#MINDANAO
It is often said that the future of the Philippine economy will be influenced by Mindanao's growth. Having reviewed several regional economies of Mindanao over the last few months, I believe that the growth of Mindanao’s regional economies, particularly manufacturing and processing, or the agro-industrial base, will be good for the growth of the rest of the nation. Let me examine some reasons why this is the case.
The first reason for this is that Mindanao’s agriculture, fisheries, and forestry (AFF) sectors are a significant part of each regional economy. CARAGA’s forestry resources, Northern Mindanao, and the Davao region’s pineapple, banana, and coconut farms truly deliver on exports. In addition, all Mindanao regions have great potential for the blue economy in fisheries and marine culture. These make Mindanao the country’s food basket.
Because of these potentials, growing Mindanao’s AFF sectors further will mean more food for the rest of the country, helping the entire economy manage inflation, a big part of which is due to high food prices. A related benefit of a broader AFF sector is that it creates more employment in more remote provinces. This broadens the income base and creates local wealth. In effect, this new opportunity can lessen the need for residents to seek opportunities in our major urban centers. This makes the growth spread and become more inclusive.
Moreover, agro-processing can create higher scales of production that can lower costs. This enables consolidation by agribusiness corporations or cooperatives that can invest in post-harvest processing, product development, and consolidated buying. This makes products more competitive in a wider array of markets so that we can compete with imports. As a case in point, while there are challenges faced by the coconut production and processing sector, our coconut producers still hold the greatest potential since there are agro-industrial players among them producing a variety of products such as desiccated coconut, oil, coconut water, and canned coconut milk producing many products from the harvested coconuts.
One of the keys to harnessing AFF potential is to increase the volume and value of its production. This means encouraging investment in enterprises such as farms so that they can plant and harvest more in the long term. The corollary to this is encouraging agro-processing investments that can buy the farm produce, particularly the secondary grade production from the farms. This can encourage farmers to plant more since there are additional markets to buy their crops. This is the case for coffee and cacao. Not all the beans can be bought by the limited set of buyers who will select only the best grades.
When farms can get good buyers for second-grade produce, there is an encouragement to plant more and earn more through longer-term contracting. This, in turn, can reduce the risk of investing in more production.
Of course, there are reasons why the AFF sectors of some Mindanao regions are growing faster than others. There are also challenges faced by different commodity production supply and value chains. Some are more successful than others in producing more and at better costs. Therefore, a deeper analysis of these will be needed especially with variables such as the threats posed by climate-related risks, logistics costs, market access, and shifting market preferences- and how all of these can affect agricultural productivity and the viability of investments. These analyses can be done through Mindanao’s various academic and research institutions in collaboration with bodies such as the Philippine Institute for Development Studies.
We look forward to more collaboration toward this.