Philippine agriculture

[OPINION] Plant oils and high-value agricultural productivity

Dean de la Paz

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[OPINION] Plant oils and high-value agricultural productivity

Guia Abogado/Rappler

'It is time we stop this business of not only being led by the uneducated but also by the badly educated'

Given that agriculture has perennially been among our weakest contributors to gross domestic productivity, the number officially employed by it and the even greater uncounted trapped in its upstream links, traditional models of countryside economics seem to have failed. Poverty among farmers is seen as the worst. But the irony does not stop there. The percentage of real estate dedicated to agriculture and the attention government allots from tax-funded subsidies and ayuda, and the influential crony cartels fattened by governments inequitable allocation of benefits aggravate the irony.

Note that in discussions of GDP growth qualified by its lack of inclusivity, invariably agriculture’s relative unproductivity enters the debate. The poverty levels are seen higher in that sector and the per capita GDP lowest among those who work the land and till the soil.

Worsening this gloom is the recent series of crises involving default importation policies to address shortages. Importations not only enrich crony cartels; they also exert pressures to increase taxes.

While these temporarily temper price volatility by prioritizing consumer demand over local supply weaknesses, the importation spikes within the expense method in calculating GDP do not help.

It is time we stop this business of not only being led by the uneducated but also by the badly educated. As we search for silver linings to mitigate disasters wrought by incompetent agricultural policy-making and management, we discovered real glimmers of hope. And these are not cast by strobe lights reflected off a rotating mirrored ball from constant partying at the palace along the Pasig.

From acreage that the late Environment Sec. Gina Lopez had started as an experiment to increase the per capita GDP of farmers, farmland in Iba, Zambales is currently producing a viable high-revenue answer to agriculture’s relative weaknesses.

The Iba model is being replicated in Camarines Sur with the direct involvement of Cam Sur’s local government. In other parts of the country, in particular beside a remote and sleepy town in Palawan, the same is occurring where bold and forward-looking initiatives are taken by private sector investors hoping to transform marginally productive land into an export earning proposition.

There is nothing new about initiatives to increase per capita productivity and develop high-value agricultural products, mechanize farms, and allow science-led solutions to reduce farm input costs.

Unfortunately, the productivity these envisioned despite paradigm initiatives like the shift to aquaculture, multi-cropping, hybrid seeds, cut-flowers, and other high value fruit and vegetable products has been elusive. Part of the inertia is due to cultural fears of complexity, the resistance to innovation, and the lack of knowledge, financial inclusivity, and funding. For these, catalysts are needed from outside the farmgate.

Allow us to cite the Cam Sur initiative virtually grafted from botanical successes in Zambales. South of Manila the world’s largest integrated aromatic oils facility based on a locally available variety of vetiver grass is currently being developed.

We once proposed vetiver to anchor a green infrastructure initiative naively ignoring the realities of big-ticket infrastructure projects and the ways cement-centric infrastructure and its revenue pies are sliced and shared with politicians.

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But now consider vetiver as an agricultural product.

 Vetiver is a robust bunchgrass whose multifunctional uses cover a wide spectrum, from export-earning aromatic oils to green infrastructure and watershed protection critical to storm-prone areas.

As a plain vanilla bunchgrass, botanically, vetiver absorbs greenhouse gases, controls agricultural pest damage, and remediates contaminated soils without the application of imported and expensive chemical pesticides and fertilizers that eventually poison agricultural land.

Vetiver oil and its derivatives are important ingredients in a number of everyday home products whose demand has not wavered despite the global slowdown and our government’s serial fiascos involving food and other agricultural products.

Vetiver oil and other aromatics enhance fine fragrances, personal care products, and cleaning products. Vetiver is also used in its raw form or processed as a base for other fragrances.

But that’s just the raw material input aspect for an integrated plant oils facility. Let’s go beyond that. And let’s go beyond the objectives typical of a local government and the parochial interests of archetypal low-margin investments in rural farmlands.

In the area of rural development, 1,000 hectares planted with vetiver grass from at least 7,500 previously secured by the Cam Sur government under licenses can supply its P300 million vetiver oil distillation facility. Jobs-wise that is expected to initially generate at least 800 new jobs for one town alone. The enterprise can yield over 20 metric tons of vetiver oil per year and export these to the $30 billion global fragrance and flavor industry and its fragrance markets.

Extrapolate that and replicate the initiative in other marginally productive rural communities. Note the possibilities. The investments in essential oils, aromatics, and natural plant phytochemicals in the three rural communities we identified are virtual debuts into global markets where, on a macroeconomic scale these could very well substantially mitigate if not reverse the trend where traditional agriculture has been our weakest contributor to GDP.

Consider the export earnings as rural communities quickly develop and step onto the world stage propelled by a private-public partnership equipped with modern, state-of-the-art fully-integrated operations that adhere to global best practices for quality assurance, traceability, and sustainability.

Upon exorcising demons from a possessed underperforming cabinet bureaucracy, once rid of infernal incompetence, we can now focus on domestic food security while simultaneously multi-cropping with high value export-oriented products. The latter is necessary as it augments and funds the subsidies we’ve inadvertently worked into the expensive, high-tax and import-driven placebos the DA chose to pursue under Ferdinand R. Marcos. –

Dean de la Paz is a former investment banker and managing director of a New Jersey-based power company operating in the Philippines. He is the chairman of the board of a renewable energy company and is a retired Business Policy, Finance, and Mathematics professor. He collects Godzilla figures and antique tin robots.

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