Clarice Colleen Q Manuel
Corn is one of the major crops produced in the Philippines. According to the latest Census of Agriculture and Fisheries, rice still has the largest allocation of land at 1.958 million hectares, while corn places second with 1.050 million hectares. On average, a parcel of land measures about 1.2 hectares and is likely to be managed by household farmers. Sadly, however, farmers are among the poorest in our society, even if they have land to produce their necessities. Farmers face a poverty incidence of 34.3 percent, a considerably higher figure than the national average of 21.6 percent.
In-depth interviews with corn farmers in Malaybalay and Cabanglasan in Bukidnon reveal serious problems in the corn industry that have likely contributed to the high poverty incidence among farmers. A common lament among the interviewed farmers is the occurrence of drought, strong winds and rains, which have led to corn crop losses for the past 10 years. Most of the corn farmers plant in sloped areas, which are naturally prone to landslides; thus, extreme weather conditions would likely result in crop failures. By some accounts, in 2012 there were farmers who experienced zero yield because of Typhoon Pablo, whose strong winds flattened corn stalks and made the fallen corn cobs an easy target for hungry field rats.
Indeed, corn farmers face much risk from unpredictable weather. If this persists, then these small-scale farmers would remain poor. Not much could be done about the weather, so farmers need to find a way to diversify their crops in order to protect their income. Moreover, consistent corn production failure in these areas are likely to reduce the total production of corn.
Although they have land, corn farmers find it difficult to keep planting every season. It is a challenge for them to acquire capital to buy corn inputs and pay for additional labor. It becomes necessary to seek credit from cooperatives, financiers and banks. Based on interest rates, banks and cooperatives offer the lowest rates, while local financiers charge the highest.
Although it seems ideal for farmers to borrow from banks and cooperatives, the farmers opt to take credit from the financiers because of less stringent requirements. Most of these formal banking institutions require land titles or proof of land use, collateral and farm plans, which small-scale farmers find difficult to provide. Nevertheless, most financiers do not require documents, while others require only guarantors. With higher interest rates, farmers are left with smaller incomes after paying off their debts every cropping season.
Many stories shared by the farmers pertained to taking credit from a financier, suffering crop failures, and owing huge debts. Some have been in debt for more than eight years, while some were able to pay off their debts in succeeding cropping seasons. Nowadays, farmers try their best to avoid this set-up. They are so afraid of falling into debt that they choose to plant cheaper corn varieties with lower yields. In worse cases, they simply give up, and they end up selling or leasing their land to other farming households or financiers in order to pay off their debts.
Small-scale farmers are receiving lower net incomes because of the lower production from the cheaper varieties of corn or from the higher interest rates from financiers. Thus, they remain in a cycle of poverty. Generally, the lack of access to credit limits the production of corn to levels far below potential.
Although corn has a price floor with the National Food Authority, farmers are at the mercy of traders who buy their corn, and they cannot complain if the buying price gets too low. They consider low corn prices as a crop failure, and most of them have experienced it. In fact, it has gone as low as P7 per kilo, as reported by the farmers. With the low price, they cannot recover the amount spent during the entire cropping season and would have a negative net income for that season. Mostly, farmers have buying agreements with traders they borrow from, so even if the price floor is higher than the buying price of the trader, the farmers still receive a lower price.
Unstable corn prices result in unstable incomes for the farmers. Without stable incomes, it would be more difficult for them to prepare their household budget for the months after harvest. Another major consequence of this is that a sudden inflow of corn and corn-product imports will push the buying price further down, thereby putting the corn farmers’ livelihood at risk. They are not ready to face international competition in this set-up.
The corn industry needs arbitration primarily in expanding credit access and creating corn price stability to ensure that its production will remain steady despite climate change, and to improve the net income of the small farmers who work incessantly to provide for their family and the Filipino nation.
Clarice Colleen Q Manuel, faculty member of the Ateneo de Manila Economics Department and scholar of the project LUCID collaborative project between the Environmental Science for Social Change and Université de Namur, is pursuing a doctorate degree in development economics at Université de Namur in Belgium.
This story was originally published in Business Mirror on 30 August 2018.