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Why farmers remain poor Part 3

Based on what I discussed in this column the past two weeks, it is clear that our low level of agricultural modernization resulted from our low level of industrialization and the disconnection between the two sectors.

Senator Manny B. VillarFor many years, the government has undertaken numerous programs and adopted different approaches to industrialize the country. We had the import-substitution approach, under which industries were established to manufacture products to replace imports. Some companies succeeded, and have been able to compete with foreign manufacturers.

During the late seventies up to the early eighties, the government pursued several heavy industries to speed up the country’s ascent to industrial status. These included a copper smelter, an integrated steel mill, coco-chemical manufacturing, fertilizer production, shipbuilding and petrochemical production. Many other industries were established, but the disconnection with agriculture remained.

A good example was the automotive industry. Malaysia’s National Car Project was approved by its Cabinet in 1982, and the first locally built car, the Proton Saga, was launched only in July, 1985. Today, the Proton competes with other international brands.

Malaysia has not only industrialized its economy; it has also modernized its agriculture sector, which continues to play a significant role in the country’s economy. With its oil palm plantations, Malaysia is the world leader in vegetable oil production.

The Philippines implemented its motor vehicle manufacturing program in 1973, or nine years earlier than Malaysia. The program consisted of the Progressive Car Manufacturing Program (PCMP), the Progressive Truck Manufacturing Program (PTMP), and the Progressive Motorcycle Manufacturing Program (PMMP). Today, the car industry remains basically an assembly operation, with most of the major components like engines supplied by foreign producers and put together in local facilities.

The question arises: Would the Philippines be producing its own brand of farm tractors if these were included in the motor vehicle program? Tractors are also motor vehicles, but require fewer components and less technological sophistication than cars and sports utility vehicles. I remember that under the PCMP, Delta Motor Corporation, which was assembling Toyota cars, was able to locally manufacture the gasoline engine for the Corona.

Car industry leaders say the Philippines’ automotive market is too small to make the country a car manufacturing hub. This is because only a small portion of the population can afford to buy cars.

On that basis I think tractors would have been more viable in the Philippines. Even assuming that a tractor costs as much as a car, it doesn’t require one farmer-buyer for each tractor. A dozen or more farmers, grouped into a cooperative, can buy a tractor for common use. With that number of buyers sharing the cost, farm tractors would have had a reasonably sized market to make local production viable.

I hope our planners will seriously consider eliminating the disconnection between industrialization and agricultural modernization, and come up with a plan that establishes strong ties between the two sectors.

My understanding is that the revitalization of the industry sector, particularly manufacturing, will be included in the updating of the Philippine Development Plan 2010-2016.

Implementation of such plan will take years. In the meantime, measures must be adopted to push the mechanization of the agriculture sector so its benefits will reach our farmers as soon as possible.

These measures may start with the government identifying the small manufacturers that, without encouragement and assistance from the government, saw the market for farm machinery and implements and invested their small savings to produce them.

I have heard of complaints that these small manufacturers could not even obtain loans under liberal terms. Helping them will not require legislation, comprehensive planning and review or tedious processes.

The government has enough resources to help manufacturers expand production and improve quality so that more farmers will be able to mechanize their activities, from field preparation to post-harvest operations.

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