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The role of big-brother companies in MSME and agri development


I and the big-brother companies of Kapatid Angat Lahat sa Agri Program (KALAP) had a very productive meeting with Department of Agrarian Reform (DAR) Sec. Conrado Estrella III last week, the third in the span of two to three months. We were there to discuss the details of how economies of scale can be achieved through block, or cluster, farming and how we could apply the lessons gleaned from successful models implemented by the private sector in crucial commodity crops. As always, every meeting with him is quite productive.


I can see why President Ferdinand Marcos Jr. put his faith in this man. Sec. Estrella was mentored well by his grandfather, Conrado F. Estrella Sr., the agrarian reform secretary under president Ferdinand Edralin Marcos. The elder Estrella was also the governor of the Land Authority, the predecessor of the Ministry of Agrarian Reform, which was later renamed as Department of Agrarian Reform. He tells us that he practically grew up around the agrarian reform offices and would listen to his lolo talk about agriculture in the Philippines. In short, he was being mentored even before he knew he would one day be filling his grandfather’s shoes.


What makes us optimistic is that we have people in government like Sec. Estrella, who knows the issues of land reform like the back of his hand. He tells us, for example, that the concept of aiming for economies of scale had long before occurred to his grandfather and the former president. They knew enough to focus land reform on rice and corn, which not only required economies of scale but also had elements of social justice in them, a crucial factor in fighting the communist insurgency. In the years that followed, this vision was lost, and this created many problems that the secretary himself is humble enough to say will take years to undo.


I view agriculture as a key component of jobs generation (my task as lead of the Jobs Cluster of the Private Sector Advisory Council) and entrepreneurship as a way to alleviate poverty (my advocacy in Go Negosyo). I believe we must go where we are most needed.


The Philippine Statistics Authority’s latest reports as of June 2023 show that the country’s unemployment rate has declined, with the accommodation and food services sector leading the charge and accounting for more than half of the share of the increase. The agriculture and forestry sector accounts for only a quarter of this increase, and the number of workers in the sector has continuously declined over the years. The World Bank reports that agriculture as a percentage of employment in the Philippines has dropped over the last 30 years: from 45 percent in 1991, to 24 percent in 2021. Our farms are slowly being emptied of workers at a time when our country’s food security is increasingly being threatened by climate change and global supply chain disruptions.


Our own big-brother companies in KALAP report that it is now common for Filipino farmers to work two to three jobs, a situation that indicates that they are in survival mode – not exactly the ideal situation for dreaming about farm productivity.


This is why I believe the private sector – our big-brother companies – will play a bigger role in growing our economy in the near future. This is especially true in MSME and agriculture. Over the last 18 years that Go Negosyo has promoted entrepreneurship in the Philippines, we know that big-brother companies are instrumental in scaling up the country’s MSMEs. We know that the big-brother model works; the brisk activity and job growth in the retail, services and industry sectors – where big-brother relationships are long established – are proof of this. It is inherent in big companies to integrate smaller companies in their value chain; it makes sense for them. When the small companies within the value chain grow, the whole becomes stronger and the business becomes more sustainable.


Such a big-brother relationship will be most needed in the agriculture sector, where it can provide not just technology, but also the professional and organizational skills to effectively manage farms, as well as the legal know-how to help farmers address various tenurial and documentary issues that continue to hinder progress in the sector. Land fragmentation is making it difficult to achieve scale; land titling issues must be addressed in order for the private sector to come in and be confident enough to invest.


Right now, we see that we need economies of scale to achieve productivity and achieve volume and quality in our agri products. We keep hearing this over and over during our meetings, and we must continue repeating because it is worth repeating.


Growing the agri sector will bring tremendous gains in terms of reducing poverty and generating jobs, especially in the countryside. Poverty in the Philippines is most deeply felt in the agri sector, but at the same time, there are so many opportunities here for growth. We want our farmers to become wealthy and we believe it is possible.


We already know that block or cluster farming is the way forward. We must now work on how we will get there, and for this, the country will need more big-brother companies to participate. We now have more than 30 big-brother companies in KALAP, and there is room for more.



Source: Go Negosyo - www.philstar.com

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