Until his passing in 2020, Dr. Rolando Dy was one of the most influential agribusiness economists in the Philippines, advising both government officials and top executives on agricultural policy and strategy. In the 1980s, while working at the World Bank, he was part of an expert team sent to Thailand and Malaysia to help craft long-term agricultural development plans. It was due in part to his team's guidance that these two countries became global leaders in high-value food crops. Ironically, when he returned to the Philippines and established the think tank Center for Food and Agri Business, much of his most valuable advice—such as the recommendation to move away from rice self-sufficiency—fell on deaf ears within the government.

One critical piece of advice Dr. Dy offered to both officials and investors is finally being seriously considered and implemented by enlightened entrepreneurs: the consolidation of fragmented landholdings. Consolidation makes farms commercially viable and transforms them into worthy recipients of long-term credit. Historically, most banks notoriously preferred to pay hundreds of millions of pesos in penalties rather than fulfill their lending obligations to agricultural projects under the Agri-Agra Law. Dr. Dy noted that fragmentation limits a farmer’s ability to adopt modern technology, attract investment, and achieve economies of scale. By consolidating land—whether through ownership or well-managed clustering—farmers can increase productivity, lower costs, and compete effectively in global markets. He emphasized that this must be coupled with credit access, extension services, and market linkages to ensure inclusivity.

The central question is how to consolidate the millions of smallholdings resulting from the country's controversial but socially justified agrarian reform program, allowing farmers to remain landowners while collectively achieving scale. Several successful models from our Southeast Asian neighbors and beyond stand out, including cooperatives, farm clustering, nucleus estates, and corporate partnerships.

Let’s start with Cooperatives and Farmer Associations. These member-owned groups enable farmers to pool resources, lower costs, and market produce collectively. While successful in Europe and Taiwan, cooperatives in the Philippines are often more known for failure than success, as economic cooperation is not traditionally a cultural strength despite the "bayanihan" spirit. However, notable exceptions exist, such as the Sorosoro Ibaba Development Cooperative in Batangas and CARD in Laguna. There are also dairy cooperatives in Cebu and banana agrarian reform beneficiary (ARB) cooperatives in Mindanao maintaining export contracts with Dole and Del Monte. Despite this potential, many cooperatives face challenges like weak governance and limited capitalization. We should continue seeking technical assistance from countries with successful models, such as Spain’s Mondragon, Germany’s Raiffeisen, or the Israeli Kibbutz.

Then there is the approach of Farm Clustering and Block Farming. This organizes smallholders into coordinated production units while preserving individual ownership. The Department of Agriculture’s F2C2 program institutionalized this to improve competitiveness. A successful example is the ARB Block Farm in Quezon, which improved yields for sugarcane. However, success depends heavily on trust and local government facilitation. In the 1980s, I personally witnessed block farming fail at Victorias Milling Corporation due to "pole vaulting"—the selfish practice of breaking contracts to sell to a different mill for a marginally better price. Even relatively large landholders often struggle to sacrifice individual interests for the common good.

The Malaysian palm oil industry contributed another successful approach: the Nucleus Estate Model. This links smallholders to a large agribusiness unit, such as Guthrie or Sime Darby, which provides capital and technology. In Palawan, Lionheart Farms employs this model by leasing coconut farms and offering farmers steady rent and employment. I have personally interviewed these farmers, who shared that their rental income and new employment opportunities far exceed what they previously earned selling copra. It is necessary, however, to have strong regulatory oversight to ensure contracts remain equitable and do not deepen farmer dependency.

A fourth model involves Corporate Partnerships and Contract Growing. These formalize supply relationships through joint ventures or lease agreements, often under the Department of Agrarian Reform’s Agribusiness Venture Arrangements (AVAs). Examples abound in Mindanao with Dole and Del Monte, while companies like San Miguel and Bounty Fresh rely on contract growers for poultry. The Jollibee Group Foundation’s Farmer Entrepreneurship Program also connects vegetable cooperatives to their supply chain. In fact, Jollibee, in partnership with Cargill, has established the largest poultry project in Asia in Sto. Tomas, Batangas using this model. Another prime example is Axelum, a coconut processor in Misamis Oriental that relies heavily on contract farmers and recently saw the First Pacific group buy a significant share.

While these schemes reduce market risks, they can also expose small farmers to imbalances in bargaining power. Programs like the World Bank-supported Inclusive Partnerships for Agricultural Competitiveness (IPAC) are essential for building the capacity of farmers to negotiate fairer contracts. International precedents offer further inspiration. In April 2025, a group of Filipino investors witnessed how the Vietnamese government mobilized small farmers—with average plots of less than one hectare—into cooperatives. This effort built their coffee industry from scratch, eventually dethroning Colombia to become the world's second-largest coffee exporter, behind only Brazil.

To be continued.