FAITH, HOIPE & CHARITY: Agricultural modernization

BY IKE SEÑERES

IN the education sector, the perennial mantra referring to the shortage of resources is the lack of “classrooms, textbooks and teachers.”

In the agricultural sector, the perennial mantra is the lack of “irrigation, farm-to-market roads and post-harvest facilities.”

Now that the World Bank (WB) has extended a massive loan to the Philippine government to once and for all solve these shortages in the agricultural sector, could we now say that these three problems will be gone for good?

I would rather not answer that question, because I do not agree that these three are our real problems.

Of these three problems, only irrigation is directly related to production efficiency, and that is where I will start with my counter argument.

To have efficient production, it is necessary to have good economies of scale and good farm management.

To have good economies of scale, the land areas of the farms have to be big enough to be able to recover the costs of farm inputs such as machineries, seeds, fertilizers and pesticides.

If the farms are too small in terms of land areas, there is a need to consolidate these small farms into bigger farms, and that is the first hurdle that is difficult to overcome.

The second hurdle is dependent on the first, because good farm management would not be worth it if the farm areas are too small. This is not a “chicken and the egg” situation, because it is very clear that the farm consolidation has to come first, before the farm management.

In theory, a fully consolidated large farm that is well managed should be able to earn enough money to be able to build its own farm-to-market roads and put up its own post-harvest facilities.

The key is still consolidation and management, because if these two factors are present, the farms should be able to attract large investors or take out large loans, as the case may be.

If farm consolidation is the first thing that should be done, how could it be done? The most practical move that could be done is to organize these small farm owners into a cooperative, because that is one way to consolidate their farm areas. If they could not form a cooperative, they could all sign up to become individual clients of a farm management service provider, and that is another way of consolidation.

In order to validate my argument that irrigation is not the be-all and end-all solution to the problem of good farm productivity, just check out the production records of irrigated farms.

No matter how good the irrigation is, it is not likely that the production would be good if the management is not good. At the risk of sounding redundant, I would again add that without good consolidation, there would also be no good production, even if there is good management, because the scale of production would not be big enough if the farms are too small.

This is the reason why I say that there was a fundamental error made in our land reform program, because the parcels of land were chopped up to areas that were too small to achieve the needed economies of scale.

Does farm modernization mean only mechanization? I hope not, because there is more to modernization than just mechanization. In these present days, modernization should include computerization, and the outcome of that should be automation.

Is it really possible to computerize and automate the processes of farm production?

The answer is yes, and that should also include all the other processes of the farm business such as planting, harvesting, sorting, washing, processing, manufacturing, storage, inventory, finance, human resources and marketing.

The answer is yes, because it has been done before in many other countries, and in many businesses that are usually called corporate farms. By the way, even the cooperatives could be managed and operated just like the corporations. The hybrid name for that is “corporative”, but there is also nothing that prevents individual farm owners to form corporations instead of cooperatives, for the purpose of consolidating their land holdings.

It goes without saying that these prospective corporate farms will eventually have their offices and factories other than their farmlands. By design, their offices could already have Enterprise Resource Planning (ERP) systems that will run in their own Local Area Networks (LANs) using Personal Computers (PCs) that will be functioning as workstations. These ERP systems should include the sub-systems for storage, inventory, finance, human resources and marketing.

One way or the other however, these ERP systems should also interface with their Programmable Logic Controllers (PLCs), the more robust computerized system that will run their farmland and factory operations that will include planting, harvesting, sorting, washing, processing and manufacturing. Technically, PLCs could also be considered as computers, but these are intended for heavy duty farmland and factory operations, unlike the High Performance Computers (HPCs) that are used more for research.

Going beyond the corporate farms, the ERP systems should also interface with the outside world via the internet. Needless to say, the ERP systems should be able to support their electronic commerce systems, mainly for Business to Business (B2B) and Business to Consumer (B2C) purposes.

Through these B2B and B2C systems, the corporations will be able to sell not only to customers in the Philippines, but also to the whole world. Although these ideas might sound too futuristic, these technologies and systems are already here. There are already many local companies that could provide ERP, PLC, B2B and B2C services and technical supports.

It is said that mankind has already gone through three stages of its history, namely the agricultural age, the industrial age and the information age. Sad to say, we have not done too well in the agricultural age, and we seem to have skipped the industrial age.

We might be making headway in the information age, but we better hurry up, because it is also said that mankind is now fast jumping into the transformation age. As I see it however, we could still combine the best of the three stages in a modernized corporate farm that would have automated farmland, factory and office systems.

The farmlands represent the agricultural age, the factories represent the industrial age, and the offices represent the information age. What is next in the transformation age? (Email bantaygobyerno- [email protected] or text +639369198429)/PN