Tuesday, March 8, 2016

Unsolicited advice to the Ilocos region and DTI

“In the last three years, the Ilocos region’s economy ranked eighth in terms of its contribution to the country’s gross domestic product (GDP). The region contributed 3.09 percent to the country’s GDP in 2013 and was the country’s number one producer of mango and milkfish in that same year.

“‘Local industry roadmaps would define our vision, goals, and targets initially for cacao, coffee, mango, and processed meat and fish industries,’ Leal said. ‘We have a lot of work ahead of us as we identify binding constraints to growth and recommend strategies for industry upgrading and development.’” [DTI pursues region-specific roadmaps, Amy R. RemoPhilippine Daily Inquirer, 5th Mar 2016]

Based on the above news report, which in fairness most likely doesn’t reflect the full extent of the efforts of the region and DTI, the writer is taking the liberty of offering unsolicited advice. Since the public sector would occasionally benchmark their efforts against the private sector, this unsolicited advice is meant to give deeper insights into how the latter conducts business.

Firstly, it is encouraging that “focus” is an element of the roadmap. The focus being cacao, coffee, mango, and processed meat and fish industries.

Let’s start with “vision” referenced in the article. There are ways and there are ways to get to a vision. For this exercise, let’s use the region’s contribution of 3.09 percent to the country’s GDP as a starting point. What if the vision is to raise that contribution to 10%? Let’s round it off to 3X current levels so the index can apply across all focused products. Is that doable? In other words, a vision is not a linear progression from the present. It is far out into the future.

Let's go back to the focused products: cacao, coffee, mango, and processed meat and fish. And take cacao. Where do we export this product? What are the different segments representing the levels of value-added? The basic segment being the produce from our farms. [And the Malaysians, sensing how uncompetitive we are, assumed we will confine ourselves to farming. Not surprising given our crab mentality and how we define nirvana – to parcel out miniscule lands to our farmers being the Christian thing to do? Sadly immortalizing their bonds to poverty? And it comes from our hierarchical and paternalistic system and structure where we embrace destiny – not social mobility? What happened to Juan de la Cruz is made in the image and likeness of his creator?]

And so we must ask: How high up the value chain do we go and compete? The higher we go the greater the probability of generating healthier margins – the critical element in the effort to attain a sustainable economic undertaking. For example, do we have premium chocolates like Belgian chocolates that are branded?

In other words, what is the current portfolio of products of our cacao industry? What is the size of the global market for each of the segments as well as in each of the countries where we export or can export them? We need to establish a base line: where are we? And where is the global market and how does it break down by country? And where is the total global market of cacao products including those in the highest or premium segment?

That is how we can see far out into the future and expand our outlook – beyond the industry’s current contribution to the country’s GDP. The key is for us to have a brand new perspective – if indeed we want to get agribusiness growing robustly instead of declining. And that is why we ask the question, what if the vision is to get to a 10% contribution? And we can run different “what-if” scenarios until the numbers approximate the demands of a sustainable enterprise.

Forget about whether we currently have the capacity or the wherewithal to go to that 3X vision. The thought process is meant to begin and develop strategic thinking – and down the road visionary leadership. They are not accomplished via linear thinking or a linear exercise. Which is man’s default thinking process – and why visionary leadership is few and far between. 

Then we must ask: what resources do we need to pull together in order to raise output to the 3X contribution level? How much land do we need to produce that volume? And given economies of scale, the buildup of resources must likewise reinforce the desired efficiency, effectiveness and productivity levels because we want to exploit not undermine the benefits inherent in scale – which, unfortunately, is how we crafted land reform. See above re our definition of nirvana. Recall Edison: Begin with the end in mind. And not to put the cart before the horse.

In this cacao exercise we are not talking about the plight of the farmers – yet. As the blog pointed out in a previous posting, the need of Juan de la Cruz goes beyond being an object of charity – which we would unwittingly assume given our hierarchical system and structure? It is to join the ranks of the middle class. And that can only come about if we erect an ecosystem that is designed to compete and win and bring sustained elevated revenues – and make PH a developed and a wealthy economy.

The role of leadership is to take the people from where they are to where they have never been before.

In the meantime, another resource we need is marketing – so they can respond to the above questions re products and product segments and markets, etc. In other words, we must begin with the end in mind. What will be acceptable to the end-consumer and as important, how do we win her heart and mind? And the marketers must thus figure out the marketing mix or the 4Ps: product, pricing, placement and promotion.

Only when we have a good handle on the product and the market profiles should we figure out the critical resource needs or relevant inputs. For example, the factors of production from the old days haven’t gone out of style. They are called the 5Ms: Men/Women, Machine, Materials, Money and Method.

We shall pause the exercise at this point lest it begins to sound more complex than it should. And if the Ilocos region and the DTI would wish the writer to continue, he is prepared to offer and share as much as necessary.

Meanwhile as the following article reveals, we have to acknowledge that we’ve fallen into the trap of “insanity” as Einstein defined it – especially as far as the budget of the DA is concerned. How long have we been doing the same thing over and over again expecting a different outcome?

Throwing good money after bad – as in an ever increasing budget levels – doesn't necessarily solve the problems of agriculture . . . and the impact on the farmers and the economy.

Throwing good money after bad smacks of incompetence – and “alleged shenanigans”? “Graft and corruption permeate all levels of public life . . . Perhaps in no other country in South Asia is political dishonesty so widely recognized, accepted and talked about as a part of the political game . . .” [“The Philippines’ ‘buwaya problem,’ Solita Collas-Monsod, Get Real, Philippine Daily Inquirer, 5th Mar 2016]

And here's the article that reveals how we fell into the trap of insanity. “Failed experiment at DA,” Marichu A. Villanueva, COMMONSENSE, The Philippine Star, 4th Mar 2016. “Ironically, the contribution to the country’s annual economic growth from the agriculture sector, however, has been declining even while budgetary support grew by unprecedented proportions.

“From P38.1 billion in 2011, the DA budget was doubled to P60.9 billion in 2012. The agriculture, fishery and forestry sector posted growth from 2.6 percent in 2011 to 2.7 percent the following year. But when the DA budget rose to P74.2 billion in 2013, however, growth from the agriculture sector dipped to 1.1 percent.

“In 2014, the DA budget rose to P90.5 billion and it somewhat helped push a wee bit the country’s agriculture output to 1.6 percent. Last year though, the DA budget was cut to P88.9 billion. This was obviously the result of department reorganization where four of its major agencies were cut from the supervision of Agriculture Secretary Proceso Alcala.

“President Aquino signed Executive Order No. 5 in May 2014 that transferred to the Office of the President the following DA agencies to his newly created Cabinet post called Presidential Assistant for Food Security and Agricultural Modernization (PAFSAM): the National Food Authority (NFA); the National Irrigation Administration (NIA); the Philippine Coconut Authority (PCA), and the Fertilizer and Pesticide Authority (FPA).

“President Aquino named his Liberal Party (LP) ally, Sen. Francis ‘Kiko’ Pangilinan to this Cabinet-ranked PAFSAM after the latter ended his second and last term at the Senate in July 2013. Pangilinan resigned in October last year to run as one of the LP’s 12-man Senate ticket. P-Noy named PAFSAM undersecretary Fredelia Guiza as officer-in-charge after the resignation of Pangilinan.

“The creation of PAFSAM was supposed to help beef up the DA which at that time was supposedly organizationally challenged. Secretary Alcala had also been under fire from various stakeholders’ groups denouncing alleged shenanigans in rice importation, problems of delayed irrigation projects, the coco-lisap infestation, among other issues.

“Unfortunately, this political accommodation did not produce miraculous gains for the country’s agriculture sector.

“To borrow the terms used by P-Noy to describe the Autonomous Region in Muslim Mindanao, the creation of PAFSAM was a ‘failed experiment.’ This is why the various stakeholders would not want a repeat of this ‘failed experiment’ at DA.”

“Why independence, if the slaves of today will be the tyrants of tomorrow? And that they will be such is not to be doubted, for he who submits to tyranny loves it.” [We are ruled by Rizal’s ‘tyrants of tomorrow,’ Editorial, The Manila Times, 29th Dec 2015]

“As a major component for the education and reorientation of our people, mainstream media – their reporters, writers, photographers, columnists and editors – have an obligation to this country . . .” [Era of documented irrelevance: Mainstream media, critics and protesters, Homobono A. Adaza, The Manila Times, 25th Nov 2015]

“Development [is informed by a people’s] worldview, cognitive capacity, values, moral development, self-identity, spirituality, and leadership . . .” [Frederic Laloux, Reinventing organizations, Nelson Parker, 2014]

1 comment:

  1. Great advice for people who lived in those particular region.