agro-industrialization, the preferred term to current vogue agri-industrialization, is the way out of poverty for farmers. That's where agro-entrepreneurship should be going. Historically, as far back as at least 1981, or 35 years ago, we were already talking of agro-industrialization of the Philippines (CA Villamor & AC Rigor, Canopy International, Forest Research Institute, agris.fao.org).

Question: "Why haven't we been able to eradicate farmer poverty?" Answer: Because higher yields are not enough. We need to use higher intelligence. Which so far we have not exhibited in official declarations, official documents, or official deeds. Here or abroad.

Internationally, the United Nations Industrial Development Organization, or UNIDO, came up with a 20-page pdf report, "Industrialization and poverty alleviation: pro-poor industrialization strategies revisited" (2006, unido.org). But you will notice that the UNIDO title itself says "poverty alleviation," which means decreasing poverty but not removing it, which is not good enough for the poor farmers, so we have to look elsewhere.

Unfortunately, even the World Bank has a project in China that aims at less than poverty emancipation, as reported in its own webpage: "New World Bank Project in China Focuses on Poverty Reduction Through Industrialization" (worldbank.org). The World Bank misses the point. No, we want more than reduction of poverty of the farmers. We want their release from poverty!

Locally, in the Philippine Development Plan for 2011-2016 presented by Director Maria Lourdes D Lim, Director for Region XI of the National Economic & Development Authority, or NEDA, focusing on Mindanao, there is the promising slogan "Making growth work for the poor" (25 October 2012, worldbank.org). In that report, there is clear mention of "inclusive growth" and "market connectivity," terms that sound promising to me as you will note later in this essay. The report mentions "high economic growth" and "mass employment," but the goal within the Vision of "Inclusive Growth" is only to reduce poverty. Not good enough for the farmers.

In 2012, almost 5 years ago, Arsenio Balisacan, then the new Director General of NEDA, said that "the agency will focus on increasing agriculture and industry productivity in the next four years so the country can achieve inclusive growth and meet the Millennium Development Goals" (Christine Ubalde, 12 May 2012, "New NEDA Chief: Focus On Agri, Industry For 'Inclusive Growth," InterAksyon, interaksyon.com). "Inclusive growth should be our mantra," he said. I searched but the report does not poverty eradication.

Last year, in October, Mike Crismundo reported that "A series of workshops to craft more aggressive agricultural development and industry road maps of agricultural commodities is being held in the Caraga region to ensure food sufficiency" (13 October 2016, Manila Bulletin, mb.com.ph). Yes, but food sufficiency is not sufficiency for the poor farmers – they must be able to get rid not only of their hunger but more so their poverty!

On 05 September 2016, ANN reported that Secretary of Trade & Industry Ramon Lopez "emphasized the relevance of infusing an entrepreneurial mindset in the agricultural industry" during the Mentor Me Innovation Forum sponsored by Go Negosyo held at UP Los Baños earlier that Thursday, saying among other things (author not named, Philippines News Gazette. philippinesnewsgazette.com): "We believe that having an entrepreneurial mindset is really the way to level up and be successful. This is the lasting solution to poverty." Let's see.

Lopez mentions high-value crops, innovative value adding, agriculture-based roadmaps, shared service facilities already established (2,000 plus) and Negosyo Centers (265) throughout the country with more than 300,000 clients already served, and streamlining business processing licensing. We are told that those roadmaps address the insufficient supplies in cacao, bamboo, rubber and coconut, which requires multi-sectoral participation.

Which is well and good – and yet not good enough. With adequate public and private support, entrepreneurship is a great tool to get farmers to become business-minded, but it will not result in poverty eradication if it is all business and there is no equitable distribution of the benefits of entrepreneurship. Not to mention equitable access to resources.

I have no doubt that farmer entrepreneurship is good for the poor farmers, and that they can be trained to become business-minded, but there must be an iron-clad guarantee that it will not be the merchants or agribusiness corporations that will milk the producers of the value they add to the produce along the chain from soil to spoon.

Let us now look beyond the Philippines for models of farmer development that can get them out of poverty into prosperity.

I know of one. The African experience of the International Crops Research Institute for the Semi-Arid Tropics, or ICRISAT, is our guide. William Dar writes of it in his Manila Times column ("Warrantage system and organized farmers," 09 December 2016, manilatimes.net). He is the President of the Inanglupa Movement based in Manila (inanglupa.weebly.com). In his column, he says that Filipino rice farmers receive just 47% of the wholesale price of palay while Indian farmers receive 62% and Chinese farmers receive 94%. I didn't know that! How do you explain that? That is because the Filipino farmers are not organized, so they are victims of the usual suspects: unassuming usurers and mindful merchants.

The Filipino farmers today are not different from those in Burkina Faso, Mali and Niger in West Africa before 2005, the year ICRISAT introduced 2 innovations: (1) credit/cash arrangement called warrantage, or inventory credit system, and (2) social cooperation system for the marketing of produce. This was during those years when William Dar was Director General of ICRISAT, so he knows what he's talking about. I happen to know also because I have been writing about ICRISAT in the last 10 years, and have 7 books published to prove it, all published in India where ICRISAT is based.

What warrantage?

A farmer stores his harvest in a facility belonging to a cooperative or group, after which the farmer can apply for a loan with his harvest as collateral, worth 25 to 35% of the prevailing market price. This is the warrantage system. So the farmer does not have to borrow from the usurer, and the inventory credit system stops the farmer from selling his harvest to the trader who dictates the price, because he is not in a hurry to sell his produce.

What social cooperation system?

The cooperative of which the farmer is a member arranges for the marketing of his produce, and waits for market prices to improve, as there is no necessity to unload immediately. There is no hurry to sell at harvest time, which is a buyer's market, because the cooperative has resources and the farmer has his loan. This is not simply market linkage or connectivity; this is market management.

With warrantage, ICRISAT also introduced in West Africa the hill application of fertilizers, also referred to as micro-dosing, because on every plant hill you apply only a 3-finger pinch of fertilizer, which results in huge savings and therefore higher income. What happened in Burkina Faso, Mali and Niger is that yields of millet and sorghum increased from 44 to 120% while farmers' incomes increased 52 to 134%. Higher yields are not enough. This is clearly inclusive growth, inclusive of the poor farmers!

The warrantage system eliminates the loan sharks; the coop marketing eliminates the middlemen who siphon off the benefits that should accrue to producers.

Thus, Danggay Foundation believes that model cooperatives in the Philippines servicing the cash/credit needs of Filipino farmers via warrantage and assembling their produce in pursuit of group marketing, will eventually help eradicate poverty among the poor farmers.

Only then will agro-industrialization result in the elimination of poverty. I myself do not subscribe to anything less than poverty eradication, not poverty alleviation, not poverty reduction, not poverty amelioration, not poverty diminution, and not reduction of extreme poverty. The poor farmers must rise from poverty and be able to stay there – that is the Foundation's minimum development goal. Anything less is a denial of economic justice to the farmers. @

01 February 2017. Essay word count, excluding this line. 1427