Addressing the challenge of agricultural development: The coconut

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(Part 4)

In the Transition Report of the last leadership in the Department of Agriculture (DA), a great deal of importance was given to the Philippine coconut industry. This stands to reason because 69 out of 82 provinces in the country produce coconut. The industry covers about 3.62 million hectares, about a third of the total farm land, and provides an estimated 2.5 million farmers with employment. As of 2018, it was estimated that the Philippines had 347 million fruit-bearing coconut trees and a total production (in metric tons) of 14.7 million (nut terms).

The Philippines is the second largest producer of coconut in the ASEAN, next only to Indonesia. Major producers of coconut in the Philippines include the regions of Calabarzon, the Zamboanga Peninsula, Davao, and Northern Mindanao.

According to the Philippine Statistical Authority in its Bulletin, April to June 2022, coconut (with husk) production improved to 3.30 million metric tons, an increase of 2% from 3.29 million metric tons output in the same period of 2021, the height of the pandemic. The Davao Region was the top producer during the quarter, with 460.01 thousand metric tons output or a 13.7% share in the country’s coconut production. Northern Mindanao and the Zamboanga Peninsula followed with 13.1% and 12.4% shares, respectively.

Unfortunately, as described in a paper issued by the Food and Fertilizer Technology Center for the Asian and Pacific Region (PCAARRD), the coconut industry in the Philippines has been in a constant state of stagnation. It is still considered to be an “orphan” in the country’s agriculture because of poor investments, with a very high poverty incidence among millions of Filipino coconut farmers.

Among the identified problems are the unorganized supply chain, vulnerability of the product to world price fluctuations, low farm productivity, recurring infestations of an insect called “cocolisap,” the ageing of the current crop of coconut trees, inadequate fertilization, insufficient farm to market roads, low allocation on research and development (R&D), and the presence of corruption and bureaucracy.

To make matters even worse, there is the unresolved coconut levy fund.

The Marcos Jr. administration need not start from scratch in addressing these myriad problems of the coconut industry. The President should seriously consider the content of the Transition Report submitted to him by the DA’s former leadership. The first step is to address the coconut levy fund issue.

The enactment of Republic Act No. 11524, or the Coconut Farmers and Industry Trust Fund, signed by former President Rodrigo Duterte on Feb. 16, 2021, paved the way for the release of the P74-billion coconut levy fund intended to uplift the livelihood of the coconut farmers and their families. The law mandates the formulation of a 50-year Coconut Farmers’ and Industry Development Plan (CFIDP) that will provide the blueprint for the modernization and industrialization of the coconut sector. As of March 10, 2022, the Philippine Coconut Authority (PCA) has submitted the CFIDP to the Office of the President for signing, a pre-condition for the release of the coconut levy fund. Concomitantly, there is an on-going drafting and consolidation of the CFIDP Operations Manual to flesh out the operational details of the Plan.

In addition, the PCA’s Program Management Office and Implementing agencies are conducting parallel pre-implementation activities for the full activation of the CFIDP. While awaiting the signature of the President, the PCA focuses on conducting and establishing an information campaign and completing the staff requirements of the PMO.

Among the important concerns of President Marcos Jr., especially in his position as Secretary of Agriculture, is the coordination of various agencies that have to act synergistically. He should pay special attention to the way the PCA collaborated with the Department of Science and Technology’s Food and Nutrition Research Institute (FNRI) and the Philippine Council for Health Research and Development (PCHRD), as well as the University of the Philippines-Philippine General Hospital for clinical studies on the therapeutic use of virgin coconut oil against COVID-19. Results of the study by the PCA and DOST-FNRI found that five of the 29 individuals with probable and suspect COVID-19 cases who were served meals with VCO manifested diminishing signs and symptoms as early as the second day, while only one patient served with the same meals but without the VCO showed similar improvement. The study of the PCHRD and UP-PGH is still ongoing.

Among the short-term goals (2023-2025) indicated in the Agriculture Department’s Transition Report, there is one that is most applicable to the coconut sector. It is the one about farm consolidation and clustering.

Studies have shown that the fragmentation of farm lands into miniscule sizes (1-1.5 hectares) has resulted in a significant decline in farm productivity. This is due to the lack of economies of scale that results in the inability to apply modern farm machinery and technology. It is for this reason that the leadership of the DA in the last Administration advocated farm consolidation as one of the key pillars in promoting agricultural development. It has to be pointed out, however, that consolidation does not refer to ownership of land but to its use and cultivation. There should be a way of replicating land use models that have worked in other agricultural countries like Malaysia, Thailand, and Vietnam that have made agrarian reform compatible with large-scale application of mechanization and other modern technologies through cooperatives or nucleus estate farming.

As Secretary of Agriculture, President Marcos Jr. can literally crack the whip for the Department of Agriculture and the Department of Agrarian Reform (with possible participation of the Department of Environment and Natural Resources in the cases of fruit trees) to finally address this long-standing dilemma of making social justice compatible with economic growth and development.

The prolonged agrarian reform program has resulted in the fragmentation of farm lands, especially in the coconut sector, into ridiculously small sizes. It also decimated the middle-class farmers because of the low hectarage ceiling for land ownership. There is an economic size for the production of most agricultural commodities but its realization cannot be attained because of the low hectarage ceiling. The result was the increasing impoverishment of the small farmers and the inability to form an entrepreneurial class of middle-income farmers because of the unviable sizes of the farms mandated by agrarian reform.

President Marcos Jr. has the unique opportunity of reviewing the agrarian reform program after more than 30 years of implementation to make the necessary revisions to ensure that the law will really promote the development of the agricultural sector and, more importantly, to redeem the small farmers from grinding poverty, which is especially acute in the coconut industry. In this regard, President Marcos Jr. should give serious study to the proposal submitted by General Benjamin Madrigal as PCA Chief to the Transition Team spelling out a very realistic program to apply the clustering scheme for coconut farms to address this problem of lack of economies of scale in the coconut industry that resulted from the agrarian reform program.

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