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 January 21 2007

(by Ruben L. Villareal,
National Academy of Science and Technology, Philippines)

FIVE YEARS AGO, the Philippines was at the forefront in almost all aspects of development, including agriculture, among Asian countries. Today, the agriculture sector of the countries like Taiwan has become so much more productive than that of the Philippines.

Having lived and worked in Taiwan for about a decade and visiting it frequently thereafter as a scientist and educator, I have had the opportunity to observe Taiwan’s agriculture firsthand. I would like to share my insights from what I have observed.

Technology transfer

I deeply believe that the major reason for Taiwan’s success in agriculture is the very effective movement of advanced technologies from the research institutions that developed these to the farmers, resulting in a massive application of such technologies. Moreover, this transfer is facilitated by the active participation of Taiwan’s highly disciplined and entrepreneurial farmers as well as the sincere support and strong political will of the government.

Effective organizational support for market-oriented farmers

In market-oriented agriculture, where a farmer needs to produce in volume in order to trade, the need for professional assistance is critical. Taiwan has effective structure in place to support its market-oriented farmers. In particular, it has effective organizations that identify the sources of inputs (e.g., seed, fertilizer, pesticide, capital) as well as determine the crops to be produced and their markets. These professionally-run organizations, mostly cooperatives and corporations, are able to provide the practical and effective delivery of technology. They also have strategically established specialized production areas such as for fruits and vegetables.

In general, Taiwanese farmers are aware of the benefits of group action and possess a strong sense of community. It is usual that the first thing they do when starting as activity or a business is to ask who will join them to make such an activity a success. And so the value and strength of collective thinking and action are assured. They value teamwork. No wonder then that successful and progressive coops are everywhere in the countryside of Taiwan.

In my last visit there, I was amazed to see a coop selling cars and numerous non-agricultural consumer goods along with tractors and agricultural inputs. Many years back, one would find only agricultural inputs and products. Most coops have three main sections: credit, marketing and extension. The credit section handles the financial requirements of the members. The selling of agricultural inputs and consumer goods (e.g., rice, oil, groceries) and the marketing of farm produce are taken care of by the marketing section. The extension section does the planning of production and marketing for the coop, which includes the identifying what crops and variety to grow as well as how much area, where, and when. Moreover, it also identifies the latest appropriate technologies to use to ensure optimum productivity. In effect, the member-farmers do not have the usual problem encountered by most farmers in developing countries. Their main task is to use their imagination for the crop option, put the crop in the ground, take care of their crop following the prescribed technology and management practice, and harvest it when ready.

The Philippines has had a few cases of successful coops and farmers’ associations, with the similar function of providing services to their members. But unfortunately, the system has suffered from many problems and eventually; many of these organizations have ceased to exist. Moreover, replication of successful or effective coops in other locations has also been a big challenge.

The predominant system of producing vegetables has been through informal means, especially through enterprising traders who provides agricultural inputs and even cash advances to the farmers in exchange later for their produce at an agreed price.

Grower-factory arrangement

The grower-factory contract method of collecting raw agricultural produce (e.g., mushroom, bamboo, asparagus, tomato) is generally practiced and well documented in Taiwan. The contract indicates the responsibilities of both he factory and the grower. For instance, in the case of the tomato with which I am most familiar, the factory assigns one agricultural technician for every 50 hectares, determines the variety to be planted, and provides the production inputs and sprayers at cost, transportation cost from the designated collection center to the factory and grower agree on the guaranteed price of the tomatoes.

The grower, on the other hand, provides the use of his land as identified by the technicians for the purpose, commits to follow the management and cultural practices of the factory, allows the technician and factory representative to inspect his farm, uses the prescribed crates, and pays the transportation cost from his farm to the designated collection center.

Such an agreement has been found to be mutually beneficial because the factory is able to have a continuous supply of raw materials and the grower is assured of a market for his produce.

This arrangement is not very common in the Philippines, except in the case of the Philippine Fruits and Vegetable Industry Inc. in San Carlos City and the Northern Food Corporation in Sarrat, Ilocos Norte, where a modified version of the arrangement has been used. Both companies have clamed success in producing tomatoes for the canneries by subcontractors.

Two multinational corporations in Mindanao, Del Monte and Dole Philippines, have been producing pineapples through their corporate farms as well as subcontractors whom they provide with agricultural inputs and technical support. To some extent, the successful banana industry has also been relying on a similar scheme in order to secure their bananas for export.

Likewise, contract growing of chicks has been used extensively in the Philippines by giant food corporations such as San Miguel Corporation and Robina Farms. The rapid growth of the poultry industry in the Philippines has been largely attributed to this scheme. In this particular case, the company provides inputs such as chicks, feeds, medicine, and technician to the grower, who in turn provides the house and day-today management of the chicks until harvest time. The company gets its chickens while the grower receives prompt payment at a guaranteed price from the company. Both parties are satisfied and happy. As in the Taiwan experience, the keys to the success of this kind of poultry farming are availability of proven technology, inputs, sound management, and ready market.

Specialized production areas and public facilities

Taiwan has specialized production areas located around its urban centers. Moreover, it has installed public facilities (i.e., markets, packaging, weighing, storage, ice plants) in the traditional way of growing and marketing vegetables, thus further enhancing technology delivery to farmers.

This approach has brought fresh produce closer to the consumers. In addition, it is open to joint planning and marketing for all participating growers. As a result, it is cost effective to hire a professional who will handle the integrated management of the industry. The fact that the market, usually auction market, is part of the structure enables it to serve as ready outlet for whatever produce is brought by the growers. They receive fair market prices, which are monitored and updated regularly through television broadcasts. Payments are made promptly made either in cash or through electronic transfers after presentation of receipts to the cashier of the market.

Starting them young

We are familiar with stories of Chinese families who expose their children to business activities at an early age. I observed this myself during my stint in Taiwan. At the end of the day, it was common to see school kids doing their homework in the store while their parents minded the business. By doing so, the parents provided a natural setting for their school kids to learn to appreciate their livelihood and gain business skills while still in the grade school. This may explain also why the Chinese, including the Taiwanese, are generally entrepreneurial and willing to take the business risks. It is no wonder in their early 20s, they are already allowed to manage businesses on their own, thus exposing them to risks, giving them the opportunity to learn from their mistakes and honing their entrepreneurial skills. And so, at the age of 30, the question is “what business do you own?” whereas, for a 30-year-old Filipino, the question would probably be "who do you work for?"

Government support

Undoubtedly, the government’s strong support for its agriculture sector has contributed substantially to the success of Taiwan’s agriculture. Such support can be seen in the sustained funding for research and development, building of excellent road networks including farm-to-market roads, and installation of public facilities (markets, packaging, storage, ice plants, etc.). In science and technology, for example, Taiwan’s budget for research and development in 2003 was 2.40% of GDP; that of the Philippines was a measly 0.14% of GDP.

Consequently, while the Philippines had 106 R and D personnel per million population in 2003, in Taiwan, the ratio was 676 per million. This is very likely one of the reason why Taiwan’s crop productivity is much higher than that of the Philippines. Indeed the Taiwan government has been generously supporting its R and D. On the other hand, in terms of government support, R and D in the Philippines has been described as low in priority, erratic and grossly underfunded. As a well-known Filipino journalist once wrote "What happened to us? Politics, politics, and more politics! We in the Philippines remained mired in political conspiracy and limitless investigations and debates."

We are not without hope, however. While the Philippines has slid really low in the ranking of nations in terms of development, it can rise up again. But to start the chain reaction for development and to sustain it, the government must exert strong political will to do what is right and good for the country. It must give priority to science and technology, to human resources development, to building strong and effective institutions, to putting in place policies that engender development, and lastly to putting its money where its mouth is.

Published in the Manila Bulletin, 24 December 2006