December 20, 2016 at 15:00


Last Saturday, hundreds of farmers working with Marsman Estate Plantation Inc. (MEPI) happily celebrated the company’s foundation day. Over 1,000 agrarian reform beneficiaries entered into agribusiness venture agreements (AVAs) with the company.

There were many reasons for them to be happy. The market for our banana exports has never seemed brighter. Economic sanctions against Iran, a major market for our bananas, have been lifted. China, in the light of President Duterte’s diplomatic pivot, opened its market. Russia committed to buy our fruit exports.

Meanwhile, the innovative farm systems at MEPI allowed the plantation to harvest the highest yield per hectare in the whole industry. Years of boom are on the horizon.

The first sign of that boom was the recent visit of a business delegation from China. They wanted to buy bananas but there was no supply available for them. The banana industry has just entered a seller’s market.

The land now owned by the farmers was donated 16 years ago by the Marsman-Drysdale Group, MEPI’s parent company. Not only is the same land leased from the farmers, the company pays the highest wages for those who work the plantation. MEPI pays up to 17th month bonuses and up to 400% salary incentives. These pay levels are unmatched in the industry.

In addition, workers in the plantation receive 30 days vacation leaves that may be accumulated through the years. They receive sick leaves of between 15 to 25 days and are covered by generous health and accident insurance. The company maintains primary health as well as educational facilities in the plantation. Children of plantation workers qualify for scholarships and grants funded out of the Marsman Foundation.

As a matter of company policy, workers are treated as enterprise partners. This explains the generosity in compensation and benefits that workers in other farms can only envy.

MEPI is distinguished for one more thing: it is the only banana plantation that maintains a biotechnology research unit. Continuing biotechnology research enabled the improvement of cultivated varieties and the protection of the crop from plagues. Not only are the harvests bountiful, the crop is also most resilient.

There were all the reasons for the workers of MEPI to be happy. Life was good and could even be better.

The company’s executives, however, were not as optimistic. This Eden could end very soon.

The reason for the anxiety is that the Department of Agrarian Reform under the radical leftist Rafael Mariano wants to invalidate the AVAs. It is a completely ideologically driven policy decision. It has nothing to do with the economic realities on the ground.

If Mariano get his way, that will spell the end of our banana export industry which produces much more yield that the land it uses for cultivation. It will forcibly break up the highly productive partnership between agrarian reform beneficiaries and agribusinesses. With land broken up, the farmers will have no other option but to return to subsistence agriculture and the misery that comes with that.

This push by the leftist mandarins to invalidate the AVAs will have major repercussions on the entire economy. It will sink our already vulnerable agricultural exports. It will return tens of thousands of farmers to penury. It will kill an important dollar-earner our economy depends on to pay for essential imports like fuel.

The Agrarian Reform chief’s intent to invalidate the AVAs has already created much uncertainty in our agribusinesses. Investments have been held back. Research and development have been stymied.

By attempting to invalidate the AVAs, Mariano is also trying to invalidate President Duterte’s huge effort to open new markets for our agribusinesses. Specifically, the President convinced the Chinese, the Japanese and the Russians to buy more Philippine bananas. His own agrarian reform secretary, on the other hand, is trying to kill agribusiness.

President Duterte is guided by economic pragmatism. Mariano is guided by some perverse ideological vision that sees paradise in small, barely productive family plots tilled by poor farmers producing mainly for their own consumption.

This is not some marginal policy difference between the President and his supposed alter ego. This is a major ideological difference that the two men must soon iron out. It is a difference that is untenable.

Mariano holds the agrarian reform portfolio mainly as a concession to the CPP-NPA. It is part of President Duterte’s confidence building measure to convince the radical left to enter into a political settlement with government.

But holding a Cabinet portfolio does not give Mariano a blank check to pursue his ideological proclivities, killing our most productive enterprises in the process. As Cabinet secretary, Mariano should submit to the overall economic policy of the administration he serves. Where he came from is not half as important as what he now has to do.

This administration has an economic strategy. In January, the medium term plan drawn from consultations with all stakeholders, will be unveiled. An important component of that plan is strengthening our agribusinesses to rescue the rural poor from poverty inflicted by subsistence agriculture. Without raising rural productivity through intensive capitalization of our farms, we cannot achieve inclusive growth.

If Mariano wants to break up our agribusinesses, he is fundamentally contradicting the general plan. He is breaking from administration policy. He is being impractical and thus forcing our agriculture to backslide. He is making himself a renegade in the Cabinet, a saboteur of official policy.

If Mariano disagrees with the trajectory of the medium-term plan, the honorable thing to do is to resign his post. If President Duterte wants his Cabinet to work as an effective team, he must let Mariano go.

  All rights to the stock images are owned by Getty Images and its image partners and are protected by United States copyright laws, international treaty provisions and other applicable laws.
Getty Images and its image partners retain all rights and are available for purchase by visiting gettyimages website.

Arangkada Philippines: A Business Perspective — Move Twice As Fast | Joint Foreign Chambers of the Philippines