Hand-Holding Rural Farm Communities towards Development
A New Institutional Template
The average Filipino small hold farmer tills roughly one hectare of land, more or less, is unable to access low cost finance for inputs, has limited links to the commodity value chain and vast retail markets, has little access to better seeds and fertilizer inputs and is still stuck in 19th century farming practices inherited from prior generations. Poor farmers generally borrow from high interest micro-finance sources or are forced to pre-sell the expected harvests to commodities traders under highly iniquitous arrangements. The agriculture sector, which employs one third of the country’s labor force, has very low productivity – resulting in inadequate rural incomes and a vicious circle that has kept over twenty five million Filipinos in chronic poverty and bouts with hunger.
The prevailing model of (government as well as non-state) assistance to farmers is generally limited to giving farm credit and farm inputs (seeds, fertilizer and livestock), and some extension support, if any. The model assumes that the farmers are already well-versed in the art of farm business management – which is not the case for most small-hold farmers in many countries, including the Philippines. The situation in most rural communities calls for sustained presence of institutionalized support and there is need to re-engineer the way every rural farm community works. The proposed solution revolves around the establishment of an institutional platform that will address the identified gaps, provide the needed interventions (technical, financial, or otherwise), and interact with partner farming communities on their socio-economic concerns to help them leverage their assets and resources.
For instance, access to markets depends on sustained supply of goods that meet buyer expectations. But this would require the use of technologies and better inputs that would, in turn, need consistent good production practices and good handling of the produce. Without external support, most rural farm communities are unable to sources of financing and link to the markets that they actually serve. They become price takers and unable to capture much of the value-added from their own produce. There is need for an institutional group that has in its DNA the ideals of fairness and inclusivity, the will to raise rural productivity and incomes of poor farmers, and to put together knowledge of best practices in agriculture, community development, and lifelong learning
in order to give rural communities a fairer shake in building for themselves a more prosperous future.
The idea of a Community Agriculture Management Company (CAMC) is to provide the institutional platform that will ignite the process of modernizing the rural farm economy at the village or municipal level. The CAMC’s mandate is to institute a profit-based based model in transforming village communities by taking part in rural production systems, establishing contractual partnerships that are more socially equitable compared to their traditional economic relations (i.e. away from commodities traders or "compradors"), and introducing newer technologies to the farmer-partners by way of required meetings and learning sessions. The CAMC intends to address these gaps by organizing farmers into managed enterprise groups for contract farming and by engaging itself in the business of:
- Agricultural inputs (seeds, fertilizers and pesticides, animal feeds, and other crop requirements) for reasonable mark ups that will support the CAMC team
- Coordination of farm credit and financing (standard professional fees of 2% of amount mobilized for the acquisition of farm inputs, post-harvest facilities, and for regular food budgets for the farmers’ families)
- Training and capability building (to update farmer’s technical know-how; teach financial literacy and entrepreneurial values, and general education through alternative learning platforms)
- Contract growing and contract cropping with moderated and calendared farm activities and processes to ensure the quality of produce.
- Coordination of farm logistics and transport of farm produce, including post-harvest processing and packaging
- Marketing of agricultural products produced by the partner communities
- Participation fees in the potential use of Information Technology and “block chain” platforms in managing the farmer’s access to their family budget funds and intra-community transactions
The proponent envisions a professionally managed entity that will hire graduates in the agriculture, social development and business disciplines. The CAMC shall usher in multi-pronged partnerships with farm communities that would span the production cycles, the agricultural value chain and the life-long learning activities of partner-farmers groups and the community values and attitudes.
Initially, it shall engage the communities through familiar entry-points such as provision of inputs and financial assistance – with the same contracting models used by the commodities traders, but with better terms for the farmers, such as: (a) lower cost of credit for farm inputs, (b) market-linked prices for their harvests, and (c) a regular food budget for the farmers’ families in between cropping periods.
Farmers shall be required to co-produce in groups of contiguous farms with synchronized farm activities based on group production plans. They will be asked to attend regular meetings and learning sessions in farm technologies, financial literacy, and marketing. With a CAMC to provide digital devices, communications and learning can be further enhanced within the community. The CAMC shall also arrange for crop and accident insurance cover for the partner farmer groups.
The traditional crops and agriculture products are mostly profitable – even from an investment analysts’ point of view. Improvements in farm techniques and choice of varieties and inputs will definitely bring in higher returns for the farmers. The Solution will help small hold farmer-partners in capturing more of the value-added from their own produce.
Still, the CAMC’s more important mission is to further build the sense of community and to strengthen community values as the recurring themes in the governance of the whole system. The proponent envisions that the farmers will gradually buy into co-ownership of the AMC in order to allow its expansion to cover other communities.