The coconut sector should be the vanguard in the ambitious plan of the present Administration to improve the production and productivity of the entire agriculture sector. As reported by Julie Aurelio in a leading daily, while Indonesia is now the top producer of coconuts, producing an average of 17.06 million metric tons (MT) of coconuts from 2017 to 2022, the Philippines is still the top exporter in the world of this tree crop, accounting for $3.2 billion, or 43 percent of the country’s total agricultural exports in 2022. The Philippines has a total area of 3.6 million hectares planted to coconut trees, which is about 27 percent of total agricultural land. It is only logical that it should be in this large sector that we apply the four-fold strategies that can significantly lift the productivity of the primary sector. These four are farm consolidation, product diversification, digitalization, and industrialization.
It is a good sign that President BBM ordered the PCA to work with the Cooperative Development Authority to consolidate farmers’ groups and associations to enable them to implement the massive planting and replanting program. A massive tree planting program needs economies of scale in both the implementation and the more important phase of maintenance and care of the seedlings. We should make the small coconut farmers working individually obsolete as soon as possible. There should be no “small coconut farmer” if we want significant improvements in productivity in this sector in the same way that we made the backyard banana or pineapple farmer relatively insignificant with the onset of the Del Montes and the Doles that made the Philippines a major force in the world in the export of these two products. We should benefit from economies of scale in cultivating the 3.6 million coconut farms by attaining sizes as large as 20,000 hectares per coconut commercial farm (in Malaysia, there are palm plantations that can average 100,000 hectares per plantation). This consolidation can be done, as already accomplished by such model coconut enterprises as Axelum in Misamis Oriental or Lionheart Farm in Palawan, through the forming of cooperatives (as President BBM proposed); or by resorting to the very successful nucleus estate model perfected in Malaysia in the palm oil industry in which the farmers can directly lease their farm holdings to a large commercial enterprise; or to work with the DENR to transform denuded forests or grasslands into coconut plantations.
Actually, some part of the 3.6 million hectares presently planted to coconuts can be shifted to other tree crops amenable to large-scale commercial farming like cacao, coffee, mangoes, durian, avocado and bamboos. We should remember that before the Second World War, we were among the largest exporters of coffee and cacao beans, especially from my home province, Batangas. I still remember how my mother used to sell “tablea” which she used to produce at home, starting with the beans, grounding them, all the way to the finished tablet. Unfortunately, because of the backyard approach to growing cacao, the small farmers were helpless in fighting the disease that wiped out both the cacao and coffee industries. It would have been different if these two products were grown in tandem with the equivalents of Del Monte and Dole in the pineapple and banana sectors. The big businesses would have had the financial and technical wherewithal to fight the rust. That is why farm consolidation and product diversification should go together. Those Philippine conglomerates that are beginning to invest in large-scale agribusiness ventures like First Metro Pacific, DMCI, and Benguet Corporation, among others, are cognizant of the fact that there will be a surge in demand for high-value fruit products as more and more of the countries in the Indo-Pacific region transition to high-middle income and high-income economies. The composition of their consumer food basket will contain less carbohydrates and basic food products and more and more high-value fruits like mangoes, durian, and avocado, following the trajectory of bananas and pineapples in the last century. The Chinese, for example, have fallen in love with avocados. It is time we grow this fruit (and vegetable for some consumers), not in a backyard fashion, but in large commercial farms.
I am glad that there is already talk of product diversification that can accompany farm consolidation with the announcement by the Department of Agriculture that it would implement intercropping of coffee, cacao, and bananas while the coconut farmers are waiting for their coconut seedlings to grow and to bear fruit. This can also be applied to land planted in palays that may actually be marginal for rice because they are in mountainous areas or where water is scarce. These marginal lands for palay may be more suited to some of the tree crops mentioned above. This would be part of the product diversification strategy that can lead to larger exports since there are very high demands in China, Japan, and South Korea, not only for bananas and pineapples but also for fresh coconut juice, mangoes, avocado, durian, etc. It is product diversification that has enabled Thailand and Vietnam to reach export volumes of agribusiness products five times ours.
It is also in the larger commercial plantations in which agrarian farmer-beneficiaries can have double income from leasing their farms to the large agribusiness ventures and thus earn rental and at the same time have some members of their household receiving wages as workers in some phase or another of the coconut enterprise at the farming, logistics or manufacturing stages as are already a reality in Axelum and Lionheart Farm. Actually, to Chris Po, the CEO of Century Pacific, these are no longer theoretical possibilities but are already sources of profits because his company is already exporting the finished products of coconut water and other high-value manufactured coconut products from these large coconut enterprises.
Century Pacific typifies another strategic direction that has to be taken in our attaining food security: the industrialization of agriculture which means processing the raw materials we produce into finished products. The origin of Century Pacific was Century Can which processes the tuna caught in our seas into canned tuna. As much as possible, we should not export the raw materials from agriculture or aquaculture. We should add higher value to them by processing them into finished consumer products. For example, the move of the Lorenzo family to plant thousands of hectares of bamboo is geared towards processing bamboo into construction materials that can match the strength of steel as a building material. Once we can produce cacao beans large scale, we should no longer be limited to the likes of the Malagos, Auro, Hanan or Dalareich brands of chocolate candies in Davao and Bohol, which are still artisan products, but should aspire to mass manufacture high-quality chocolate candies that can compete with the Hersheys, Nestles and Cadburys of the world. Another example of industrializing agriculture is the coco chemical plant of D&L Industries in Tanauan, Batangas which processes coconut oil into finished pharmaceutical, cosmetic, or food products. It is no coincidence that more than 30 percent of Philippine manufacturing is accounted for by processed food and beverage products. With the rapidly expanding domestic consumer market and the trend towards fruits and vegetable products as healthy sources of nutrition in developed countries, we can aspire to export more manufactured food and beverage products in the future. I am glad that there are forward people looking CEOs like Chris Po of Century Pacific who are ahead of the curve in this regard. It is also worth noting the strategic move of the First Metro Pacific group to purchase Carmen’s Best from the Magsaysays and to valiantly enter the dairy industry in order to produce the fresh milk raw materials that they will process into ice cream. On the lighter side, Jovy Hernandez, CEO of Metro Pacific Agribusiness Venture, can count on the prayers of Pope Francis who seemed to have relished the salted caramel flavor of Carmen’s Best when His Holiness visited us in 2013 at the height of Typhoon Yolanda. To be continued.