Agricultural workers say Contract Growing will push small farmers into bankruptcy — UMA

May 17, 2021

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As a debate on food importation and rural development rages with the government set to hold a food summit, the Unyon ng mga Manggagawa sa Agrikultura (UMA) today belied the private sector’s contention that contract growing is the key to the development of Philippine agriculture.

Antonio “Ka Tonying” Flores, UMA chairperson today stated, that Coalition for Agricultural Modernization of the Philippines (CAMP) chairman Emil Javier’s assertion that contract growing will be the key to making small farmers bigger is false.

Mr. Javier is also one of the speakers of the Department of Agriculture’s National Food Summit from May 18 – 21, which many groups, including UMA, will be boycotting.

Included in said summit are workshops on High Value Crops Development Program (HVCDP). This is where contract growing comes in and it is also a part of the DA’s so-called ‘12 key strategies’ for agriculture.

In a research made by UMA on plantations in Mindanao in the first half of 2018, it found out that most contract growers either became indebted to corporations and did not make enough even for themselves as the contract made between them and plantation companies were too onerous in favor of the latter.

Contract Growing or Growership is a type of Agribusiness Venture Arrangement (AVA) wherein the farmer carries out the entire production process, yet the agribusiness corporation, to which the farmer is bound to sell the produce, dictates its quantity, quality, and price. Meanwhile, the corporation sells the produce to other countries at a far higher price.

All production costs are shouldered by the grower. The corporation loans farming inputs, such as fertilizers and pesticides, but at higher prices and with padded interest rates. Debt payments are deducted from the grower’s sale; oftentimes, the grower is left with meager earnings and even suffers losses. In a contract growership, all production costs and risks are passed on to the grower. Losses due to typhoons, floods, and infestations are solely the grower’s burden.

If growers sell the product to another buyer for a higher price, the corporation they are in contract with may have them jailed or penalized. Growers are then trapped in this unfair condition.

In particular, Dolefil in Polomolok, South Cotabato, during UMA’s research purchases pineapples from its growers at PHP3.57/kilo while other growers not tied to Dolefil can sell their produce at PHP20/kilo.

Small growers also usually include their whole families, including little children, when working on their farms. Yet all these efforts remain insufficient, forcing them to borrow from loan sharks at 20% monthly interest. In Polomolok, one pineapple grower for Dolefil earns a net income of PHP48,000 for the first cycle and PHP70,000 for the second cycle or ratoon crop. This amounts to about PHP118,000 in a 3-year span or a negligible earning of PHP39,333 a year or PHP3,278 a month.

In banana plantations owned by Sumifru in Davao, it buys bananas from its growers at P15.75 a kilo or P212.63 per 13 kg. Box. Sumifru then sells this at P131.21 a kilo in Singapore and in its online retail store in Japan at P340 a kilo.

Usually, growers of Sumifru earn a gross of PHP30,000 every 15 days and a net profit of PHP15,000 – PHP20,000. From this amount, the grower must pay the wages of his workers, which leaves him a mere PHP2,000 per 15 days or PHP4,000/month. To make both ends meet, the grower himself and his family members work on the land to save on labor costs.

In effect, Mr. Javier is out of touch of reality on the situation of the growers in Mindanao, while at the same time, supporting the Philippine government’s neo-liberal policies in agriculture. This encourages foreign and local corporations to control the pineapple and Cavendish banana industries including control over the lands of small farmers who have no more say on what to do with their properties.