Use technology, not subsidies, to fix agriculture

THE CORNER ORACLE - Andrew J. Masigan - The Philippine Star

President Marcos has correctly identified food insufficiency and the dismal performance of the agricultural sector as among the country’s greatest vulnerabilities. To exemplify his intention to fix our agricultural conundrum, he assumed the role of Secretary of Agriculture to personally oversee reforms. It is a bold move since the President will have no one to blame if agriculture fails to turn the corner.

How bad is the situation? Let’s put it this way – despite having 13.2 million hectares of land dedicated to agriculture, the country remains import dependent in all major crop and livestock categories. According to the USDA and the Department of Agriculture, the Philippines will have to import 2.8 million tons of rice (representing a 22.5 ton deficit in domestic output), 750,000 tons of corn, 250,000 tons of sugar, 110,000 tons of beef, 600,000 tons of pork and 404,000 tons of chicken to feed our population this year.

The poor performance of the agricultural sector can be attributed to a lethal combination of reasons. Among them is the average size of farms which is less than one hectare; few and inefficient cooperative networks; the inability to mechanize due to lack of economies of scale; the lack of farm-to-market roads; ageing farmers; climate shocks, among many others.

PBBM has reacted by bombarding the farm sectors with subsidies. He green-lit the P590-million Rice Farmers Financial Assistance Program; the P320-million Fuel Discount for Farmers and Fisherfolk Program; a one-year amortization moratorium for agrarian reform beneficiaries and extensive subsidies for seeds, fertilizers, fingerlings and livestock.

Dishing out subsidies to increase agricultural output is a page taken from the Masagana-99 playbook. But it is not sustainable. While M-99 produced a bumper crop of stocks, it relegated the state deeper into debt. Now is not the time to be liberal with subsidies, given our high debt levels and gaping budget deficits.

But President Marcos need not break his back to find solutions. The Netherlands faced similar challenges in developing its agriculture sector and emerged a world leader in it, thanks to the use of technology. We can learn valuable lessons from the Dutch model.

In theory, the Netherlands is not an ideal place for agriculture. The country has a small land footprint, a low population, high wages and an inhospitable climate for farming. Yet, the Netherlands has become the world’s second largest food exporter. It leads in vegetable and livestock production.

One may wonder why the Dutch decided to specialize in agriculture despite being a wealthy, industrialized nation, which can easily import their food. Like us, the Dutch are concerned about food security. Following the Cuban Missile Crisis of 1962, visionary Dutch politicians decided that food security should be made a priority, given the threat of nuclear war. They were also aware that by the year 2050, humanity would need to produce three times more food annually to feed a global population of 10 billion. The Dutch view agriculture as a strategic investment that has bearing on national security.

The Netherlands operates with only 2.7 million hectares of agricultural land (roughly 20 percent of the Philippines), yet it generated agricultural export revenues worth $111 billion last year. Its yield of potatoes is two times the European average while its yield of tomatoes is 16 times that of the United States. It achieves spectacularly high outputs while consuming 50 percent less water and zero pesticides.

The utilization of technology is at the heart of Dutch agriculture and this is its secret to success.

The University of Wageningen is the world’s mecca for agricultural research. Located in the province of Gelderland, the university is part of the Foodvalley cluster, a vast region that houses research institutes and agricultural-related businesses. Foodvalley is a knowledge-intensive ecosystem for agriculture that acts like Silicon Valley. It incubates start-ups relating to food technology as well as venture capitalist to fund scale-ups. University of Wageningen is to Foodvalley what Stanford University is to Silicon Valley.

Among the technologies pioneered by the University of Wageningen is the custom-formulation of fertilizers based on the nutrient make up of soil, determined through sensors. The use of drones to spot hydration and micronutrient deficiencies in plantations. The utilization of unmanned tractors that can work 24/7. The adoption of hydroponics and geothermal heat for greenhouses, among others.

The University of Wageningen has two core mandates. To conduct cutting edge research on food technology and to train the best food scientists. The medium of education is English so as to attract the best faculty and students from around the globe.

While the Dutch government invests in the university’s programs and facilities, it rarely subsidizes 100 percent of research work. It finances only 50 percent of research budgets, leaving the university and the private sector to finance the rest. This way, private companies have a stake in the research outcomes and are incentivized to monetize the technologies resulting from the research.

Technology has made agriculture just as profitable as industrial manufacturing. As a result, young entrepreneurs are attracted to become farmers, thereby infusing youth, skill, exuberance and capital into the sector.

The Philippines is not starting from zero in its quest to put technology in the center of the country’s agricultural program. The Rockefeller Foundation funded the International Rice Research Institute in 1960, an adjunct to the University of Los Baños, precisely to serve this purpose. PBBM can build on this to build a Philippine version of the University of Wageningen and Foodvalley.

The era of subsidies and traditional agricultural methods have proven to fall short. To go down this road is an expensive, albeit doomed exercise. We need to pole-vault to the future in as far as food security is concerned.  Technology is key and the Netherlands provides a good template to follow.

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Email: [email protected]. Follow him on Twitter @aj_masigan


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