Practical Solutions for Filipino Farmers and Market Fluctuations

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Problem: Small scale Filipino farmers plant not knowing what the price will be by the time the crop is ready for harvest. When the price drops due to oversupply of vegetables the farmers barely make enough and sometimes even end up dumping their crops because the cost of transportation is greater than the value of the vegetables.

The problem is three-fold. First, it is the inability of farmers to see the whole picture of who is planting what crops, which results in overproduction and then drives market prices down. Second, it is a problem of markets being mostly local, with little to no access to other markets, this keeps prices lower. Third, there is not enough coordination between domestic farmers and government agencies that control the importation of agricultural goods.

Solution: The Department of Agriculture (Philippines) needs to study the market to find out what amount of vegetable production is needed. Once they establish a baseline, then they should come up with a voluntary program that will aid farmers in deciding what crops to plant today based on their projections of future demand.

The Department of Agriculture (Philippines) could issue a quota voucher to farmers, who had enrolled in the program, to plant crops based on the projections and granting them certain protections for if the market price does drop. In other words, if there is a market need for a particular amount of green beans then the agency could issue a proportional number of vouchers. This, assuming import controls, would stabilize the markets and prices. And, if the market price dropped anyways, abiding by the voucher system would entitle the farmer to some compensation.

Another way to get better prices for isolated farmers is to facilitate the connection to a broader market. Access to markets beyond the local region is one way to increase the value of crops produced and also to stabilize price fluctuations. Government contracted transportation and distribution could be a part of this or it could be entirely put out to bids with private contractors. The transportation costs to be offset by the better prices in the destination market, the farmer would get the voucher guarantee price and the rest would go to the transportation contractor.

This sort of analysis and organization could also be done independently of the government. But it would take a significant investment. The national government would be in a better position to facilitate this than a private entity of limited resources. That said, universities could help to develop the models of the agricultural markets necessary to determine how many vouchers should be issued for each kind of crop. It would need to be a collaborative effort. Maybe with the help of transportation cooperatives between these small-scale farmers?

And one key is to incorporate the local ‘grassroots’ input, as well, as a strictly top-down central planning agency would likely fail. Central planning generally doesn’t work and especially not when it removes the autonomy of individuals to act in their own self-interest or allow choice. Participantion would need to be voluntary and incentives market-based rather than artificial. Ideally it would be self-sustaining and entirely funded by the beneficiaries.

Finally, yes, protectionism may be bad in excess, as in North Korea. However, any country that wishes to maintain domestic industry and jobs must moderate foreign imports. Haitian farmers learned this lesson the hard way when cheap, subsidized, rice exports from the United States destroyed their already meager profits and forced more of them to compete for the limited opportunities for employment in the cities. So it is incumbent, on the government of the Philippines, to control agricultural imports for the benefit of domestic producers.

Anyhow, some ideas.