Policymakers should take a hard look at the five-decades-old Agrarian Reform Law and possibly repeal it to open the door for bigger investments in the capital-starved agriculture sector, said Manuel V. Pangilinan, chairman and president of Metro Pacific Investments Corp.
Metro Pacific, a listed infrastructure company, last year made its first major investment in agriculture by buying a majority stake in dairy company Carmen’s Best. Earlier this year, it bought a third of coconut products manufacturer and exporter Axelum Resources Co. Metro Pacific has also partnered with an Israeli company for its hydroponics project.
In an exclusive interview with Context.ph’s Beyond The Boardroom series, Pangilinan said the government must look at a new model for agriculture since the land distribution program under the Agrarian Reform Law hasn’t helped lift farmers out of poverty or improve farm productivity.
“I think if we get over the notion about this agrarian reform, it might be able to attract business groups to get into agriculture in the way they feel they should get into. How long has it been around? I think more than 50 years. We should just simply drop that notion that it provides the promise that it did many, many years ago. So let’s not go back to that. Tapos na yon (It’s in the past).”
Manuel V. Pangilinan, chairman and president of Metro Pacific Investments Corp.
Former President Diosdado Macapagal initiated land reform in the Philippines when he enacted into law in 1963 the Agricultural Land Reform Code, which abolished tenancy and established a leasehold system. This law has been refined under the late presidents Ferdinand Marcos and Corazon Aquino.
Pangilinan said the Philippines has the resources to be self-reliant in the production of food that are now imported, including rice, the country’s staple food.
“Let’s look at a new model under this current age, especially our ability to deploy technology both on the growing side of the business and the logistics side of the business,” he said.
Pangilinan said Metro Pacific’s commercial farming strategy will largely follow the Indonesian model, where agriventures just lease large tracks of land and use the extra capital to employ technology that increases farm productivity.
Aside from agragrian reform, other issues hound agriculture in the Philippines.
“The other bit of it is that…the wounds on agriculture are self-inflicted. Right? And therefore, by and large, business groups I would say—I’m generalizing–are not particularly keen on getting into agriculture because it’s a very complicated business. Part of it is the politics of it,” Pangilinan said.
“We hope we could be a bell cow investor. We have to prove that this makes sense and it makes profits. Because if they see we are losing a lot of money, then why should business get into it. We do have a credibility issue as well. We have to show that we can make agriculture a profitable enterprise for businesses,” he said.
Not a few eyebrows were raised when Metro Pacific excitedly announced its investment in the Carmen Group, where it took a 51 percent stake and plans to invest even more to further develop its dairy farm and product lines.
But that was also the case when Metro Pacific acquired Makati Medical Center in 2007, explained Pangilinan, remembering critics questioning the wisdom of investing a large amount of money in a “cottage industry.” Since then, Metro Pacific has steadily expanded its hospital business and made it a major contributor to the group’s earnings.
Pangilinan said some continue to question Metro Pacific’s foray into agriculture, thinking it is only intended as “deodorizer” to improve the group’s corporate image.
“I can assure you that is not the intention. We are serious about this. We are not investing for us to look good to anybody,” said Pangilinan.
“Then, we have to show performance. Of course to shareholders, our board that this makes sense and that eventually we can scale up to make it a meaningful contributor not only to Metro Pacific but to the larger economy,” said the Metro Pacific chief. “Not only does it offer the potential (to be an income generator for the group) but it is a need of our people. We have to feed our people,” he added.
