back in the game: winning strategies for private sector investments on small producers in the...

7/28/2019 Back in the Game: Winning Strategies for Private Sector Investments on Small Producers in the Philippines

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1WINNING STRATEGIES FOR PRIVATE SECTOR INVESTMENTS ON SMALL PRODUCERS IN THE PHIL IPPINES

Backin the

Game:WINNING STRATEGIES FOR PRIVATE SECTORINVESTMENTS ON SMALL PRODUCERS IN THE PHILIPPINES


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Oxfam is an international confederation of 17 organisations networked together in more than 94 countries,as part of a global movement for change, to build a future free from the injustice of poverty. In thePhilippines, we work with poor people to sustain their livelihoods, and reduce their risks to natural andhuman-made disasters. We strive to enable poor people to have a voice in economic issues affecting themand we support poor women as they lead in transforming unequal social and economic relations.

4F 150 Corporate Center,150 Panay Avenue, Quezon City, PhilippinesTelephone: +63(2) 9294470 Fax: +63(2) 9270499Website: http://www.oxfamblogs.org/philippines

This publication was printed using 100% recycled paper and soya-based printing ink.

Back in the Game: Winning strategies for private sector

investments on small producers in the Philippines

Acknowledgements

This brief was written by Dante Dalabajan with contributions from Eusebio Jacinto Jr. and MariaGolda Paz Hilario. Commissioning manager for this brief was Kalayaan Pulido-Constantino. Oxfamacknowledges the insights and comments provided by Kalayaan Pulido-Constantino, Marie MadambaNunez and Rohit Malpani. Substantial comments and inputs from several Oxfam partners in thePhilippines, namely: Hazel Tanchuling, Dennis Calvan, Ernie Lim, Edgardo Ligon, Tony Salvador, MariaMendoza and Daryl Leyesa were sought for the completion of this report. This is one of a series ofpapers written to inform policy discourse around increasing investments in smallholder agricultureand to contribute to Oxfams GROW campaign.

For more information, or to comment on this brief,email Kalayaan Pulido-Constantino [email protected]/grow

Production of this policy brief is managed by Joseph Edward Alegadowith assistance of Maria Golda Hilario.

Layout by: Mervin Concepcion VergaraPhotos by: Veejay Villafranca

Dante Dalabajan is currently the manager of Oxfams Building Resilient and Adaptive Communities andInstitutions in Mindanao (BINDS) project. He was a former policy and research officer of the Philippineseconomic justice program of Oxfam. He has 17 years of experience in public policy research, andadvocacy and campaigns.

Eusebio Jacinto Jr. is a freelance consultant whose expertise is on fisheries and coastal resourcemanagement.

Golda Hilario is Oxfams economic justice policy advocacy officer. She has had over 10 years ofexperience in research and policy analysis in the areas of sustainable agriculture and trade.

About the coverIn 2010, there are about 3.24 million rural women who are actively engaged in the agriculture, fisheriesand forestry sector according to a report by the UN Food and Agriculture Organization. (photo by VeejayVillafranca)

GROW is Oxfams campaign for better ways to grow, share, and live together.


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5 INTRODUCTION

6 WHO ARE THE SMALL PRODUCERSIN THE PHILIPPINES?

7 WHY ARE SMALLHOLDER PRODUCERSCURRENTLY OUT-OF THE GAME?

14 WHY SHOULD THE BUSINESS SECTORINVEST IN SMALL PRODUCERS?

16 HOW CAN THE BUSINESS SECTOR

HELP SMALL PRODUCERS GET BACKIN THE GAME?

18 GOVERNMENTS ROLE IS CRITICAL

19 CONCLUDING NOTES

20 NOTES

CONTENTS


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4 BACK IN THE GAME:


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INTRODUCTION

We are so broke, laments farmer Arnel Britalyer of Brgy. KanlurangBukal, Liliw, Laguna. Truckloads of tomato in his and the nearbyvillages are left to rot by the roadside as the price of tomatoplunged from P12 in January to P1 per kilo in May 20111 . Farmers inKanlurang Bukal are left without money for the next planting seasonand face more hardships down the road. Leonardo Nepomuceno,another farmer, wonders, How can we get back on our feet? We

borrowed from the bank. We borrowed from loan-sharks. Weborrowed medicines in the stores. Who is going to loan us if wecannot pay?

The situation in the cities, however, conceals the desperation thatpervades in rural villages like Kanlurang Bukal. Here, the toweringpresence of supermarkets and food retail outlets in almost everymajor street and district seem to conjure an image of a vibrantagriculture, an encouraging sign of the bright prospects facing thisimportant segment of the economy.

This paper is one of three Oxfam briefers on private sectorinvestments in agriculture in the Philippines. This outlines whymajority of the smallholder farmers in the country are being left outof the game and builds the case on why the business sector shouldinvest responsibly on smallholder agriculture. This paper also

discusses the public policy environment that hinders the growthof private sector small producers partnerships and what choicesthe government must make to nurture these partnerships.

WHO IS FEEDING THE GROWING POPULATION?

By 2010, the share of urban population has reached over 67percenta spectacular rise from about 37 percent in just overtwo decades.2 A growing number of families in the urban areashave dual income households which have vastly improved theirpurchasing power on one hand and increased their demand forconvenient, one-stop shops on the other. 3

This demographic shift has brought about a domino effect in

the way food products move along the value chain and hasconsequently reconfigured the structure of the agricultureindustry. There has been a radical shift of consumer preferenceto high valued commodities over grains and starchy staple crops 4with an emerging middle class fueling the demand.5 A study, forinstance, noted that families in urban areas consume food outsidehome almost twice as much as their counterparts in rural areas. 6

The shift of consumption patterns has, in turn, fueled theexplosion of supermarkets, hypermarkets and fast food chainswhich have become the dominant modality for transmitting highvalue commodities.7 From 1994 to 2007 alone, the number ofsupermarkets and hypermarkets in the Philippines have increasedfrom 496 to 5,000with value of sales of over 100 billion pesos

The situation may be even graver forwomen farmers and fishers like RosarioMendoza of Cavite who are generallynot recognized and whose economiccontribution in the agriculture andfisheries are often overlooked.


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6 BACK IN THE GAME:

in 2007, accounting for over half of retail foodsales.8 In 2011, the retail sales of packaged foodand non-alcoholic drinks sold at major grocerystores has reached US$ 14,976 million or closeto 643 billion pesos9.

The supermarket revolution has influenced theagriculture sector in no uncertain terms. First,specialized procurement agents have sprungup to make spot purchasesby-passing thetraditional wholesale markets. This mode ofprocurement served the purpose of reducingtransaction costs and ensuring a greaterdegree of control over quantity, quality andtimely delivery. Second, up in the value chainstream, specialized procurement agents havebeen instituting private grades and standardsto be able to exact the kinds of specification(e.g. quality, quantity, and delivery) demandedby the market downstream (e.g. supermarket,hypermarket, and food retail outlets).

About seventy percent of fresh produce in thePhilippines is sold in the wet markets10, but thecurrent trends clearly show that this will not goon indefinitely. There is evidence, for instancethat, more and more consumers are movingto supermarkets because of concerns aboutsafety11. Filipinos now spend roughly 49% ofgroceries on fresh food.

A parallel trend is also happening in thefisheries sector. There is an increasing shareof aquaculture in total production relative tocapture fisheries from 36.7% in 2000 to 48.7% in2009. The iconic poor mans fish - round scad

or galunggong- is being replaced by farmedspecies such as tilapiaan d bangus(milkfish).The latter are better suited for larger scaleproduction and integration into fisheries valuechains that feed into urban-based retailers.These commodities are also mostly producedby medium and large scale aquafarms who havethe capacity to meet the criteria of timeliness,volume, quality, and traceability that modernizingmarkets increasingly require.

Such stark dualism leaves majority of thesmallholder farmers and fisherfolks currentlyout-of-the game in an uneven playing field whereeventually nobody wins. It can only harm the longterm growth prospects of the business sector,buries the small producers deeper into poverty,and consequently, put the countrys food securityin great peril.

WHO ARE THE

SMALLHOLDERPRODUCERSIN THEPHILIPPINES?Agriculture broadly covers the farm, fisheries andforestry sectors, and its downstream industries(e.g. food processing, manufacturing and tradingof agricultural products). Agriculture comprise 40% of the Philippine economy and employs abouttwo-thirds of the workforce.

Strictly speaking, agriculture small producersfalls under the private sector category in as muchas they are private actors engaged in risk takingto earn profits and income. 12

The National Agriculture and Fisheries Council(NAFC) broadly defines private sector to coverfarmers, fishers, farm input providers, traders,processors, members of the academe, industrycaptains, and personalities of the various non-

government and peoples organizations.13

Distinction should be made between privatesector agribusiness and small producers. Forthe purpose of this paper, agriculture small foodproducers encompass those producers within theagriculture, fisheries and subsistence forestrysubsectors producing on a small-scale level.

On the other hand, private sectorrefers toagribusiness, domestic and multinational/transnational companies and small and mediumenterprises (SMEs). It therefore includesagribusiness firms along the value chain such asthose engaged in input provision, food processing

and manufacturing, distribution and logistics,wholesaling and retailing.

By sheer number and the aggregate size oflandholding small producers have alwaysdominated the Philippines agriculture sector:

The highest concentration of small-scaleproducers is found in fishing, coconut, rice,sugarcane and corn sectors.14


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In 2010, there are about 3.24 million ruralwomen who are actively engaged in theagriculture, fisheries and forestry sector15.

An estimated 514, 978 of the countrysagriculture holders those makingmajor decisions over resource use andmanagement over their production system -are women16;

The highest concentration of the rural pooris also found in the agriculture, fishery andforestry sector. Some 1,685,148 farmers and346,345 fishers are living below the povertythreshold in 200917.

Figure 1. Where the smallholder producers are in the Philippine agriculture and fishery sector.

(Source : NEDA (2011). Philippine Development Plan 2011-2016. page 104. Accessed from )

WHY ARESMALLHOLDERPRODUCERSCURRENTLYOUT-OF-THE-GAME?By 2025, the Philippine population is projectedto breach the 120 million mark18. With the recenttrends in consumer demands and the marketmodernization, it would have been conceivablethat the rural economy will grow in tandem withthe rest of the value chain. After all, thereseemed no other way that the private sectorcould fill the demand domestically if not for therural areas.


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8 BACK IN THE GAME:

so called financers, traders and input suppliers).Contrary to loans offered by banks, informallenders respond to small producers needs moreefficiently, without the necessary collateralrequisite and voluminous documentation requiredby the banks. Repayment among farmers is

just a secondary issue given that loan termscoincided with the length of cropping season;loan interests are not monetized but are oftencharged against the crop value collectedduring the harvested season. This arrangement,however, is disadvantageous to the farmer giventhat the interest rates are high (more than 12%)and fixed, leaving them with little option but toaccept the terms determined by the informallenders. Informal lenders are also operating onlimited funds, dealing with the same borrowersseasonally and are operating in contiguous areas,which is essentially a risky undertaking.

Low farm gate price for their produce

Small farm producers are disproportionatelygetting a small share of the value of their produceevery growing season. In rice alone, the ratio offarm-gate price compared to wholesale pricehas accordingly averaged at 47 percent overthe past 15 years24. In 2012, an equivalent kiloof well-milled rice just cost an average of PhP19.37 kilogram when sourced from the farm-gate,around 41% lower than the average the wholesaleprice which was fetched at PhP 32.82 per kilo25.Their share is lower compared to other riceproducing countries where farmers get more thanhalf of the value of their produce (Figure 2) .

The reasons why farmers are getting a pittance

from their hard work are varied and former NEDADirector Cielito Habito offered an explanation.Farm gate prices are often determined by traderswho in most cases also act as their financersthat often charge the interest rates by loweringthe value of the farmers yield. Second, poorinfrastructures poor state of farm roadsand bridges continue to hinder farmers fromdelivering their produce to markets that offermore competitive prices. The high cost oftransportation entices farmers to rather selldirectly to traders who buys directly at the farm-gate at the latters terms. Third, situations wherethere are only one26 or few27 buyers for farmersproduce are prevalent in the rural communities.With only one processor operating in the locality,the processor can control the buying price of thecommodities. Cartels control local trading. 28

Trade Liberalization

The continuing effect of trade liberalization,a policy decision that was enacted when thePhilippines ratified to the Uruguay Roundagreements and subsequent realignment ofPhilippine laws to deliver its commitments to theWorld Trade Organization, effectively removedprotective mechanisms that could have insulatedthe countrys agriculture subsectors and furthercontributes to lowering of farm-gate prices.29

However, a confluence of factors creates asituation that makes it hard for small producersin the countryside from rising. Continuingcyclical challenges hamper small food producerscapacities and their ability to be active players inthe value chain.

Lack of capital

Farmers and fisherfolks need to infuse financialcapital to be able to increase their productionand derive a decent livelihood from farming butwhere to access affordable and efficient loansremains a perennial bottleneck.

Republic Act 8435 or the Philippines Agricultureand Fisheries Modernization Act (AFMA) which waslegislated in 1997, ensured access to credit bysmall producers19, small and medium enterprises(SMEs) and industries engaged in agriculture andfisheries by outlining the scope of subsidizedcredit through Agro-Industry Modernization Credit

and Financing Program (AMCFP). Under the law,an initial PhP 2 billion and a subsequent PhP 1.7billion across the span of six years was allocatedfor the implementation of the AMCFP. Yet, annualappropriation for such subsidized credit has notfully materialized with the AMCFP implementationrelying mainly on recycled funds from terminatedagriculture credit programs.

The private banking sector that was mandatedby law to allocate 25% of their total loanableportfolio to agriculture20, has veered away theirinvestments from the sector. Rather, banksopted to pay penalties and resort to alternativecompliance measures because they consider the

agriculture and fisheries sector as high-risk,high-cost21.

Despite purported increase in the amount of bankloans to agriculture, fishery and forestry sectorto PhP 624 billion in 2010, the credit gap in theagriculture and fishery sector has reached PhP252 billion, this was dismally higher than the PhP156 billion credit gap noted in 2008.22

The passage of the Agri-Agra Reform Credit Actof 2009 limit the alternative compliance andimposes stricter penalty for failure to lend out tothe agri-agra sector and in the process, infusemore credit capital. However, this does notnecessarily equate to greater access for small

farmers and fisherfolks. Within the agriculturesector, commercial banks tend to prioritize loansto large agricultural firms such as agribusinessand plantations. Likewise, loan distribution isconcentrated among large farm owners who canpresent acceptable loan collateral and havebetter risk management practices. Formal lendingto small farmers has particularly been limitedto the rice and corn loan production supportextended by government-owned Land Bank of thePhilippines and rural banks23.

Majority of the small producers still rely oninformal credit offered by informal lenders (or the


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The Agriculture Tariffication Act or RA 8178(1996), for instance, repealed the prohibition ofthe importation of onions, potatoes, garlic andcabbages. The prices of potatoes collapsedto almost half of their 1990-levels owing to theflooding of the market with machine-sliced,ready-to-fry potatoes from the United Statesafact that virtually decimated the 50,000-strongBenguet potato farmers.30 The export receipt ofthe US relative to the Philippines is especiallyinstructive as it clearly showed the widening

trade deficit of the Philippines with the US in foodand beveage alone (Box 1).

Box 1. Food and beverage imports from the US

In 2010, U.S. food and beverage exports to thePhilippines increased by 42 percent to a record$601 million on the strength of exceptional salesincreases in fresh vegetables, dairy products, treenuts, breakfast cereals, and processed fruits andvegetables. This remarkable growth follows animpressive export achievement that went on formost of the decade. Since 2005, U.S. sales to thePhilippines set records in four out of five years. Asof the end of 2010, the Philippines was the largest

U.S. export market in Southeast Asia and the 13thlargest export market in the world for U.S. food andbeverage products.

Source: Singian R. (2011) Top Growth and TopSales Market for U.S. Foods and Beverages, USDepartment of Agriculture Foreign AgriculturalService.

Figure 2. Rice farmers share over wholesale price: Average farm gate price versus wholesale price ofrice in four rice producing countries.

source of data : Habito, C. (2011). Do Farmers Have to Be Poor. No Free Lunch. Philippine Daily Inquirer.

Public sector investment in agriculture is notenough

The share of Philippine agriculture sector relativeto the national output has been declining. For theperiod of 2007-2010, the gross value of goods andservices of the agriculture sector has been on asteady declining average at 12% (Figure 3).

A similar flood of importation is also happeningon other agricultural fishery commodities thatare the domain of smallholder producers. In thefishery sector, the DA-BFAR reports that about900,000 metric tons of imported fish enter thecountry every year, intended for institutionalbuyers that process seafood31. To the detrimentof local fishers and traders and to the consumershowever, the poor mans fish galunggong arenow being sold at the local markets at a muchhigher retail price than the import price declared

by the importers at the Bureau of Customs. Localbackyard hog raisers have likewise dramatizedtheir plight during a self-imposed pork holidaywhen imported prime meat cuts are being allowedand sold into the country at lower tariff rates asoffal (variety meats).


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10 BACK IN THE GAME:

Compared to the national expenditure, government investment to the agriculture sector over the lastthree decades is almost insignificant (Figure 4). The decline in investments on agriculture is veryglaring in the case of public spending on agriculture research. In the early 1970s, it had one of thehighest levels in Asia. But the continuing fall in public spending on agriculture which began in 1980swent on such that by 1990s, the Philippines had one of the lowest public expenditures for agriculturalresearch relative to its gross value addednext only to Nepal.32

(source: www.bas.gov.ph)

Figure 4. Government Expenditures in Agriculture, 1981 2011.

Figure 3. Declining contribution of Philippine agriculture, fisheries and forestry sector toits overall gross domestic product.

(Source: http://data.worldbank.org/)


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We may conclude that the declining share ofagriculture in the national output could be a signof economic progress in as much as increasingincomes has a corollary effect in the demandfor non-agricultural, manufactured goodsand services.33 In more advanced economies,this is accompanied by rising incomes and alower incidence of poverty among agriculture-dependent population.

However, such is not the case in the Philippineswhere the biggest concentration of the poor isin the said sectors with poverty incidence overone third of the total for both farmers (36.7%) andfishers (41.4%)34.

Viewed at the backdrop of increasingliberalization of agriculture and the falling publicinvestments, the cause of the dualism within theagriculture sector becomes startlingly obviousfood retail is growing but food exporting countriesand their agribusiness allies and the domesticsmall producers are not the ones primarilybenefitting from it.

Calamities have become a seasonal norm

Small producers not only grapple with thelack of productivity as a result of decreasinginvestments in agriculture, but must also now

deal with the increasing frequency and magnitudeof extreme weather events brought about byclimate change. Experts agree that such eventswill become even more severe and more frequentin an increasingly warmer world.

The damage and losses incurred during thetyphoons Ketsana and Perma in 2009, forinstance, were estimated to be equivalent toabout 2.7 percent of the countrys gross domesticproduct, the same year when the Philippinesposted 1.1 percent growth.35 In 2011, tropicalstorm Washi devastated coastal and low-lyingcommunities in north and north eastern portionof Mindanao. In December 2012, a more powerfuland bigger storm left catastrophic effect ineastern and north eastern portions of the islandthat were very seldom on the track of seasonaltyphoons. Bopha (Pablo) left US$ 830 millionworth of damage to agriculture, properties andinfrastructure to predominantly agriculture andfishing municipalities36.

While an extreme weather event could devastatefood supply in one sudden blow, so could slowonset climate change cripple the ability toproduce food over a long period of time. Forexample, there is evidence to suggest a 10percent fall in rice yield for each 1C increase innight temperature during the growing season.37

Lack of effective safeguards that protect farmersassets and resources

Aside from labor, land is one of the remainingresources that smallholder farmers hold asleverage. It is estimated that 76.5% of thecountrys agricultural areas are in the domain ofsmall producers38.

There is a lack of effective safeguards thatrender them virtually powerless to negotiatefor better and fairer share with a handful ofprivate agribusiness firms that are willing toinvest in their land. As it is, the prevailing policyenvironment governing investments is tilted

towards favoring large-scale agricultural landinvestments. 39

Lacking the necessary capital to infuseproduction, agrarian reform beneficiaries foundthemselves on a lop-sided situation whereinleasing out their lands either to their formerland owners or to big agricultural plantations atan undervalued rate over a long-term period hasbecome their first option.

There are also cases where farmers groups whowere able to secure production and marketingcontracts with agribusiness corporations endedup trapped in a cycle of debt to the latter. To

be able to meet the prescribed quality that themarket requires, farmers groups are bound tospecific technologies prescribed by agribusinesscorporations. Such technologies do not comecheap. The required inputs (e.g. fertilizers,pesticides, seeds) being supplied and chargedby agribusiness corporations to the farmersgroups are often in the form of loan with accruedinterests.

Farmers are ill-equipped to scrutinize the termsof the contracts and negotiate for more equitableterms. In the event that there are conflictsarising over the terms of the contract, there is nodispute resolution mechanism that is accessibleto the farmers or the farmers groups. Farmersgroups find it costly and time-consuming topursue cases through the judicial system.

The 2008 food price crisis sparked a renewedinterest among foreign investors andgovernments to invest in offshore food andbiofuel crops production. The move was initiallywelcomed by the Philippine government as it sawthe potentials that such investments could bringin, in terms of job and revenue generation thatwill fuel the rural economy.

In 2010, some 1.37 million hectares of landwas reportedly under negotiation for possibleprivate sector land investments with an expected

The cause of the dualism within the agriculture sector becomesstartlingly obviousfood retail is growing but food exporting countriesand their agribusiness allies and the domestic small producers are not

the ones primarily benefitting from it.


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accumulated worth of PhP 72.4 billion 40. Only ahandful of these deals materialized mainly due tolack of consolidated landholdings, overlappingpolicies on land and natural resources andconflicting land use. Civil society groups andfarmers organizations sounded their alarmsciting domestic food security concerns, lackof transparency and consultation, possibledisplacement of poor smallholder farmers fromtheir own lands. More so, concerns were justifiedby prevailing predicament faced by smallholderfarmers and farmers groups who have badexperience in dealing with leasehold and/orcontract growing arrangements with agribusiness

companies and former landowners. There iscurrently no formal oversight as to whether largescale land investment agreements are beneficialor fair to small farmers.

Farmers lack of organization

Small food producers as a sector can be generallycharacterized as fragmented in that they lackeconomic organization in terms of production,access to markets, financing and technology,which holds true whether they are in the farming,fishing or forestry subsectors. This gives them

The cause of dualism within the agriculture sector becomes startlingly obvious - food retail is growing but food exportingcountries and their agribusiness allies and not the domestic small producers like Nita Oigoan of Rizal are the ones primarilybenefitting from it.

less power in negotiations and inhibits theirintegration within agricultural value chains.

It must be noted that the small producers are nothomogenous. Their needs are diverse dependingupon their context such as land holding,access to assets and productive environment,orientation to different markets, livelihoodstrategy and entrepreneurial attitudes41. Withintheir sector, they also face different forms ofexclusion, including proximity and remoteness,gender, ethnicity. They can be differentiatedalong different rural worlds (Box 2).

Among small farmers who have lands, the lack ofa coherent strategy that will structure the ruralcommunities in a way that they will be able tocapitalize on the asset reform programs of thegovernment is visibly lacking, leaving the smallproducers in the countryside at the mercy of thebig players in the market. In 1985, average farmsize in the Philippines was 1 hectare, but by 2004this has fallen to 0.76 ha, and the proportionof landless households had risen from 22 to 24percent.42 From the standpoint of production anddistribution, the wide dispersion of smallholderspresents a problem of coordination andconsolidation which are the stocks of trade in themodern markets.


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Box 2. Differentiation among rural producers

First rural world - comprise 2-10% ofsmall food producers with access to

capital, organization, information andinfrastructure and who can step up toformal and coordinated markets.

In the Philippines, these are farmers whohave small landholdings and possesssome assets, whose landholdings arelocated near town centers, and haveaccess to social capital (whetherthrough membership in an organization,or affiliations with family, community orlocal leaders). These are the ones whohave shown interest and are capable ofentering into formal agreements withprivate sector.

Small fishers belonging to this segment

may be engaged in either capture fishingwith their own gears and motorizedfishing vessels or in mariculture in theirown defined and informal territory.

Second rural world - comprise themajority, who are just hanging in there.They are less likely formally organized inthe market. They are more likely to tradewith the informal sector. Among fishers,these are the ones who would have anon-motorized boat for capture or thosewho work in mariculture in exchange for ashare of the harvest.

Third rural world - landless farmers whoengage in seasonal farm labor and receive

wages as payment. They are also morelikely to depend on off-farm opportunities.They may be considered the poorest ofthe poor. For fishers, these are engagedin capture fishing but rent the equipmentof other fishers.

Sources: Vorley, B (2002). Sustaining Agriculture:Policy, Governance, and the Future of Family-based Farming: A Syntheis of the collaborativeResearch Project Policies that Work forSustainable Agriculture and Regenerating RuralLivelihoods, IIED, London.

Vorley, B, L.Cotula, C Man-Kwun (2012). Tipping theBalance: Policies to Shape Agriculture Investmentsand Markets in Favour of Small Farmers. IIED and

Oxfam. London.

The size of land holding alone cannotsufficiently explain why small producers arebeing politically and socially marginalized.For example, indigenous peoples and uplanddwellers that hold forest land-use instruments(e.g. CADT,CADC and/or CBFMAs) have bigger

landholdings than agrarian reform beneficiariesbut they face the same predicament. They lackthe skills and resources to make the land moreproductive. Similarly, smallscale fishers andartisanal fisherfolks have a unique livelihoodstructure, having retained much of their huntingand gathering characteristics for ages. Unlikethe farmers who have a relatively predictableseasonal calendar, fishers are more vulnerableto the vagaries of nature, and their archaic

systems have remained despite the inroads oftechnologies on fish capture and mariculture.

The threat of exclusion of small producers istherefore real, and in fact, various reports havecited cases that excluded small producers. Assuch, small producers are not only in no positionto take advantage of the opportunities in thechanging market; but, the lack of productivity infarms also puts the Philippines objective of foodself-sufficiency in such a precarious balance.

Private sectors perception of small producers asa risky proposition

Given the problems associated with smallproducers, the dominant view within the privatesector is that small producers are a threat toits value proposition which is built on consumerassurance, high standards for food quality andsafety, low prices, and reliability of supply.43 Theyare a drag in a very competitive setting where

consolidation and vertical coordination within thevalue chain are the stocks of the trade.

Farmers with assets and capacities to access thenecessary finance, information, and technologyare in a more favorable position to benefit fromparticipating in the modern markets44. In the ruralareas however, they are more of the exceptionthan the general rule.

For the most part, the inability of the smallproducers to meet the demand of the industries isbrought about by the fact that quality standardsare too stringent for smallholders to begin with,or that they simply lack access to extension,

and modern inputs and credit.

45

Regardless ofthe reason, very few agribusiness firms have thepatience or the resources or the foresight neededto nurture the growth of the small producers.

This is even more so for small fishers, whomtraders consider an investment risk that aresubject to the vagaries of weather, seasonalityand dwindling resources. The situation may beeven graver for women farmers and fishers whoare generally not recognized and whose economiccontribution in the agriculture and fisheriessector are often overlooked. Ultimately, smallfarmers and fishers are not bankable and thushave almost no access to the resources theyneed to be productive and compete in the market.

Small producers are not only inno position to take advantage of

the opportunities in the changingmarket; but, the lack of productivity

in farms also puts the Philippinesobjective of food self-sufficiency in

such a precarious balance.


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WHY SHOULD

THE BUSINESSSECTORINVESTIN SMALL

PRODUCERS?a. Business caseSmall producers can provide opportunities forpartnerships with business sector. Despite themilieu of challenges that justifies reluctance toinvest in their sector, small holder producers canoffer comparative advantages for the businesssector to invest in rather than putting money inlarge corporate farms or resorting to importationfrom other countries (Box 3)

Sourcing from small producers can contributeto more secure supply. Supply constraints and

volatile conditions as highlighted during the 2008food price crisis, has also shown a compellingcase why the business sector needs to considersmall producers in their value chain. The businesssector must diversify its supply base andsourcing from small producers can contribute to amore secure supply.

Sourcing from local producers can reduce fuelcosts and carbon footprints. Realities that thecurrent production system is already on themargins of planetary boundaries should alsopropel private sector to act now, as long-termconsequences will harm their business prospects.

Sourcing from local food producers, rather thanprioritizing importation can help reduce fuel costsand carbon footprints of the company.

Ethical sourcing from small producers canbe a good marketing strategy. Making supplychains inclusive for small scale producers in anequitable manner and communicating how theseactions can improve the lives of men and womenfarmers through their brands can also providea good marketing strategy for the company;it can capture new customers and increaseconsumer patronage46. Working with small-scalefarmers is also a means to build communitygoodwill, contributing to companys license tooperate47. There is a growing evidence to show

that consumers are concerned about their foodsources. The Philippines registered the highestpercentage of women who have shown concernover how48 and where49 their food is producedas suggested by a survey result released byOxfam involving 5000 women households in sixcountries50.

b. Development case

Investing in smallholders can reduce poverty andhunger. A study shows that the growth in grossdomestic product from agriculture is at leasttwice more effective in reducing poverty thangrowth from other sectors51. Growth in agriculture

increases demand for goods and services,generates jobs and creates incomes for the ruralpopulation. It has a rippling effect at differentlevels household , community and even at thenational levels.

Box 3. Opportunities that small producers c an

provide to private sector

Majority of the prime agricultural lands arestill in the hands of smallholder.

Given the limited size of landholdings,small farms are more efficient in termsof labor per productivity output. Smallfarmers tend to maximize family andcommunity labor than source outsideof the community. Hence, lesser cost isrequired for capitalization.

Small farmers and fisherfolks haveextensive local knowledge of theirenvironment. While the effect of extremeweather events does not distinguishlarge and small scale farms, small holderfarmers have proven ways to adapttheir practices to slow onset changes

caused by a changing climate regime.Majority of the smallholder farmershave a diversified livelihood base builtaround local agriculture systems thatthe business sector can take into as apotential business prospect.

Small scale producers are usingremittances of their migrant relativesas investment leverage (in the form ofcapital) and insurance. It is estimatedthat about forty percent of overseasmigrants come from the rural areas; astudy have shown that farmers tendinvest the remittances to producehigh-value and, or specialized crops,adopt mechanized farming methods inrice production, or as a risk-scopingstrategy. Their migrant relatives canalso be potential market and a newconsumer base of companies productsoffshore.


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Oxfam and Unilevers analysis of the value chainssuggest that linking smallholders with well-functioning local or global markets ranging fromlocal street markets to formal global value chains plays a critical part in long-term strategies toreduce rural poverty and hunger52.

Agricultural investment is also consideredcrucial in eradicating hunger and creates a chainpositive effect to improvement of nutritionalstatus of consumer population. Accordingly,investment by farmers and the public sector inagriculture and supportive sectors can increasethe availability of food on the market and help

keep consumer prices low, making food moreaccessible to rural and urban consumers53.Lower price of staple food provide consumerswith diverse array of food to improve their dietsand thereby improves their nutrient uptake.Agricultural investments also reduce vulnerabilityto food price shocks.

Ag ric ul tur al inv es tme nt is als o c ons ide red cru cia l i n era dic at ing hunge r a nd cre at es a c hain of pos it ive eff ect s t o i mpr ove men tof nutritional status of consumer population.

Investing in small producers can spur localdevelopment. Within the locality, private sectorinvestments can provide smallholder farmerswith better options e.g. where to buy cheaperagricultural inputs, where to get cheaper loans orbetter credit service, where to sell produce inthe process promoting competition among otherprivate sector stakeholders in the community andlevelling the playing field for small producers toget better deals out of their investment.

Investing in women producers can improve livesof rural women. Investing in women producersby ensuring that they can overcome gender-

based constraints has shown improvement inproductivity and overall efficiency of supplychains. Increase income in the hands of womencan have rippling effect it translates intoimproved nutrition and educational outcomes,especially for girls54.

Realities that the current production system is already on the marginsof planetary boundaries should also propel private sector to act now, as

long-term consequences will harm their business prospects.


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Likewise, there is growing social andenvironmental pressure coming from bothproducers and consumers end for the businesssector to adopt sustainable sourcing policies forhealth, dwindling natural resources and climatechange consideration. The increasing trendamong consumers who are paying a premiumprice for organic food products and the presenceof national and international organic certifyingbodies can attest to this.

2. Invest in partnerships.

Chain-wide collaboration approach andinnovation guided by shared goals on developingsustainable commercial trading relationshipsand fair returns agreed by all actors 56 are keysto an effective private sector small producerspartnership. Along the supply chain, thereare different business models that have beendocumented to be inclusive of smallholderfarmers.

recognized human rights understood, at aminimum, as those expressed in the InternationalBill of Human Rights and the principles concerningfundamental rights set out in the InternationalLabour Organizations Declaration on FundamentalPrinciples and Rights at Work.

The responsibility to respect human rights requiresthat business enterprises: (a) Avoid causing orcontributing to adverse human rights impactsthrough their own activities, and address suchimpacts when they occur; (b) Seek to prevent ormitigate adverse human rights impacts that aredirectly linked to their operations, products orservices by their business relationships, even ifthey have not contributed to those impacts.

The responsibility of business enterprises torespect human rights applies to all enterprisesregardless of their size, sector, operationalcontext, ownership and structure. Nevertheless,the scale and complexity of the means throughwhich enterprises meet the responsibility may vary

according to these factors and with the severity ofthe enterprises adverse human rights impacts.

In order to meet their responsibility to respecthuman rights, business enterprises should have inplace policies and processes appropriate to theirsize and circumstances, including: (a) A policycommitment to meet their responsibility to respecthuman rights; (b) A human rights due diligenceprocess to identify, prevent, mitigate and accountfor how they address their impacts on humanrights; (c) Processes to enable the remediation ofany adverse human rights impacts they cause orwhich they contribute.

For operational principles, see page 16 onwardsof UNs Guiding Principles on Business and Human

Rights

Source: UN (2011). Guiding Principles onBusiness and Human Rights.

Box 4. The Corporate Responsibility to

Respect Human Rights as stated in the UN

Guiding Principles on Business and Human

Rights

Foundational Principles

Business enterprises should respect humanrights. This means that they should avoidinfringing on the human rights of others andshould address adverse human rights impactswith which they are involved.

The responsibility of business enterprises torespect human rights refers to internationally

HOW CAN THE

BUSINESSSECTORHELP SMALLPRODUCERS

GET BACK INTHE GAME?1. Do no harm.

Business practices must be guided with respectfor basic human rights of men and women smallproducers, agriculture laborers in their supplychain.

It is never too early or too late to correct unjustbusiness practice that harms or compromises

small producers and communities health andwell-being. In 2011, the UN outlines a set offoundational and operational principles onbusiness and human rights mandating businessenterprises, regardless of their size, sector andcontext to adhere to the principles of HumanRights (Box 4). Methodology and tools are alreadywell-developed to assist businesses respond tothe development needs of the poor in general andassess to the needs of women small producersin particular55. Policies should be reflectedoperationally and company standards that makesadherence to basic human rights principlesshould be established.


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Producer-driven models. Producer cooperativesand federations are small farmer or fisherorganizations that serve their members, whetherindividuals or organizations, in terms of buildingtheir political agency, improving their accessto information, increasing their collective

knowledge, skills and capacities, and, ultimately,their power in markets.

Box 5. What women producer organizations can

do: An example of producer-driven model.

Conchita Maasin or Nay Conching, leader of theall-women group, Agraryong Repormang Samahanng mga Kababaihan(ARSK) in Barangay Nangan,Governor Generoso, Davao Oriental, had in herassociations command some 65 hectares ofcocolands awarded thru CARP. ARSK can collect156,000 liters of mature coconut water per year.Nay Conching and her group saw the potential ofproducing thick gourmet sauce out of continuous

boiling of coconut water such that the associationstarted selling the soy sauce to their immediatecommunity. Such move enabled the members togenerate additional PhP 12,000 per hectare.

Source : COIR. (2012) A Small Farmer- CenteredApp roa ch to Su sta inabl e Coc onu t Indus tryDevelopment.

While there is a mixed record of successfulcooperatives in the country, organizing farmersinto smaller nucleus such as the clustering

strategy was found to be potential option oforganizing small producers into a viable unitwhere quality assurance and traceability ismore manageable. Clustering is a method oforganizing farmers into small groups of 5 to 15based in a particular area (sitio, barangay ortown)57. Clusters can be further aggregated intoproducers federation or cooperatives.

Box 6. Business example of sourcing from

producer groups.

Jollibee Foundation (JF), the corporate social

responsibility arm of Jollibee Foods Corporationwas able to source 70% of the onion harvestedby KALASAG Farmers Producers Cooperative, anorganization of two farmer clusters who have beengrowing onions in San Jose, Nueva Ecija.

The clustering initiative was part of the BridgingFarmers to the Jollibee Supply Chain project byCatholic Relief Services (CRS) Philippines, withJollibee Foundation and the National LivelihoodDevelopment Corporation that was started in 2008.

Buyer driven models. The business sector canseek efficiencies in organizing the supply fromsmall-scale farmers by directly sourcing fromsmall producers groups and in the process, doaway with traditional middlemen.

Buyers achieve efficiencies in the chain byintegrating backwards and coordinatingproduction. Contract farming is a familiar featureof buyer-driven business models, wherebybuyers link small producers to modern marketswhere capital, technology and market access arevisibly lacking. 58 Technology transfer has provento be very crucial in upgrading the productivecapacities of the small producers. Other privatesectors have also positioned themselves as aprovider of value added to small producers on topof the incomes that small producers earn fromtheir income products.

Experiences of buyer-driven models negativelyaffecting smallholders abound and they usually

relate with stringent norms and standardsrelating to quality and volume. Experience alsoshow that buyers tend to benefit more from thedeal than small producers and therefore it isparticularly important to provide a transparentmechanism for distributing gains59.

As alternative to leasehold agreements, apotential contract growing arrangement thatcan be mutually beneficial to both company andsmall producers is the growership arrangement.Growership arrangement, in contrast to traditionalcontract arrangements, does not loan outproduction inputs to farmers. The producers arepaid a predetermined growers free, all inputs

are provided by the contractor and all the producebeing contracted are collected at the end ofthe growing cycle. This arrangement effectivelyaddressing the issues of side-selling and theftfor the business sector, and at the same time,reduces risks of the farmer60.

Box 7. Business example of company investing in

technology.

Bote Central, Inc., a family owned corporation andmanufacturer of Coffee Alamid and 18 days, deployscommunity roasting business units (CBRUs). Thisenabled coffee farmers to add value to low gradecoffee beans unsuitable for the export market.

Small producers were able to have the option tosell their roasted coffee as brewed, grounded orroasted. In return, Bote Central was able to have asustainable supply of Grade A coffee beans.

Sources : SCOPE. Bote Central Online store. < http://www.arengga.com/index.php/Coffee-Alamid.mpc>


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Box 8. An example of g rowership arrangement

by an intermediary

Manok Mabuhay Incorporated, a social enterpriseinvolved in backyard/smallholder poultry enteredinto growership arrangement with Bounty FreshChicken, supplier of rotisserie Chooks to Go!Mabuhay Manok organized some 100 backyardfarmers on a growership arrangement of 1000poultry each in the municipalities of Laguna andCavite. Manok Mabuhay unloads inputs, technicaland logistical services at agreed intervals tofarmers and the farmers are paid a predeterminedgrowers fee.

In November 2011, its production areas in Lagunaand Batangas ranked 6th and 8th among the topcommercial growers of Bounty Fresh Chicken.

Sources : People Powered Market : Businessto Empower the Poor. < http://www.pinoyme.com/consortium/people-power-models-doing-business-with-the-poor.html> Lim, E. Jr (2012).Policy Paper on Regulating Large Scale AgriculturalLand Investments in the Philippines to ensure FoodSecurity, Land tenurial Rights and Livelihood ofResource Users. ARNow! Unpublished.

Intermediary-driven models. Cutting all thosestakeholders in the middle is not always a viableoption.

In some cases, intermediaries provide specializedservices. This is especially true in situations

where the producers are too dispersed or are toofar out from the markets such that integratingforward (for producers) or backwards (for buyers)could be cumbersome and expensive.

There has been an emergence of doubly-specialized intermediaries intermediariesthat are business oriented and development-motivated at the same time61. Such a businessmodel has been particularly instructive in thecase of poultry farmers, where the producers canbe characterized as dense, dispersed, small andautonomous.

3. Instill Fair and transparent governance

Ensuring transparency in the supply chain

is a start towards fair investments. Ideally,contracts with small producers groups shouldbe properly explained and should be mutuallyagreed in a layman and localized language thatsmall producers can well understand. Allowinga mutually trusted third party to scrutinizethe contents of the contract can be mutuallybeneficial in a manner that conflicts can beavoided.

Setting a grievance system in place and a formalor informal dispute resolution mechanism areindicative of fair governance.

GOVERNMENTSROLE ISCRITICALIn the face of resource constraints, thegovernment is faced with tough choices. Itspriority should include skills development of

small producers such as technical and managerialcapacities, providing market linkages for goodsand services, brokering and effective allianceswith other chain actors and building an effectiveenabling environment.

Enabling policy for both small producers andprivate sector to thrive

There has always been uncertainty within thepublic sector on how best to connect with smallproducers. The default response has invariably tomake the small producers as the sole targets ofpublic policy rather than ensuring that the valuechain works efficiently and inclusively.

The primary role of the government in marketsshould be to provide opportunities, promote fairplay, setting a framework for competitive marketsand ensuring a level playing field betweendomestic and imported products62.

For majority of small food producers tosuccessfully get back into the game, crucialpolicies that would secure their productiveassets are needed. Examples of policies include:

Comprehensive land use policy and assetreforms specifically in land tenure. The formerwould rely heavily on the enactment of anational land use law to set aside and secure

strategic agricultural areas while the latterwould be dependent on achieving nationalgovernment targets in land distributioncurrently at 250,000 hectares annuallyfrom 2011 to 2014. Attaining these reformswould strengthen the position of small foodproducers in relation to other actors in thevalue chain such as traders, processors,financiers and large agribusiness firms.It will also give them more leverage vis--vis large agricultural investors who arepoised to enter local agriculture. However,while these conditions are necessary, theyare not sufficient for small food producers


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to integrate vertically with national andinternational value chains.

A national competition policy is needed forbusiness players to be able to compete on amore level playing field, rather than crowd outthe supply chain. More business players willfoster innovation in business models and inthe process, generate more options for smallproducers.

Onerous contract growing contracts havemarred the relationship between buyers,intermediaries and small producers. Theestablishment of a mechanism on mediatingon issues related to contract laws,contractual enforcement and taxation is alsoneeded.

Creating an enabling environment for theprivate sector to invest in risk transfer andrisk sharing instruments such as insurance

can be done by providing necessaryinformation for development of appropriateand risk-specific insurance packages, reviewof taxation rates for microinsurance providersor facilitating financial literacy among smallproducers.

Public sector investments needed

Before small producers can be verticallyintegrated into the supply chain, a horizontalintegration for those who have land but does notproduce beyond subsistence or who do not haveland at all is needed.

Priority for these small producers would behorizontal integration starting with facilitatingthe development of producer organizations andcooperatives for collective action that can pushfor and benefit from the other requisites for suchintegration such as infrastructure for agriculturaldevelopment (i.e. farm to market roads, post-

harvest and processing facilities, and enhancedirrigation; financing and credit mechanismsthat are friendly to small food producers; andresearch, development and extension services).Such requisites would be publicly provided, atleast initially, given that these are mainly public

goods although there can be specific instanceswhere public-private partnerships may beappropriate and effective.

CONCLUDINGNOTESFor millions of small producers in the Philippines,agriculture has become a perpetual poverty

trap rather than the ladder of prosperity that itought to be. Ironically, agribusiness ventureshave shown remarkable resiliencegrowing evenduring periods of economic downturns. As thispaper showed, the growth on the part of theprivate sector cannot be sustained indefinitelyfor as long as the rural communities continue tobe left behind.

The small producers need to get back in thegame. Fast. The stakes are simply too highand the price too steep to ignoredomesticfood and income security, poverty in thecountryside and its attendant social issues, andthe sustainability of economic growth of theagribusiness sector itself. Fortunately, there

are emerging trends for private sector-smallproducer partnerships that bring about mutuallybeneficial returns. The government must ensurethat there is an enabling environmentthe rulesare fair and the systems are in placewithinwhich these partnerships could thrive.


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NOTES1 The story of tomato farmers in Liliw,

Laguna was featured in a GMA News articleon 5 May 2011. See video in: http://www.gmanews.tv/video/79160/24oras-exclusive-kamatis-binibili-lang-daw-sa-mga-magsasaka-ng-p1kilo

2 FAO, the State of Food and Agriculture2010-2011. Women in Agriculture: Closingthe Gender Gap for Development (Rome:FAO, 2010), p. 92.

3 Digal, L. (2001) An Analysis of theStructure of the Philippine RetailFood Industry Philippine Journal ofDevelopment Number 51, Volume XXVIII, No.1, First Semester 2001

4 Minot N. and D. Roy (2007) Impact of high-value agriculture and modern marketingchannels on poverty: An analyticalframework, International Food PolicyResearch Institute, Washington, D.C.

5 Murray-Prior R., S. Concepcion, P. Batt,M.F. Rola-Rubzen, M. McGregor, E. Rasco,L. Digal, N. Manalili. Montiflor, L. Hualda,and, L. Migalbin (2003) Analyzing supplychains with pluralistic agribusinesssystems. Asian Journal of Agriculture andDevelopment, Vol. 1, No. 2.

6 Digal, L. (2001) An Analysis of theStructure of the Philippine RetailFood Industry Philippine Journal ofDevelopment Number 51, Volume XXVIII,No. 1

7 Gulati A., N. Minot , C. Delgado, and S. Bora(2006) Growth in high-value agriculturein Asia and the emergence of verticallinks with farmers, in Swinnen, J. (ed.)Global supply chains, standards, and poorfarmers. London: CABI Press. (page 15)

8 The values for the growth of supermarketsfrom 1994-2001 and the retail food saleswere taken from: Digal L and ConcepcionS. (2004) Regoverning Markets: Securingsmall holder producer participation inrestructured national and agri-foodsystem, The case of The PhilippinesInternational Institute for Environmentand Development. Accessed from www.regoverningmarkets.org, February 15,2005; while, the 2007 figures were taken

from Macabasco D. (2007) The SupemarketBusiness in the Philippines, Center forFood and Agri Business University of Asiaand the Pacific.

9 Peso conversion rate used is the 2011

average rate at PhP 43.31. Figurestaken from Euromonitor, 2011 as citedby Agriculture and Agri Food CanadaInternational Markets Bureau (2012).Market Analysis Report on ModernGrocery Retailing in Major ASEAN markets.

10 Agriculture and Agri Food CanadaInternational Markets Bureau (2012).Market Analysis Report on ModernGrocery Retailing in Major ASEAN markets.

11 Wiggerthale M. (2007). S upermarketexpansion in the Southa threat to smallfarmers?

12 The OECD defines private sector as allservice and funding providers outside theformal government sector, including for-profit private entities, foundations, non-governmental organisations, voluntarycontributions and private academia. See:OECD, Poverty and Health, 2003, p.43.

OECD also ascribes the definition of allprivate actors to cover the poor andthe rich, individuals and businesses engaged in risk taking to earn profits andincomes including the smallholder farmeras well as the very large, multinationalcorporation. See: OECD, Accelerating Pro-Poor Growth through Support for PrivateSector Development, 2004, p.18.

13 See: NAFC website, Message from theExecutive Director. Accessed fromhttp://nafc.da.gov.ph/message.html on10 October 2011.

14 National Economic and DevelopmentAuthority (NEDA) (2011). PhilippineDevelopment Plan 2011-2016, p. 104.Accessed from < http://www.neda.gov.ph/PDP/2011-2016/CHAPTER%204.pdf>

15 FAO (2011). 2010 2011 The State of Foodand Agriculture: Women in Agriculture. UNFAO, Rome, Italy.

16 Ibid.


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17 NSCB (2012). Fishermen still thepoorest sector in 2009. NSCB PressRelease. Posted June 7, 2012. Accessedfrom < http://www.nscb.gov.ph/pressreleases/2012/PR-201206-SS2-01_pov2009.asp>.

18 Estimate based on the National StatisticsCoordination Board (NSCB) at a lower1.46% growth rate. See

19 Small producers specifically referred tosmall farmers, fisherfolk, particularlythe women involved in the production,processing and trading of agriculture andfisheries products as specified underChapter 3, Section 20 of RA 8435.

20 Section 3 of Presidential Decree No 717.,

Providing An Agrarian Reform Credit andFinancing System for Agrarian ReformBeneficiaries through Banking Institutionsmandates all banking institutions,whether government or private, to setaside at least 25% of their loanable dundsfor agriculture credit in general, of whichat least 10% of the loanable funds shallbe made available for agrarian reformcredit to beneficiearies... PD717.

21 Quedancors Corporate Plan 2011-2015

22 Alave, K. Philippine Banks Fail to Provide

Adequate Credit to Agriculture andFisheries

23 LLanto, G. (2005) Rural Finance in thePhilippines: Issues and Policy Challenges.Agriculture Credit and Policy Council.

24 Habito, Cielito. No Free Lunch: Do FarmersHave to be Poor? Philippine Daily Inquirer.Published February 1, 2011. Accessedfrom http://opinion.inquirer.net/

inquireropinion/columns/view/20110201-317729/Do-farmers-have-to-be-poor.

25 www.bas.gov.ph.

26 This situation is also called monopsony.

27 This situation is also referred asoligopsony.

28 Habito, Cielito. No Free Lunch: Do Farmers

Have to be Poor? Philippine Daily Inquirer.Published February 1, 2011. Accessedfrom http://opinion.inquirer.net/inquireropinion/columns/view/20110201-317729/Do-farmers-have-to-be-poor.

29 Bernabe M. D. and S. Quinsaat (2009)Philippine Agriculture under the WorldTrade Organization, 1995-2005: Gains,Losses, and Prospects. Kasarinlan:Philippine Journal of Third World Studies2009 24 (1-2): 4-34

30 Garcia Z ( ) Impact of agricultural trade ongender equity and rural womens positionin developing countries

31 Alave, Kristine (January 31, 2012).Dont belittle GG: Its now imported.Philippine Daily Inquirer. January 31, 2012.

Accessed from .

32 Cristina C. David (1995) PhilippineAgricultural Research and Development:Issues and Policy Implications PhilippineInstitute for Development Studies,Discussion Paper Series No. 95-27. (page 4)

33 T. Reardon, S. Henson and J. Berdegue(2007). Proactive fast-tracking diffusionof supermarkets in developing countries:implications for market institutions andtrade. Journal of Economic Geography 7

pp. 399431.

34 NEDA (2011). Op cit.

35 Philippines. Typhoons Ondoy and Pepeng:A Post-Disaster Needs Assessment, Vol.1, 26 November 2009 a report on thePDNA that was jointly undertaken bythe Government of the Republic of thePhilippines, representatives of the privatesector and civil society organizations,multilateral development partners (theAsian Development Bank, EuropeanCommission, United Nations, and the

World Bank Group, in the context of theirglobal cooperation agreements) andbilateral development partners includingAusAID, CIDA, GTZ, JICA, Royal NetherlandsGovernment, and USAID. The 1.1 percentGDP growth was taken from http://www.indexmundi.com/philippines/gdp_real_growth_rate.html

36 UN OCHA (2012). Philippines (Mindanao)Humanitarian Action Plan 2013 TyphoonBopha/ Pablo Response Action Plan for


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Recover. Revised January 2013. Accessedfrom

37 S. Peng and others, Rice yields decline

with higher night temperature from globalwarming. PNAS, Vol. 101, No. 27, July 26,2004. www.pnas.org/cgi/doi/10.1703/pnas.0403720101.

38 In absence of a more updated data,figure was taken from the reported7,397, 318 hectares of land distributedby Department of Agrarian Reform andDepartment of Environment and NaturalResources from 1987- 2010 (http://www.dar.gov.ph/index.php?option=com_content&view=article&id=92&Itemid=161).Total agriculture area was pegged at 9.671

million hectares (http://countrystat.bas.gov.ph/?cont=3).

39 Lim, E. Jr (2012). Policy Paper onRegulating Large Scale AgriculturalLand Investments in the Philippinesto ensure Food Security, Land tenurialRights and Livelihood of Resource Users.Unpublished. AR Now! , Quezon City.

40 Bernabe (2010) as quoted in Lim (2012).

41 Vorley, B, L.Cotula, C Man-Kwun (2012).Tipping the Balance: Policies to ShapeAgriculture Investments and Markets in

Favour of Small Farmers. IIED and Oxfam.London.

42 Otsuka K. and J. Estudillo (2008) Reducingpoverty and hunger in Asia: ChangingSources of Household Income and PovertyReduction in Rural Asia, 19852004Food and Agriculture Organization (FAO).Accessed in: http://www.ifpri.org/sites/default/files/pubs/2020/focus/focus15/focus15_08.pdf

43 Vorley, B, MLundy and JMacGregor (2008).Business models that are inclusive ofsmall farmers. Accessed from http://pubs.iied.org/pdfs/G02340.pdf.

44 Vorley B and F.Proctor (2008) InclusiveBusiness in Agrifood Markets: Evidenceand Action A report based on proceedingsof an international conference held inBeijing March 56, 2008

45 Gaiha, R. and Thapa G. (2007)Supermarkets, smallholders andlivelihood prospects in selected Asiancountries, International Fund for

Agricultural Development (IFAD)

46 Oxfam (2010). Think Big Go Small Adapting business models to incorporatesmallholders into supply chains. Briefingsfor Business No. 6. May 2010. Accessed

from http://www.oxfam.org.uk/business.47 Vorley B., MLundy and JMacGregor. Op Cit.

48 45% of the women respondents in thePhilippines strongly disagree while 30%articulated that they tend to disagree thatthey are not concerned how their food isproduced.

49 46% of the women respondents in thePhilippines strongly disagree while 28%mentioned that they tend to disagree thatthey are not concerned about where their

food is produced.

50 Oxfam International (2012). The FoodTransformation: Harnessing ConsumerPower to Create a Fair Food Future. July2012. Accessed from http://policy-practice.oxfam.org.uk/publications/the-food-transformation-harnessing-consumer-power-to-create-a-fair-food-future-234411.

51 World Bank (2008). Agriculture forPolicy Development Brief : Agricultureand Poverty Reduction. WorldDevelopment Report 2008. Accessedfrom http://siteresources.worldbank.org/SOUTHASIAEXT/Resources/223546-1171488994713/3455847-1192738003272/Brief_AgPovRedctn_web.pdf.

52 Oxfam (2010). Think Big Go Small Adapting business models to incorporatesmallholders into supply chains. Briefingsfor Business No. 6. May 2010. Accessedfrom http://www.oxfam.org.uk/business.

53 Alsons (2000) as cited in UN FAO (2012).2012 The State of Food and Agriculture

: Investing in Agriculture for A BetterFuture. Rome.

54 J Hoddinot and L Haddad (1995) as citedby Oxfam Oxfam (2010). Think Big GoSmall Adapting business models toincorporate smallholders into supplychains. Briefings for Business No. 6. May2010. Accessed from http://www.oxfam.org.uk/business.

55 Oxfam for example has developedPoverty Footprint Methodology Poverty


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Footprint for companies to assess andunderstand their effects on society andon people living in poverty. See Oxfam(2009) Briefings for Business No.4 : OxfamPoverty Footprint Understanding BusinessContribution to Development. http://

www.oxfam.org.uk/busine ss. On How toenable business tackle gender inequality,See Oxfam (2012) Briefing for BusinessNo. 7. Gender Equality: Its your Businesson how to enable business tackle genderinequality.< http://www.oxfam.org.uk/business. >

56 Oxfam (2010). Op Cit.

57 A Mariano, J Uy, L Mendoza, PT TuasonIII, O Cuyco, V Torres, G Tiongson. FarmerEntrepreneurship Program: The Experienceof Small Farmer Clusters in Nueva Ecija,

Philippines.

58 Vorley B, M Lundy and J MacGregor (2008).Op Cit.

59 Ibid.

60 Lim, E. (2012). Op cit.

61 Vorley B., M Lundy and J MacGregor (2008).Op cit.

62 Vorley and Procter. Op Cit. page 24.


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This publication was printed using 100% recycled paper and soya-based printing ink.

Oxfam is an international confederation of 17 organisations networked together inmore than 94 countries, as part of a global movement for change, to build a futurefree from the injustice of poverty. In the Philippines, we work with poor peopleto sustain their livelihoods, and reduce their risks to natural and human-madedisasters. We strive to enable poor people to have a voice in economic issuesaffecting them and we support poor women as they lead in transforming unequalsocial and economic relations.

4F 150 Corporate Center,150 Panay Avenue, Quezon City, PhilippinesTelephone: +63(2) 9294470Fax: +63(2) 9270499Website: http://www.oxfamblogs.org/philippines

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