Using your coconut. Learning from FAO, learning from ICRISAT

MANILA: How do we handle the PhP 100 billion from the coco levy fund of the Martial Law years with so many people wanting to lay their hands on the treasure? First, let us humble ourselves, pray and turn from our dreadful ways.

Next, let us learn how the FAO handles funds for poor farmers in the drylands of Africa, and learn how ICRISAT & Partners helps the poor farmers rise from poverty in the drylands of India. The idea from FAO is relatively old; the one from India is recent. We should relate to them both in a new, creative way.

Combining the concepts, I'll call the strategy Inventory Inclusive (In2). In2, I say, will turn that PhP 100 billion coco levy into 100 billion opportunities for all farmers to rise from poverty.

I must differentiate: "Rising income" is not the same as "Rising from poverty." I say to raise income is too modest that it is immodest!

"The key is farmer income," says Rolando Dy, Director of the Center for Food & Agribusiness at the University of Asia & the Pacific in a paper, and eminent economist Bernardo Villegas concurs (06 September 2013, "Rescuing coconut farmers from poverty," Manila Bulletin, 06 September 2013, mb.com.ph).

No Sirs! Since at least Miracle Rice in the late 1960s, we have always raised the farmer's income, but it does not stay up. Because of usurers, since the poor farmer borrows cash to meet his field and family needs. And because of unscrupulous merchants of farm supplies and produce, who are the deadlier of the species. It's the system, stupe!

It's time we visited the Food & Agriculture Organization (FAO) in Burkina Faso, Mali and Niger; it's time economists and non-economists learn more about inventory credit - the first I in In2.

It's time we visited the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) in India. It's time economists and non-economists learn more about what ICRISAT & Partners invented, what they refer to as inclusive market-oriented development - the second I in In2.

Inventory credit (or warrantage) works like this:

This is what I wrote 5 years ago yet (04 December 2008, "Science's 4-Way Test. If it tests good, I must be in the drylands," iCRiSAT Watch, blogspot.com):

Under warrantage, the farm produce has a double purpose: as collateral and as savings. The farmers are required to store part of their harvest as collateral for a loan from a community bank. The grains stored are sold later in the year when prices are higher, to pay off the loan and buy inputs for the next cropping season. And the wheel of prosperity continues to turn for everyone.
With inventory credit, at harvest time, with part of his harvest the farmer can loan from a bank to tide over the endtime of rural scarcity (the Ilocano gawat), Otherwise, in this time of need, the farmer will want to sell 100% of his harvest to raise money; without inventory credit, the farmer will sell his harvest to the bid that is highest, which is of course only that high.

Under inventory credit, the part of the farmer's produce that is deposited with the community bank is sold much later when the price is much higher - since the farmer still owns that part of his harvest, he gets the price difference and, at the very least, is able to pay off his loan and buy inputs for the next crop.

Under inventory credit, you eliminate both the usurer and the unscrupulous trader! Easily. To borrow from Frank Sinatra, "Nice work if you can get it, and you can get it if you try."

Inclusive market-oriented development (or IMOD) works like this:

I have been writing about the ICRISAT & Partners strategy called IMOD in the last 3 years, with 71 essays already mentioning IMOD, the very first one being "ICRISAT calls for public-private-people partnerships" (12 August 2010, iCRiSAT Watch, blogspot.com), the 2 latest being "Coco Billions. 0 trader & exporter, 100 coops & 1 lesson from Shakespeare," (09 September 2013, iCRiSAT Watch, blogspot.com) and "IMODest Proposal. A Coop Revolution for millions of poor farmers" (28 September 2013, iCRiSAT Watch, blogspot.com). That lavish attention I have given and am giving to inclusive market-oriented development only shows that I consider it a method of R&D that has wide-ranging applications, now inclusive of those billions in coco levy funds that everybody wants to get their hands on.

To the uninitiated, IMOD can be explained and described as follows:

(1) Inclusive. Inclusive of the poor.

(2) Market-Oriented. Inclusive of production, postharvest handling, processing, distribution, marketing and export of farm produce and products. In the ICRISAT model, the farmers are the middlemen themselves, through their association, in our case, through the coop.

(3) Development. Inclusive of all farmers continuing to rise from poverty in a sustainable manner. They can access affordable credit at any time; their produce are handled and warehoused economically in their behalf; and they receive benefits throughout the value chain as their In2 coop is the middleman for them.

The point of all that is sustainable income along with sustainable rise from poverty. Short of that is short.

As a side remark, I will mention here that the concept of "inclusive growth" as expounded by the National Economic & Development Authority (NEDA) in its 2011-2016 National Development Plan may be said to be too inclusive - it includes the poor but it also includes the middleman as doing the marketing for the produce of the poor. (You might also want to see my essay "Inclusive NEDA," 12 September 2012, manilatimes.net.) NEDA's inclusive growth is the old economic arrangement that has worked excellently - in favor of the non-poor and in disfavor of the poor. I'm surprised because President Noynoy Aquino is Chair of the NEDA Board and everybody knows Noynoy is pro-poor. Unless your thinking is poor, you know that the middleman is the rich one who gets richer while the poor farmer gets poorer.

In contrast, under inclusive market-oriented development, the farmer members of the In2 coop enjoy all the benefits of a coop member, including all the benefits accruing from the value chain.

So, let's create In2 Coops that practice inventory credit and subscribe to inclusive market-oriented development.

Now, how do the billions of pesos of coco levy enter into the picture?

Like this: There are 143 cities and 1,491 municipalities in the Philippines, for a total of 1,634; if you have 10 In2-qualified cooperatives in each, you have 16,340 In2 coops; if you allocate as working capital PhP 50 million to each In2 coop, that's a total of PhP 81.7 billion.

The rest of the PhP 100/150 billion could be used to strengthen the Cooperatives Development Authority and maybe turn it into a Department of Cooperatives.

And like this: Adopting the In2 concept, with new In2 cooperatives that we create, and with old coops that we recreate into In2 models, let us turn coconut farmers into regular farmers, not Juan Tamads waiting for their nuts to fall; let us turn them into multiple croppers planting cash crops like rice, corn and vegetables, and perennials like fruit trees, in between the coconuts.

That's using our coconut. With In2 coops, you raise not only the farmer's income but also realize its continuing rise. You might want to look at it in the economic sense: In2 is increasing income at an increasing rate. Only then will farmers rise from poverty into prosperity and stay up there!