Carlo's Think Pieces

Reflections of a Filipino in the Netherlands

Raising Farmer Incomes through Farm Machinery

Posted by butalidnl on 6 August 2014

It sounds simple: provide farmers with machines that will increase their yields, and their incomes will rise, lifting them out of poverty. Unfortunately,  it is a bit more complicated than that. There are several reasons why the Philippine government and most NGOs are reluctant to provide farmers with large-scale farm machinery.

One problem, it seems, is that it is difficult for farmers to properly manage high-capacity machines. High-capacity machines like tractors require a high level of organizational efficiency and discipline. Since a tractor could plow large swaths of land (up to 300 hectares), there would inevitably be a mad scramble for its services; and cooperatives could not service all requests.  Ensuring that qualified people operate the machine at all times is also difficult. Also, if the tractor is given (for free) to a cooperative, the cooperative will tend to charge too low prices for its use; leading to problems in financing repairs and eventual replacement.
In other countries, cooperatives mostly bungled the management of farm machinery.

Alternatively, the government could take direct charge of the machines (as was the case in the Soviet Union). This solution was often quite unsatisfactory; it led to enormous bureaucratic bottlenecks and massive corruption.

Then, there is the reluctance to displace farm workers who would otherwise do the work. On close examination, this is only partly true: machines (e.g. tractors) would mostly replace draft animals like the carabao. Moreover, the logic of ‘providing employment’ is illusory. If agricultural development is held back by the lack of machines, farmer incomes would stagnate and even decrease, resulting in many farms being left idle. And this results in less work for farm workers. On the other hand, farm machinery would need workers to operate and service them; and the increased production as a result of the machines will stimulate farmers to bring more land into production. Increased farmer incomes would lead to other agricultural activities e.g. vegetable growing, poultry raising,  which are quite labor intensive.

International NGOs have another problem with mechanization – machines are seen as polluters, producers of greenhouse gases. Carabaos are seen as more ‘green’. It is true that machines do use diesel or gasoline, and emit carbon dioxide; but the carabao also emits methane when it farts.

These considerations has led to an unsatisfactory compromise: the goverment and NGOs give farmers lower-capacity farm machinery, like hand-tractors and threshers. These machines increase productivity a bit, and result in some additional lands being tilled. This choice does not displace labor; and farmer associations and cooperatives can manage these machines. The main benefit will be that more lands could be tilled and more palay harvested (which is the Philippine government’s main aim); but the productivity per hectare (which more directly affect farmer income) does not improve significantly.
On the environmental angle, though, the policy is not good: a tractor can do the work of 5 hand-tractors; but 5 hand-tractors use more diesel than one tractor.

In contrast, some corporations are directly addressing the need for farm mechanization. Their strategy is is to contract land from farmers, and then use large scale machinery and modern production methods to reap abundant harvests. In terms of increasing productivity, this formula is a big success. In terms of raising farmers incomes, though, it is much less spectacular.
A big advantage is that farmers are assured a steady income independent of the uncertainties of the crop cycle. But on the other hand, the rent that the corporations pay to the farmers will most likely remain the same over the years – not raising in step with the increase in harvest, or with inflation. Also, the control over the land effectively passes on to the corporation.

PAIS (Pasali Agricultural Innovations and Services) is a social business active in Region 12, and in particular the town of Palimbang, in Sultan Kudarat province. It proposes yet another approach: provide the services of large-scale agricultural machines, while it teaches farmers improved techniques of planting rice, and organizes them into clusters/associations/cooperatives.  PAIS calls this its Farm Machinery Pool (FMP) project. As a social business, PAIS does not need to make a profit for private shareholders, and recycles all its profits into expansion and social services. The PAIS FMP will provide services of Tractors, Planters and Harvesters – which, in combination, will significantly increase harvests and lessen production costs. Its rates will be relatively low, and the services will be gradually expanded to service more and more farmers. And, the farmers will retain control over their land; which means that they will benefit directly from the increased harvests.
At present, PAIS installs water systems in highland areas all over Mindanao. It will launch with its Farm Machinery Pool in the last quarter of 2014. PAIS is the social business arm of Pasali; its NGO sister organization is the PPF (Pasali Philippines Foundation).
See also: Pasali: Bringing Peace and Lifting Families out of Poverty




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