What do we get from land deal?

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The Philippine Star | 20 July 2009

By Boo Chanco

A foreign news dispatch datelined Seoul reports that a South Korean provincial government has leased a major plot of farmland in Mindoro to grow corn. The curious thing is, the Department of Agriculture has no knowledge of it. Secretary Arthur Yap who is now in Port Moresby, responded to my texted query saying he does not know these Koreans. His office checked their field officers in Mindoro and they haven’t heard of them either.

The news dispatch provides no details. All we are told is that Jeonnam Feedstock, a company set up by South Jeolla province, signed a contract in April to lease 95,000 hectares of land for 25 years in Oriental Mindoro province. It didn’t tell us who they signed up with. Jeonnam Feedstock plans to plant 1,000 hectares of corn for experimental purposes as early as September to produce 10,000 tons of feed in the first year.

If this deal is legit, the DA people should be the first to know. I wonder what made the Koreans optimistic enough to tell the French news agency they are ready to start test planting as early as September this year. Anyone who knows how deals involving vast tracks of land could get mired in the bureaucracy of at least three departments knows something is amiss.

Hopefully, the Koreans are not being scammed because the concept of allowing the lease of some of our land to produce food for export to a ready market is good. In his text message to me from Port Moresby, Secretary Yap said that as a policy, his department works with DENR and DAR among other agencies on projects of this nature.

Secretary Yap also said his department provides legal verification services “to guide the investor and the farmers to make sure the foreigners are not duped and are briefed on our laws and the farmers rights protected as well.” With some exceptions, Secretary Yap said that they encourage foreign capital to help us develop agricultural lands because the sector employs 35 percent of workers and is our top jobs creator.

A land lease deal like that could potentially provide worthwhile jobs for our farmers, improve farm technology and inputs and because there is a guaranteed market, may even make farming profitable for our farmers. We also don’t seem to have the resources needed to dramatically increase our food production.

Secretary Yap said we can use all the help we can get to give the agri sector a boost. “We need the entrepreneurial spirit to take over agriculture to sustain as much growth as possible,” Secretary Yap texted me. He also reassured that they have food security on top of their concerns when deals like this supposed Korean deal are placed on the table.

I actually witnessed Secretary Yap sign a memo of understanding covering a similar deal with Beidahuang, an agricultural conglomerate that is the corporate arm of the Heilongjiang Provincial Government in Northern China. This province is part of Northeast China (or Manchuria) and borders Russia to the north.

This group wants to lease large tracks of farmland from us to plant crops with a ready market in China. Beidahuang, has been investing overseas, particularly in Russian farms. It is a fairly large conglomerate with total assets of 50 billion yuan and its sales in 2005 was in excess of 27 billion yuan. It ranks first among all of China’s large scale agricultural enterprises. (Very roughly, 1 yuan = P7)

For the Philippines, Beidahuang is interested to engage in: a) rice and corn production (a total of 200,000 hectares) in the North Luzon Agribusiness Quadrangle area; b) agri-tourism and organic food growing; c) setting up a farm machinery production facility concentrated in modern, not basic, technologies found in modern food processing lines; and d) setting up a bio-ethanol facility.

I had also been assured that the deal gives us first crack on the produce. If we need the rice or corn or whatever was produced, we have the right to buy it first. In this sense, the deal also provides us with food security. It is a win-win situation because as they help us improve our agricultural productivity and provide a ready market for our produce, we improve the income of our rural families and our food security as well.

But the politicians and the lawyers and the loudmouth activists thumbed the deals down. The deals were put on ice after legal questions were raised involving land use and agrarian reform, among others. Art Yap was chastised for allegedly selling the national patrimony to the Chinese.

Like it or not, it seems that deals like these are going to be pretty common in years ahead as weather change patterns and changing demographics force many countries to go abroad for their food supply. I can appreciate the pragmatism of the Korean and Chinese government in seeking such deals. But, depending on how the deal is structured, there are also benefits to be enjoyed by the host country.

I remember reading an article that reports in the case of the Russians, the Chinese are making an otherwise desolate part of the Russian Far East productive. The Russians do not have enough people to maximize the agricultural productivity of their Far East territories. The deal with the Chinese also provides livelihood opportunities for the few Russians who happen to live there.

As for the Koreans, necessity made them think of this approach. “Feedstock prices surged last year, resulting in the suicide of three farmers last year in this province alone,” Lim Young-Muk, an official in charge of the project, told Agence France-Presse by telephone from the southwestern Korean province.

“In order to lock in stable supplies of feed, we need to build overseas feed bases,” he reportedly told the French news agency. Lim said South Jeolla became the first provincial government to benefit from a newly-created central government fund to develop farmland overseas. He said it received a cheap loan of $1.9 million for the Mindoro project.

“We have a respected Filipino company as our project partner,” he said, declining to name it. Provincial governments in wealthy but resource-poor South Korea are also developing farmland in Cambodia, Indonesia, Mongolia and Russia. Such projects by Korea and other countries have sometimes been controversial, with critics in host countries seeing them as exploitative.

The thing is… we do have large tracks of land in this basically agricultural nation that should be made productive. A large portion of our population depends on agriculture and because we have failed to make this sector productive, our poverty rate has remained unacceptably high. It is ironic that we have world class agricultural scientists in UP Los Baños and we even host the International Rice Research Institute but are perennially dependent on imported rice.

It is for this reason that I am inclined to view these foreign offers positively. We have nothing to lose anyway because by ourselves, our track record gives us little hope that we will succeed any time soon in making agriculture more productive as befits a sector that accounts for about 20 per cent of our GDP.

But we must be told the details of this Korean deal so that we can intelligently evaluate what we have to gain by entering into it.
Original source: Philippine Star
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