The Economic Transformation of a North Cotabato Community through Oil Palm Farming

A possible model for overcoming rural poverty.

By Pablito P. Pamplona, Ph.D.

In a study on how oil palm farming affects farmers , the author made an interesting discovery. Jose Sagadan of Dunguan, Mlang, North Cotabato, a poor Muslim farmer struggling to provide his big family with three meals a day, planted eight hectares (ha) of oil palm on a plant-now-pay-later (PNPL) scheme. From this, he earned a high income, and this enabled him to buy enough nutritious food for his family, support the college education of his five children (who finished degrees in law, accounting, social services, physical therapy, and pharmacy, respectively). It also enabled him to renovate an old wooden house, buy a brand new pickup vehicle, and expand his oil palm farm.

He also created employment and livelihood opportunities for his barangay-mates. Many of his neighbors followed his footsteps, and this led to the transformation of a Muslim community which was part of the Liguasan Marsh brushland. From an economically depressed area and a rebel hideout, it became a progressive and peaceful community.

Sagadan’s success is now being duplicated in some municipalities of Cotabato like Alamada, Tulunan, Antipas, and Arakan, which have planted oil palm on PNPL schemes. These farmers confirm the transferability of the strategy used by the governments of Indonesia, Malaysia, and Thailand in overcoming poverty with the use of oil palm farming in the Philippine setting.

Sagadan and his ilk show that overcoming rural poverty is not an elusive dream for the Philippines, but government interventions are necessary. The two major interventions are 1) providing farmers with quality planting materials through the plant-now-pay-later (PNPL) scheme and 2) adequate extension services to capacitate the farmers to use good agricultural practices (GAP) for sustainable high yield and income. It is recommended that these interventions be piloted on a wider scale in the province of North Cotabato
as a step towards the national adoption of this strategy to overcome poverty, produce prosperous and peaceful communities, and help overcome the huge vegetable oil shortage of the country. This will also help the Philippine Coconut Authority (PCA) meet its objectives on its roadmap of planting 350,000 ha of oil palm from 2014 to 2023 to overcome the increasing shortage of vegetable oil in the country.

How a PNPL Scheme Helped a Poor Muslim Farmer

Jose Manangka Sagadan, was once a poor farmer in barangay Dunguan, Municipality of Mlang, North Cotabato. Now he is glad to tell friends and visitors, “I discovered the formula of retiring from poverty by planting oil palm.” He is talking from experience; years back, the income from his farm—which was then grown to low-value crops—could hardly meet the food needs of his big family. He had to borrow money from friends and relatives to finance the college education of his eldest daughter.

But his five younger children were more fortunate as when they entered college, Sagadan had planted oil palm, which in a short period of 28 months after planting started to give him a high bimonthly income. His first eight ha of oil palm trees were planted in a span of three years, from 2000 to 2002.

The seedlings were obtained through a promotional plant now-pay later (PNPL) grant from C.K. Chang of the Agumil Palm Oil Milling Corporation.

Sagadan’s income from oil palm was several times higher than the income he was getting from his previous field
crops. In a short time, he was able to pay his debts and the amortization of the oil palm seedlings. Income from oil palm farming made nutritious food affordable for his family, and was more than enough to fund the college education of his five remaining children.

Soon after his children finished their degrees, his income from oil palm enabled him to renovate and enlarge a wooden house. He also acquired a brand new pickup, paying for it on a four-year amortization plan using his income from his oil palm trees. Moreover, his income also helped him lease land for oil palm expansion. His production area for oil palm now totals over 20 ha, and 16 are already productive.

As the Agumil PNPL program was over, to acquire new planting materials, Sagadan availed himself of the PNPL program of the provincial government of North Cotabato, headed by Governor Emylou Taliño-Mendoza. When he no longer qualified for a PNPL grant, Sagadan used part of his income from oil palm to buy planting materials from the Triple P Farms and Nursery, which he found to be productive in just over two years (Fig. 1). At present, his oil palm income is financing the construction of his dream house: a bigger concrete house. Perhaps even a retired government executive can’t afford to construct Sagadan’s dream house from a retirement lump sum.

Sagadan employs eight regular laborers on his farm who are paid well. He also hires contractual laborers as needed for farm maintenance activities like weeding and the harvesting of fresh fruit bunches (FFB) every other week. He prefers to employ his jobless neighbors for weeding to keep his farm weed-free instead of using herbicides. Outside working hours, his laborers help their wives weave slitted old pruned fronds of oil palm into attractive “kalakat” or “amakan” for low-cost house walling.

They make 300 kalakat/month on the average, which Sagadan buys for R85 each; he delivers these to different construction utility stores at a wholesale price of R120 each. His strategy for a high farm income from
oil palm His success in earning a farm income that is high above the poverty threshold level can be attributed to two major factors. First, he shifted to a crop with high yield and income potential. A study carried out by this author under a United States Agency for International Development (USAID) grant in Mindanao shows the average income of farmers growing various crops can be seen in Table 1. The cultivation of oil palm provides the farmers with the highest income versus many other crops. It is also one of the easiest—if not the easiest—crops to grow which brings in profit every 15 days.

Second, he applies GAP to the oil palm trees so that these will have a high yield and income potential. Sagadan and his wife love to stay on their farm, ensuring that the trees are provided with GAP. He applies emerging technologies in oil palm farming disseminated by the LGU and the Philippine Palmoil Development Council, Inc. (PPDCI).

He personally supervises the implementation of major farm operations, which include keeping the trees adequately weeded, provided with adequate drainage canals, and fertilized quarterly at the rate of two kg/tree four times a year for mature trees. (The fertilization rate of immature trees is lower.) The yield of the oil palm trees on his farm is higher than the national average.

According to Sagadan, the maintenance of drainage canals is a major activity in oil palm near the Liguasan Marsh. Poor drainage keeps the palm trees yellowish and unproductive. He and other farmers of Dunguan are happy that the mayor of the municipality of Mlang, Joselito Piñol, often lends them the municipal backhoe for drainage purposes. Their group hopes that the government will provide a comprehensive drainage and road network for the 5,000 ha of idle brushlands between the barangay proper and Liguasan Marsh so the same can be used for oil palm farming.

An Expanding Web of Prosperity

The good life enjoyed by Sagadan and his family through oil palm farming did not go unnoticed by his fellow Muslims in Dunguan and other communities in Central Mindanao. Those who availed themselves of the PNPL and followed GAP are emerging, like him, as successful oil palm farmers. To many farmers who are waiting for an oil palm PNPL program in Dunguan and many other communities, he is the inspiration that someday they too will be liberated from poverty and be able to provide a brighter future for their children through financial support in the pursuit of a higher education through income from oil palm. Without the PNPL programs, the planting of oil palm is difficult for poor farmers.

Today, more than 200 farmers in Barangay Dunguan have planted over 700 ha of largely drained marshlands through PNPL programs. Slowly and steadily, this once-economically depressed barangay with a population of 5,000 (comprised solely of Muslims) situated in over 5,000 ha of fertile and largely idle brushlands, grasslands, and underutilized agricultural lands, is being transformed towards high farm productivity and prosperity. What was once an economically depressed barangay—the gateway to the jungles of the Liguasan
marsh and a hideout for lawbreakers, kidnappers, and rebels—is currently emerging as a model of an economically prosperous and peaceful Muslim community. The future planting of oil palm on PNPL programs is the key to hastening the large-scale economic transformation of barangays like Dunguan in Cotabato and Mindanao in general.

The strategy that helped neighboring ASEAN countries overcome poverty is applicable in the Philippine setting Sagadan and other oil palm farmers in barangay Dunguan overcame poverty by planting oil palm through PNPL schemes and by practicing GAP, as taught by their LGU and the PPDCI. Their success has been duplicated in other municipalities of Cotabato like Alamada, Antipas, Mlang, and Tulunan, and is proof that government interventions are needed for poor farmers to overcome poverty and to ensure household food security and peace.

Private investments, like the putting up of milling plants and/or to include planting materials on PNPL are useful, and should be welcomed—but these should not be a substitute for the role of the government in provide poor farmers with effective extension services to ensure high yields and incomes.

Sagadan and company also validated the long-proven strategy used in Malaysia, Indonesia, and Thailand, which helped these three countries meet, ahead of the Philippines, the Millenium Development Goals (MDG) set by the United Nations (UN) for overcoming poverty by 2015. In these three countries, government intervention was strong: providing planting materials and effective extension services, including the linkage to input companies, thereby ensuring that small farmers benefited from the potential yield and income.

The World Bank, in one of its recent reports, cited the key role that oil palm played in overcoming rural poverty in Indonesia. Our three neighboring countries of Malaysia, Indonesia, and Thailand— which produce 85% of the world supply of palm oil—have left the Philippines behind when it comes to the gross national product (GNP) and in overcoming poverty. As shown in Table 2, the Philippines is a minor producer of palm oil despite having over one million ha in idle lands suitable for this crop.

Consequently, the Philippines is a major palm oil importer from these countries, and the imports are valued at over R27.5 billion annually. The Philippine government has failed to implement an agricultural program which incorporates oil palm among the major crops for high farm incomes as Malaysia, Thailand, and Indonesia did. The past passive role of the government in oil palm farming prevented the large scale expansion of oil palm. Moreover, many farmers who planted oil palm failed to get the maximum benefits from the production potential of the crop due to the lack of government extension services and proper linkages with input providers. These shortcomings should be addressed in the implementation of the PCA roadmap for expanding oil palm farming in the country to 350,000 ha by the year 2023. Recommendation : Plant 1 million trees a year in North Cotabato until 2016.

The strategies for overcoming rural poverty were elusive during the first four years of President Aquino. Now, one of the strategies has been found and proven! Oil palm farming can help the upland rural poor overcome poverty. It’s high time that a tried and tested successful strategy for overcoming poverty be piloted on a much larger scale. The strategy is to promote, through PNPL schemes, the planting of one million palm trees a year in the province of North Cotabato until the end of President Aquino’s term in 2016. The strategy calls for both national government funding support to LGUs so that these can provide farmers with planting materials through PNPL programs, and for the LGUs to play an active role in capacitating farmers to use GAP through effective technology dissemination services.

Why the province of North Cotabato for piloting? North Cotabato is successfully implementing, on a small-scale, a PNPL program couple with extensive extension support services that enable farmers to use GAP for high yield and income in oil palm farming. North Cotabato is at present the leading and the most successful province in the country in using PNPL for oil palm as a tool for overcoming poverty.

This is because the PNPL schemes are coupled with human resource development, equipping the farmers with the knowledge and skills necessary for implementing GAP. The LGUs of North Cotabato provide more extensive support to oil palm farming compare to other LGUs. Seedlings through PNPL programs are only made available by the provincial government to farmers after they undergo the appropriate training on oil palm farming. The municipal government within the province of Cotabato also provides adequate technical support services. In the municipality of Carmen, for example, there are three technicians solely focused on oil palm farming.

During the last three years, the LGU in North Cotabato distributed oil palm seedlings to small farmers, who have planted these on almost 5,000 ha. As a result of the successful PNPL program in North Cotabato, a private oil palm company in Thailand, Univanich, decided to put up a modern milling plant in Carmen, North Cotabato (Fig. 5). This milling plant is also equipped with facilities to convert the byproducts of palm oil milling to generate electricity, which will help overcome the electricity shortage in Mindanao.

Another milling company from Indonesia has recently begun construction of a milling plant in Antipas, North Cotabato. The large-scale piloting of the program to plant one million oil palm plants in North Cotabato can serve as a template for other provinces to follow. Improved innovations should be documented and introduced to other provinces.

Piloting in North Cotabato can show the government how to meet the PCA’s targets on its oil palm road map of planting 350,000 ha of oil palm by 2023. This means the planting of 35,000 ha/year starting in 2014. One million oil palm trees can be planted in 7,143 ha. This means that five million seedlings are needed annually to plant in 35,000 ha, and so piloting may be expanded in 2015 to five other provinces, with North Cotabato as a model.

The PCA’s main objective in the palm oil road map, which is to overcome the increasing huge palm oil shortage, may no longer be an elusive dream. National leaders in Mindanao like the congresspersons and the Mindanao Development Authority should rally behind the governor of North Cotabato in order to convince President Aquino to make one million oil palm seedlings. Funds may be sourced from the PCA, Department of Agriculture (DA), the Department of Environment and Natural Resources (DENR) Greening Program, the poverty alleviation fund, and more.

Among the benefits of piloting the planting of one million oil palm seedlings a year on a PNPL scheme are:
1. Bringing to high productivity the idle, underutilized agricultural lands and brushlands totaling 7,143 ha;
2. Liberating 3,571 farmers from poverty through oil palm PNPL schemes (at two ha/farmer);
3. Creating 5,000 jobs;
4. Generating approximately R750 million worth of foreign and local investments in the putting up and operation of two additional milling plants;
5. Producing crude palm oil to substitute for imports (at a yield of four tons of palm oil/ha per year at R30,000 for 20 years = R18,286,080,000);
6. Increasing business activities in various municipalities to create prosperous and peaceful communities; and
7. Increasing the tax revenue of the LGUs, bringing peace and prosperity to various communities. The cost to the government shall include the amount needed for the purchase of 1 million oil palm seedlings at R200 each
for a total of R2 million, plus the enlargement of the effective extension services of the LGUs in the amount of R50 million for a total of R250 million.

For more information, visit PNPL.

This appeared as “The Economic Transformation of a Muslim Community through Oil Palm Farming” in Agriculture Monthly’s July 2014 issue.

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