Tree crops development: A much ignored poverty reduction strategy?

Conclusion

Poverty reduction

MANILA, Philippines –  Tree-crop development plays a key role in rural poverty reduction in Southeast Asia. In Indonesia, tree-crops development has contributed to rural employment and poverty reduction. Some six million rural households depend on tree-crops for employment and livelihood.

In Malaysia, the Federal Land Development Authority (FELDA) resettled 133,000 poor families in mostly oil-palm estates and today enjoy better quality of life. 

The sincerity of intention and single-mindedness of purpose by former Prime Minister Tun Abdul Razak in the late 1950s and 1960s as well as a hands-on approach to implementation are among the success factors of FELDA. 

Although the number of beneficiaries for the Federal Land Consolidation and Rehabilitation Authority (FELCRA) was smaller, the World Bank (WB) estimated in 1987 that the FELCRA settlers had 44 percent to 100 percent higher farm incomes than those for comparable holdings.

Similar observations can be made for Thailand and Vietnam. The former pushed for rubber development, and the latter, coffee, rubber, and cashews.

Meanwhile, in the Philippines, very limited progress has been made, contributing to a high level of poverty. This is dramatically evident in the coconut sector.

Where do we go from here?

The record of the Philippines is dismal. There is a lack of long-term program for coconut replanting and intercropping, as well as promotion of oil-palm and rubber, crops where the country has a comparative advantage. The factors that hindered tree-crop development in the Philippines can be traced to several factors:

• A lack of genuine tree-crop strategy. This is in part because of the lack of appreciation of the role of tree-crops in poverty reduction, exports and import substitution, and crop diversification

• Lack of long-term financing. The author worked in Malaysia for a multi-lateral development agency in the 1980s. Tree-crop financing was available with 15-20 years money for oil palm and rubber with an appropriate grace period as well as capitalized interest during the grace period. Except for a modest DBP initiative in rubber planting in the early 1980s, there is a dearth of long-term funds.

• In addition, there was an inherent bias in the banking laws. The General Banking Act of 1950 provided that the maximum grace period of loans was three years. Tree-crop loans need up to seven years grace period. It was only in 1999 when Bangko Sentral amended this provision as mandated by the Agriculture and Fisheries Modernization Act of 1997.

• Too much focus on rice irrigation as a result of rice self-sufficiency drive. Since resources are scarce, tree-crops had to play second fiddle to rice.

As a result, the tell-tale signs are there: high rural poverty, low agriculture exports, weak agro-industrial value adding, and under-utilized lands.

The Philippines can learn from the experiences of ASEAN. The success factors include:

• Top-level commitment of using tree-crop development as a major component of agriculture and poverty strategy;

• Availability of long-term financing from government and official development assistance;

• More liberal policy on land ownership; and

• Business models such as the FELDA and FELCRA in Malaysia, Inti-plasm (Nucleus Estate-Smallholder) Schemes in Indonesia, and strong government push in Thailand and Vietnam.

As the country crafts the Medium Term Plan for 2010-2016, it is hoped that the past neglect of tree-crops will be reversed. It is long overdue.