Report on the 3rd Mindanao Food Congress

Marketing Series: Number 08 26 March 2001

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BACK TO OFFICE REPORT OF PEPA DUMON RE: PARTICIPATION IN THE THIRD MINDANAO FOOD CONGRESS ON FEBRUARY 20-22, 2001 IN BUTUAN CITY Objective/s of the Congress 1. To discuss the role of Mindanao regions in the country’s food security program. It was also aimed to look into the initiatives undertaken both by the public and government sectors in Mindanao and the progress of its implementation, as well as promote and push for support programs and strategies needed for its sustainability. Main Points 2. The Mindanao Food Congress was organized by the Mindanao Business Council (MBC), Caraga Council for Economic Development Foundation, Inc. (CCED), in cooperation with the Butuan-Agusan Chamber of Commerce and Industry Foundation, Inc., Department of Agriculture, Caraga Development Board of the Regional Development Council, Growth with Equity in Mindanao (GEM)-USAID and the Department of Trade & Industry (DTI). 3. Various speakers both from the private and public sector were invited to the Congress to present topics ranging on the Mindanao situation, industry updates such as on the palm oil, coffee, peanut and coconut, and agricultural support facilities including financing. Representatives from the World Bank, ADB and USAID were also present to discuss their respective development assistance programmes in Mindanao. Secretary Montemayor of the DA discussed the 11 Point Agenda of the Department and enumerated the ongoing foreign assisted projects in the island (UDP was mentioned) aimed to support and further improve Mindanao's contributions to the country's total agriculture/fisheries production and domestic food trade. Highlights of the Congress Mindanao Situation 4. Mindanao has all the requisites to realizing as the food basket of the country with its rich natural resources, good soil and weather conditions, abundant water supply and the availability of new technology in the world. It produces 40% of the food grown in the Philippines. 5. As it is now, it is ironic that despite Mindanao’s excellent climate, it has not even reached its own self-sufficiency, particularly in rice and fresh fish. It is, however sufficient in pork, corn and has a little surplus in chicken. The wide demand – supply gap, particularly on rice is brought about by the lack of irrigation facilities in Mindanao. As of Year 2000, of the 959,000 hectares of potential irrigable areas in the island, only 267,000 hectares are irrigated. This represents 28% as compared to the national average of 44%.

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6. Infrastructure development, however, has been hampered to a large extent by the peace and order situation in Mindanao which are linked to political, religious, cultural and pervasive poverty in the island. Mindanao Economy 7. Mindanao economy is undergoing a favorable transformation for the past 7 years. Service and industry sectors have posted positive growth rates of 3% and 2%, respectively when the agricultural sector has declined by 7%. This reflects a growing manufacturing sector absorbing agricultural produce and generating more jobs for the Mindanaoans. 8. Banana still remains the top export commodity of Mindanao, followed by coconuts (copra), pineapples (fresh juice) tunas, skipjack , bonito, shrimps and prawns.

9. Major export market include Japan, USA, Japan and Netherlands. Coming close are China, Korea, Taiwan, Singapore, Malaysia, Hongkong and Canada. 10. Demand, both national and international, for agriculture, aquaculture and fishery products are growing, yet Mindanao producers are not increasing their market share when it comes to most high valued products. 11. Their share of the market for products needed by institutional buyers like hotels and fast food chains even those located here in Mindanao, is small. This is partly due to lack of quality production and of an efficient cold chain that could assure prompt delivery of products to the market. While the manufacturing sector is growing, there is still little processing going on in Mindanao. It needs to attract more investments in this sector to stimulate local processing of products. Mindanao’s Potentials 12. Business opportunities abound in Mindanao. Potentials for further development of agribusiness, aquaculture, and fisheries is enormous. To name a few, are the development of the palm oil industries, particularly in the CARAGA Region, banana, coffee and peanut production, and fisheries. 13. Mindanao also needs to diversify its economy by developing other sectors, such as assembly industries, information technology and tourism for sustainable development. It needs to generate more off-farm jobs to keep pace with its growing population. 14. For Mindanao to achieve its potential are some necessary actions, some of which are the ff: finalization of tenure arrangements to remove uncertainty associated with agrarian reform; expansion of farm-to-market road network and irrigation systems in places where potential is greatest; improvement of postharvest facilities; modernization and expansion of ports; improvement of product quality and making credit available to responsible groups.

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15. There is also a call for the Mindanaoan producers to be more market-oriented – by implementing the “seed-to-shelf” focus in every step of the business; and to unify themselves and move forward as a team. To achieve this, industry associations by product sector should organize and interact with the government, especially on matters where intervention is most needed. 16. The Congress also highlighted the needed shift on the role of the government towards the private sector by behaving less like a bureaucratic and regulatory body and more like a customer-oriented partner of the private sector. What Have Been Done So Far 17. Critical to the development of Mindanao is the speed by which the government could undertake the peace process, particularly with the MILF. Latest developments showed that the Arroyo administration has constituted the peace negotiating panel to win back peace and start the development process. 18. On the infrastructure side, particularly in irrigation, NIA is implementing a number of projects funded by WB, Japan Bank International Cooperation (JBIC) and ADB to increase the total service area to 285,700 hectares or 30% at the end of 2001. In the pipeline are projects totaling P19.9 B to expand further to 358,600 hectares or 37% of the total irrigable areas. 19. In the area of postharvest facilities, the Bureau of Postharvest & Extension (BHPRE) has completed three major projects, i.e, diffused light system for potato seed in Kapatagan, Digos, Davao del Sur, cold chain sysytem for fruits in Davao City and bulk handling system for corn in Baungon, Bukidnon. 20. In the area of financing, Land Bank, has launched special programs for countryside development. These are the TODO – UNLAD, Accelerating Change in the Countryside thru Equity Sharing Strategy (ACCESS), the Countryside Loan Fund (CLF) and the Rural Farmers and Agrarian Reform Support Credit Project. These programs are with funding assistance from WB, ADB and JBIC. 21. A number of development programs aimed at improving the standards of living of rural communities are ongoing such as the European Union (EU) assisted Agrarian Reform Support Project (ARSP) and Upland Development Programme (UDP), and the USAID – funded Growth with Equity in Mindanao (GEM) through their Emergency Livelihood Assistance Program (ELAP) and the Support Which Implements Fast Transitions (SWIFT) Program. The last two are focused on assisting former MNLF combatants make the transition from being guerilla fighters to being productive farmers and fishermen.

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Main Highlight 22.. The main highlight of the Congress was the presentation of the 12 resolutions to President Arroyo. Said resolutions are to help fast track the realization of Mindanao as the food basket of the country. (Refer to Annex 1 for the Summary of Congress Resolutions). 23. The President in her speech assured Mindanaoans that her administration would continue to support the policy of making Mindanao as the food basket of the country. In line with this, the President stressed the importance of developing agribusiness not just agriculture in order for Mindanao to be a sustainable food basket not just on rice but also in corn, meat, fish, fruits and vegetables. With that, she expressed support to all the resolutions presented albeit thorough consultations with the stakeholders shall be undertaken on a few resolutions. Of particular importance to the businessmen present was the repeal of Letters of Instruction (LOIs) 58 and 790 which limit the hectarage that would go into the planting of bananas. 24.. Attached as Annex B are excerpts of the speeches delivered in the Congress.

ANNEX A

THIRD MINDANAO FOOD CONGRESS

Summary of Congress Resolutions

Resolution No. Title

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2

3

4

5

6

7

8

9

10

11

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A Resolution for Making Mindanao the Food Basket through a Functional Irrigation Program A Resolution for Making Mindanao the Food Basket by Providing Additional Postharvest Facilities and Improving the Existing Ones A Resolution for Making Mindanao the Food Basket by Improving its Agriculture Marketing / Logistics System A Resolution for Making Mindanao the Food Basket by Promoting the Development of Food Processing Industries A Resolution for Making Mindanao the Food Basket through a Pro-active Farm Mechanization Program A Resolution for Making Mindanao the Food Basket by Expanding the Utilization of the Advances in Science & Technology A Resolution for Promoting Private Investments in the Banana Industry in Mindanao by the Repeal of Letters of Instruction 58 & 790 A Resolution for Maintaining the Competitiveness of the Vegetable Oil Industries in Mindanao A Resolution Urging the Removal of Discriminatory Tariffs on Philippine Canned Tuna Exports in the European Union A Resolution for a Fast-track Tree Crop Development Program A Resolution Urging the Department of Agriculture (DA) through the Bureau of Fisheries and Aquatic Resources (BFAR), to Address the Issue of Tuna Handline Fishermen of Sosksargen and the Reclassification of their Boats A Resolution for Pilot-testing the Provisions of R.A. 8550

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(The Philippine Fisheries Code of 1998) in Mindanao A Resolution Supporting the Presidency of Gloria Macapagal Arroyo and the Appointment of Vice-President Teofisto T. Guingona, Jr. and the other Minadanaoans to the Arroyo Cabinet

TABLE OF CONTENTS (Annex B)

Title Page No.

I. Global Prospects for Mindanao II. Mindanao Situationer III. Supply – Demand Analysis and Projections of Key Agri-Products Fresh Fish Rice Corn Pork Chicken Industry Updates IV. Palm Oil V. Coffee VI. Peanut VII. Fisheries & Aquaculture Development VIII. Coconut Industry Development Program IX. Mindanao Irrigation Plan: 2001 – 2004 X. Industry Assistance in Postharvest Interventions in Mindanao XI. Asian Development Bank Program in Mindanao XII. United States Agency for International Development (USAID) Program XIII. World Bank Program in Mindanao XIV. Land Bank’s Role in Mindanao’s Agricultural Development Plan XV. Agricultural Priorities XVI. President Gloria Macapagal Arroyo’s Speech

1 – 2

2 – 3

4 4 – 5 5 – 6

6 6 – 7

7 – 8 8 – 9

9 – 10

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10 – 11

11 – 12

12 – 13

13 – 14

15 - 16

17 – 18

18 – 20

20 – 21

21 – 22

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ANNEX B EXCERPTS FROM THE SPEECHES DELIVERED DURING THE CONGRESS I. Global Prospects for Mindanao Agriculture by Mr. Luisito P. Lorenzo, CEO, La Panday Holdings, Inc. 1. In his keynote speech, Mr. Lorenzo underscored the need to actualize the decades-old expectation of Mindanao as the land of promise as all the requisite assets are present : • Mindanao’s rich natural resources, with soil and weather conditions conducive to

agricultural production; • Abundant water supply in the irrigated areas; • The pioneering spirit, “can-do” attitude of the people in the region; and • The availability of new technology around the world. 2. He firmly believes that Mindanao has got what it takes to meet the world’s market demand and expectations for agricultural produce. This can be achieved by implementing the “seed-to-shelf” focus every step of the business. This means employing the best land-preparation systems, quality choice and handling of seed materials and modern farming systems to the efficient harvesting and processing techniques, packaging, logistics and marketing strategies. Marketing strategies are anchored on the belief that the customer is the “king” and that there is a need to adopt a ‘customer-oriented” approach to be able to respond quickly to market developments. However, while pushing forward, he pointed out the need to keep an eye on what the market can absorb to maintain a good supply-demand equilibrium to ensure that local industries continue to rise steadily, and not crush after a brief spurt of growth. To achieve this, industry associations by product sector should organize, interact, and be listened to in frequent dialogues with the DA, especially on matters where intervention is required. 3. Mr. Lorenzo highlighted the role of the government in realizing the dream to make Mindanao as the food basket of the country. He stressed the needed shift towards behaving less like a bureaucratic and regulatory body and more like a customer-oriented partner of the private sector. Among the measures he suggested are the following: § Making credit available to responsible farmer groups, as well as find access to

cheaper loans; allow amendments within Government Financial Institutions (GFIs) lending policies were possible, to accept agricultural land as collateral.

§ Help farmers become more cost-efficient in sourcing inputs by using generic agri-

chemicals to save on costs. (Note: agri-chemicals in the Philippines are branded and therefore more expensive compared with similar products in competing countries).

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§ Creatively allow for Build-Operate-Transfer for agricultural infrastructure that the private sector is willing to set up, for example, irrigation systems, harvest and post-harvest / cold store facilities, farm-to-market roads, etc.

§ Address tariff and non-tariff barriers to gain fair access in international markets. § Fair compensation for those whose lands were lost as a result of the agrarian reform

program.

4. In conclusion, he stressed the need for the Mindanaoan to make a concerted effort to think, function and move forward as a team - to unify the government and private sector and get the different departments to work together for the greater good. II. Mindanao Situationer by Hon. Paul Dominguez, Presidential Adviser on Regional Development 5. Mr. Dominguez noted that Mindanao economy is undergoing an economic transformation as reflected in the 1992 and 1999 NSCB reports. GRDP by Sector:

SECTOR Yr 1992 1999 Agri 42% 37% Service 33% 36% Industry 25% 27% 6. Said transformation is good for the Mindanao economy as the service and the industry sectors have posted positive growth rates in the past 7 years even when the agri sector has declined by 5%. This reflects a growing manufacturing sector absorbing agricultural produce and generating more jobs for the Mindanaoans. 7. However, overall Mindanao’s economic performance of 2.9% from 1994 to 1999 is far below compared to that of the national economy of 3.8%. 8. Banana tops as the top export commodity accounting for 22.34% market share, followed by coconuts (copra) at 21.83%, pineapples (fresh/juice) at 10.58%, tunas, skipjack and bonito at 4.0% and shrimps and prawns (frozen) at 1.84%. 9. Major markets of Mindanao exports include Japan (30.29%), USA (25.35% and Netherlands (11.60%). Other major markets include China, Korea, Taiwan, Singapore, Malaysia, Hongkong and Canada. By region, Region XI gets the biggest export share at 55.73%, followed by Region IX at 13.20%, CARAGA at 1.88% and ARMM at 0,04%. 10. Air traffic obtained an average annual growth rate of 4.80% from 1994 to 1999 while sea traffic averages at 2,73% of the same period. Air and sea cargo posted an

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average growth rate of 6.44% and 5.54%, respectively. Tourist arrivals in Mindanao scored an average annual growth rate of 10.1% also in the same period. 11. Power consumption increased by an average of 4.4% from 1994-1999 while telephone lines have improved by eightfold. 12. Flow of investments into the region has been erratic in the same period with its highest in 1994 and lowest in 1998. Private building construction suffered a sharp decline of 45.7% from 1997 to 1999. Employment rate manages a 93.5% average from 1994 to 2000, however at a declining rate from 1998 to 2000. 13. Poverty incidence is high in Mindanao with 18 out of the 25 most deprived provinces in the country are in the island. Status of ODA in Mindanao as of December 2000 14. As of December 2000, Mindanao accounts for 29% of the total estimated value of ODA commitments in the Philippines.. Luzon and Visayas accounts for the remaining 71%. • Commitments: 10 committed projects with a total value of US$391.83 M • ODA Pipeline: 13 projects with a total value of US$517.65 M • Ongoing projects: 24 ongoing projects with a total value of US$796.3 M

18 projects are loan funded amounting to US$678 M 6 projects are grant funded amounting to US$119 M

Mindanao Agenda (Central Focus): Improvement of Peace and Order Situation 15. Mr. Dominguez pointed out that while peace negotiations with the MILF are ongoing, project implementation will be undertaken by the new administration at the same time. Focus will be given on the ff:

• Political and socio-economic reforms • Greater people’s participation; • Direct government intervention for former combatants and communities caught in

armed conflict, and • Peace education and advocacy • Accelerated investments in infrastructure projects • Revitalized BIMP-EAGA • Forge Investment Agreements with Regional Partners • More Stability in the Countryside • Investments and Employment in Potential Growth Areas Policy reforms in EAGA • Extended travel tax exemption until December 2001

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• Fifth Freedom Traffic Rights within BIMP-EAGA • 50% reduction of immigration charges for airlines serving BIMP-EAGA III. Supply / Demand Analysis and Projections of Key Agri-Products by Dr. Rolando Ty, Executive Director, Center for Food & Agribusiness, University of Asia & the Pacific

Fresh Fish Supply 16. Total production (commercial, municipal, aquaculture) of all kinds (fish, seaweeds and crustaceans) in Mindanao range from 1.1 - 1.2 M tons annually over the last five five years.

17. Western Mindanao and ARMM (primarily Sulu and Tawi-Tawi) lead in production with more than 400,000 tons. A large part of the former and much of the latter are seaweeds. 18. Fresh fish supply account for around 50% of fishery and aquaculture products. Demand 19. The estimated fresh fish demand was over 500,000 tons annually from 1995, with small surplus. Per capita consumption in the region is around 21 kg., some 2 kg., higher than the national average. Supply / Demand Gap 20. Projections indicate that Mindanao is not self-sufficient in fresh fish with deficits ranging from 10,000 to 27,000 tons over the next few years (note: for validation).

21. According to industry sources, the tuna canning industry in Mindanao has some 800 tons fish per day capacity for one shift, or 240,000 tons per year. A part of the supply is imported while most is caught by Philippine vessels in Pacific waters outside the Philippine Exclusive Economic Zone (EEZ). This adds up to the national deficit seen to reach more than 200,000 tons annually (note: for validation).

Rice Supply 22. Mindanao produced about 3.04 M tons of palay in 2000 up by 2.79 M tons in 1995 and 2.21 M ton in 1998. Production comprises about 25% of national output: 24.7% of 12.29 M tons in 2000 and 26.5% of 10.54 M tons in 1995.

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23. Mindanao produced rice equivalent some 1.97 M tons at 65% milling rate in 2000. 24. In terms of area, total harvested areas reached about 1.0 M in 2000 from 930,000 hectares in 1995. In 2000, about 60% of the areas were irrigated (604,000 ha) compared to 59.8% in 1995 (556,000 ha). 25 About 275,000 hectare of physical land are under irrigation, or 29% of total irrigable areas of 959,000 ha in 2000. 26. In terms of yield, average in 2000 was 3 tons/ha: 3.62 ton/ha for irrigated areas; and 2.2 tons/hectare for rain-fed areas. These yields are far lower than over 6 tons/ha in China, Japan and South Korea and 4.5 ton/ha in Indonesia. Demand 27. The estimated rice demand was about 2.02 M tons in 2000; 91.2% (1.85 M tons) for food; 2.4% for seeds (equivalent), and 6.4% for feeds, wastes, etc. Food consumption is based on per capita usage of 104.5 kg times population (2000: 17.67M). Supply / Demand Gap 28. Mindanao is not self-sufficient in rice. There could, however, be seasonal trade with other regions.

29. In 2000, the deficit was about 44,000 tons, down from 194,500 tons in 1999. With El Niño in 2001, this could worsen.

30. As a result of expanded irrigation program, by 2004 Mindanao will produce some 2.35 M tons rice compared to a projected demand of 2.19 M tons, or a surplus of 156,000 tons.

Corn Supply 31. Mindanao production has been fairly stable over the last 6 years ranging from 2.5 - 2.9 M tons.

32. The region accounts for over 60% of national production with white corn sharing more than 80% and yellow corn more than 50%, respectively.

33. In terms of yield, it has not improved significantly from 1.62 ton/ha in 1995 to 1.76 ton/ha in 2000. Yields in both white and yellow corn are higher than the national average but far lower than benchmark yield of 7.7 ton/ha (USA), 4.9 ton/ha (China) and 3.2 ton/ha (Thailand). Source: FAO, 1993-98 Ave.

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Demand 34. Corn demand in 2000 is estimated at 1.2 tons with some 65% going to the feeds and processing sectors. Food accounts for 25 - 30%. Per capita consumption is estimated at 20 kg. Supply / Demand 35. Mindanao is self-sufficient in corn with over 1.6 million tons available for "export" to other regions. This is projected to reach 1.8 M tons by 2004 similar to the 1995 level.

Pork

Supply 36. Mindanao produced about 345,000 tons of pork (carcass and offal) in 1999, or 29% of national production. A third of Mindanao supply comes from Southern Mindanao. Demand 37. Pork demand in 1999 of 210,000 tons is used mainly for food (98%) and a little for processing. Per capita consumption of 11.8 kg (1999) in the region was 4 kg below the national per capita figure (15.9 kg.). Supply / Demand 38. Given the low consumption of Mindanao, the region has reportedly surpluses that are shipped to other regions. This was about 134,000 tons (2 M heads) in 1999 and is projected to grow to about 193,000 (2.9 M heads) by 2004.

39. However, according to industry sources in General Santos City, the above surpluses may have been over estimated. Shipments out of General Santos are only about 25,000 heads/month. There is an urgent need to validate population and production figures.

Chicken

Supply 40. Mindanao production has remained at about 120,000 tons (120 M birds) annually over 1997 - 1999 period. It contributes 24% to national output with Southern Mindanao accounting for over a third of the total production.

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Demand 41. Chicken demand is basically for food with per capita consumption (6.6 kg in 2000) increasing at a relatively steady rate. However, per capita consumption is below the national average. Supply / Demand Gap 42. Mindanao has a small surplus of chicken. However, estimates indicate a decreasing surplus till 2004 unless production growth exceeds 5% p.a. While the region is surplus producer, its contribution so far to food security (in chicken) is minimal. However, the potential for higher surplus exists.

Industry Updates IV. Palm Oil Industries: Mr. Hector Quesada by Mr. Dennis Villareal, President, Filipinas Palm Oil Industries, Inc. 43. There is a large and growing market for palm oil so there is a need for our government to support establishment of 300,000 hectares of palm oil in Mindanao. There are vast areas of Mindanao specifically the CARAGA Region for growing palm oil. 44. Palm Oil has been a very important and profitable crop in Malaysia and Indonesia with more than 3 M hectares devoted to palm oil production compared to 15,000 hectares in the Philippines. Palm oil, palm kernel oil and its derivatives is used for cooking oil, confectionary fat, shortening, noodles, margarine, ice cream, biscuits, filled milk, infant milk formula, cocao butter substitutes, coffee creamer, soap and many more. 45. Price of palm oil is at its all time low, however, for a long-term investor now is the time to plant at bottom price to reap the fruits at the top price. Recommendations for the Development of the Palm Oil Industry in the Philippines • New legislation and / or an executive order that would encourage establishment of

palm oil plantations in the Philippines, particularly in Mindanao. • Plantations such as FPII, Agusan Plantations and KENRAM be given special status as

nucleus plantations because they provide the technology, processing, marketing and management for the out-grower farms that will be established around the nucleus plantations.

• Exemption of the above-mentioned companies from CARP or given special rights to maintain management control over their plantation lands

• Availability of long-term financing to fund development costs which is about P100,000 per hectare or P30B for 30,000 hectares.

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• Investment incentives such as income tax holidays, real property tax and exemption from other local taxes. At the moment palm oil trees, roads, bridges and drainage system are slapped with real property taxes

• Dredging of Agusan River to reduce excessive flooding and allow barging of produce to Butuan from towns along the Agusan River.

• Allocation of infrastructure funds for the CARAGA Region and other identified areas.

• Extend the tariff of 15% on palm oil and other vegetable oils at least 2003 to allow our industry the necessary breathing spell from the current very low commodity prices and the consequent flooding of cheap oil from Malaysia.

V. Coffee Industry by Glicerio Lumagbas, AVP, Nestle Philippines, Inc Supply 46. The main varieties of coffee grown in the Philippines are: robusta, arabica and excelsa, in the order of importance. There are about 150,000 ha of coffee planted in the country as of Yr 2000 (note: for validation). 47. Coffee used to be a major export of the country. Exports reached 42,700 tons ($120 M) in 1986. Following the collapse of the International Coffee Agreement in1989, coffee exports fell to less than 500 tons in 1996. Philippine production is now lagging behind Vietnam and Indonesia in coffee bean production. The declining production is due to the loss of hectarage on account of the massive conversion of agricultural lands and the trend among coffee growers to diversify to high-value crops 48. Vietnam’s production is 700,00 MT with average production of 1.5 MT per hectare per year and as high as 4 to 5 MT per hectare for irrigated coffee farms. In Indonesia, average production is 800 kgs per hectare. The Philippines does not even produce 10% of Vietnam’s output. Average national production is 450 kgs per hectare per year. Southern Luzon produces 800 kgs. per hectare, Northern Luzon – 250 kgs., Northern Mindanao – 400 kgs, Southern Mindanao – 380 kgs and the Visayas –290 kgs. Demand

49. Domestic demand was about 50,000 tons (green beans) in 2000, or about 670 grams GCB per person per year. This is projected to increase by at least 3% p.a from 50,000 tons in 2000 to 67,000 tons in 2010 and 90,000 tons in 2020. Mindanao demand was estimated at about 8,800 tons (17.7 M people in 2000 x 0.5 kilos per capita). 50. Nestle (Nescafe brand) is the largest buyer and processor with about 80% of the market share of soluble coffee. Far behind are Consolidated Foods Corporation (Universal Robina Group - Great Taste and Blend 45), Commonwealth Foods Corporation (Kaffe de Oro). The export market will continue to be a large market, albeit growing at less than 1-2% p.a. due to shift to tea, juices and mineral water in many

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developed countries. Quality, minimum volumes and service reliability will remain important. Supply / Demand Gap

51. The Philippines is already in deficit situation. Nestle is sourcing 15,000 MT of coffee bean from Vietnam on a yearly basis because local supply could not meet its demand. Because of this situation, the Philippine coffee farmers are losing P500M in revenue computed at P35 per kilo (buying price of Nestle from farmers). It wants to prioritize coffee produced in the Philippines than that produced in Vietnam or Indonesia. Opportunities for the Mindanaoan Coffee farmers • The expansion of production will hinge on three fronts: new plantings; rejuvenated

areas and increased yields. • Mindanao especially the CARAGA Region is best suited to coffee bean production • Main factory is located in Cagayan de Oro City. • Typhoon-free environment • Availability of open areas (hilly terrain) • Less vulnerable to effects of El Niño with proper irrigation in many areas • Presence of foreign funded livelihood projects for depressed and marginalized areas. VI. Peanut Industry by Engr. Edwin B. Andot, President, Northern Mindanao Peanut Industry Association, Inc. (NMPIA) 52. There is a huge demand for peanuts, however, domestic supply is low and unreliable. According to the 1999 statistics, the Philippines is importing shelled peanuts from China (63%), Indonesia (22%), Vietnam (9%), Singapore (2%), Hongkong (2%) and the remaining 2% are from other countries. Ilocos, Cagayan and Mindanao are traditional peanut producer of peanuts. Why Grow Peanuts in Mindanao

• It has high economic value • High marketability • Favorable agro-climatic conditions • Vast potential area • Compatible with current cropping system (e.g., corn, coconut, fruit, industrial crops) • There I support from private and government agencies

Strategies: As proposed by the Northern Mindanao Peanut Association, Inc. (NMPIA)

• Market Development • Seed Production Program

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• Technical Assistance • Research & Development • Linkaging & Networking • Organizational Development • Mechanization program (prototyping and fabrication of equipment) • Postharvest facilities (shelling and consolidation centers) 53. The NMPIA, Inc, an organization based in Cagayan de Oro City is providing technical assistance to peanut growers of Agusan del Norte, Lanao Norte and Sur and SOSKSARGEN areas. It plans to plant 5T hectares of peanuts in Northern Mindanao.

VII. Fisheries and Aquaculture Development by Hon. Cesar Drilon, Undersecretary, DA

• Fishery production contributes 19% to Gross Value Added (GVA) and 2.7% of GDP • Estimated employment in the fishery sector stands at 1.0 M • Production growth rate of 2% from 1998 to 1999 (2.7 MT to 2.8 MT) and 3.5% from

1999 to 2000 • In 2000, Mindanao contributes 32.4% of the total commercial fishery production • Upgrading of Zamboanga fish port is ongoing while expansion of the Gen San Fish

Port is in the pipeline • The Philippines has a bilateral fishing agreements with the countries of Palau, Papua

New Guinea and Indonesia • Provided Training and Research Vessel • Eighty per cent FARM-C organized throughout the country • Provided 5 patrol boats in 5 Fishery Resource Management Project (FRMP) areas in

Mindanao (Butuan Bay, Gingoog, Pangil Bay, Davao Gulf. • BFAR allocated P206 M for Mindanao in 2000 of which P 65 M was released. VIII. Coconut Industry Development Program by Eduardo U. Escueta, PCA Administrator

• There are 300 M coconut in the whole country of which 75 M are too old and

unproductive. • 1.5 M trees are cut every year • There is need for a national policy encouraging farmers to plant coconuts, however,

government needs to immediately response the problem on the lack of seedlings. • A coconut farmer in the Philippines earns only P10,000 per hectare per year. • Coconut farmers need to practice multi-cropping to enhance income on coconut

production.

54. PCA has 7 Development Programs for Coconut, one of which is the Maunlad Na Niyugan Tugon Sa Kahirapan.

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Products with Good Market Potentials

• Coco charcoal (briquetes as coal substitutes) • Crude coconut oil as diesel fuel substitute • Coconut coir for soil preservation and rehabilitation • Coco peat as growth medium in greenhouse farming in Europe and the U.S. • Coco sugar and coco honey from coconut soup

IX. Mindanao Irrigation Plan: 2001 - 2004 by Cesar E. Gonzales, Administrator, National Irrigation Administration

55. Mindanao has eighteen (18) river basins. Potential irrigable area is 959,000hectares but only 28%, or 267,000 hectares are with irrigation facilities at present.

56. There are 41 National Irrigation Systems that are operated by NIA with some 156,300 ha serving 85,800 farmers across the island. These are complemented by 610 communal irrigation systems with a total area of 90,100 hectares with 67,700 farmer beneficiaries and 244 private irrigation systems in 20,400 hectares built through the initiative of small group farmers. 57. However, in comparison with the rest of the country, Mindanao is lagging behind in irrigation development. Firstly, because irrigation systems had been built in Luzon and Panay in the 1930's while irrigation development came to Mindanao only in the 1950's. The first NIA system that came into operation in Mindanao is the Padada River Irrigation System in 1955. 58. Secondly, the recent outbreak of hostilities in some areas of Mindanao has affected irrigation development of the following projects: Malitubog-Maridagao Irrigation Project, Kabulnan Irrigation and Area Development Project and the River Basin and Watershed Management Program. Overall, % level of irrigation development in Luzon stands at 51%, Visayas at 45% and Mindanao at 28%. 59. There are four (4) other ongoing major irrigation projects implemented by NIA in Mindanao with foreign funding assistance. These are the Lower Agusan Development Project-Irrigation Component, Water Resources Development Project, Southern Philippines Irrigation Sector Project and the Grains Sector Development Program Irrigation Component.

60. NIA is also undertaking the irrigation component of projects and programs implemented by other government agencies, such as the Comprehensive Agrarian Reform Program which is partly funded by JBIC and World Bank, Balikatan Sagip Patubig Program jointly undertaken by the DA, LGU and NIA and the Mindanao Rural Development Program (Phase 1) 80% of which is funded by the WB. At the end of 2001, irrigation development in Mindanao is expected to increase to 30% with the total service area of 285,700 hectares.

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61. Pipeline Irrigation Projects: 2002 - 2004. NIA has lined up 11 projects for foreign assistance and 16 projects for local funding in different areas in Mindanao for implementation beginning 2002. Investment requirement will be P19.9 B. Total service area of irrigation systems is estimated to reach 358,600 ha and Mindanao will then attain 37% development. X. Industry Assistance in Postharvest Intervention in Mindanao by Dir. Ricardo L. Cachuela of BPHRE • Constructed 4,122 units of Multi Purpose Drying Pavement (MPDPs) amounting to

P247.32M, each unit measuring 420 sq. m. with a drying capacity of 100 bags per batch

• Distributed 550 units of Mobile Flash Dryers (MFDs). These dryers can be best used during emergencies and can dry grains up to 18% moisture content

• Distributed 278 units of moisture meters, which technology were developed by BHPRE Engineers

• Other PH Facilities distributed include: 103 units of mini-warehouse, 105 units of rice treshers, 130 units of corn shellers, 420 units of tarpualin canvass and 10 units of corn crib

Three Major Projects of BPHRE • Diffused Light System for Potato Seed (Kapatagan, Digos, Davao del Sur) • Cold Chain System for Fruits Ibago Ishiro, Davao City • Bulk Handing System for Corn (Liboran, Baungon, Bukidnon) Other Projects • Adaptation of Mobile Flash Dryer for Corn (Bukidnon) • Establishment of Techno-Demo Centers (TDC) Digos, Davao del Sur & Malaybalay,

Bukidnon) • Mobile Controlled Atmosphere Technology for Storage & Transport of Perishable

Crops (Davao del Sur) • Application of Heat Pipe Technology for Corn Drying (Bukidnon)

Other BPHRE Services (Technology Promotion & Extension Activities0

• Establishment of Technology Demonstration Centers aim to transfer technologies to

small holder entrepreneurs • Industrial Extension – accreditation of manufacturers to fabricate BPHRE designed

technologies such as corn sheller and mechanical dryer • Training & Seminar on Postharvest

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Resolution in Support for Making Mindanao The Food Basket

• Extraction of water from humid air for use in drift irrigation while the same machine in used for cold storage of high value perishable crops (on line and ready to take off).

• Rehabilitation and/or upgrading of poorly performing, non-performing or antiquated postharvest facilities (ongoing).

• Bulk Handling Program for corn in SOKSARGEN and Bulk Loading & Unloading in Gen. Santos City (approved under DANIDA mixed credit)

• Mobilization of mobile cold storage facilities for fruits and vegetables, livestock and fishery products under the cold chain (in progress)

• Utilization of advances in Science & Technology, i.e. use of monitoring device to determine the flow & movement (physical) of commodity through GPS (global positioning system).

• Intensify mycotoxin program which will address the monitoring and control of aflatoxin in corn

• Pro-active farm mechanization XI. Asian Development Bank Program in Mindanao by Mr. B. R. Philipps, Manager, AEAR Division, ADB 62. Mr. Philipps stressed that Mindanao’s abundance of natural resources, rich soils and good rainfall stand in stark contrast to the levels of poverty in the region: the ARMM, the Central and Northern Regions of Mindanao have poverty levels exceeding 50%. He said that ADB’s reason for being is poverty reduction.

63. ADB’s three core areas of intervention as contained in the proposed long-term strategic framework:

• Sustainable economic growth, which includes investments in the social sector for

human development and attention to environmentally sound development; • Inclusive social development, which addresses equity and empowerment issues and

in particular gender equity issues; and • Governance for effective policies and institutions, which focuses on promoting

good governance, assisting in decentralization, and strengthening institutions. 64. In addition, the long-term strategic framework has three crosscutting themes:

• Promoting the role of the private sector in development; • Regional cooperation and integration fro development; and • Addressing environmental sustainability 65. These core areas of intervention and crosscutting themes help frame ADB’s country assistance plan for the Philippines, which closely aligns with the Government’s Medium Term Development Plan. In essence, the plan calls for:

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• Promoting equitable growth and good governance, which means ADB providing increased attention to rural development and more balanced regional development – with special attention to Southern Philippines, including Mindanao;

• Better provision of basic social services such as health care and education; and • Management and protection of the environment ADB Projects in Mindanao:

66. Four loans worth together over $400M have been approved that focus on Southern Philippines and Mindanao to provide support for agrarian reform communities, irrigation works, and rural infrastructure (work is slow)

Projects Amount Yr of Implementation

Agrarian Reform Communities $93 M Dec 1998 Southern Philippines Irrigation $60 M Dec 1998 Grain Sector Development Project

$175 M April 2000

Rural Productivity Enhancement $75M Oct 2000 67. He emphasized some needed actions to improve the situation in Mindanao.

• Investments in rural infrastructure are essential to help increase rural productivity,

raise real incomes, and reduce the high transaction costs that fall on poor farmers • Policies are necessary that allow farmers to get a return on their investment. (Note:

The Grain Sector Development Program – which was developed with by the Government and supported by ADB – will help strengthen this policy environment.

• There is a need to improve the efficiency of production to benefit BOTH farmer and consumer alike.

68. Mr. Philipps also underscored the findings of an ADB study in rural Asia in 2000 as follows:

• Agriculture growth is crucial to poverty reduction in rural areas, however,

agriculture growth alone is not sufficient for broad-based and sustainable improvements in the quality of life in rural areas.

• Attention must be given to equity issues, if the benefits from agriculture growth are to fuel rural purchasing power and the growth of the rural non-farm economy.

• Investments in education and health create synergies that can initiate a virtuous cycle of development, and create pathways out of poverty for children in poor families.

• Importance of social capital in development.

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XII. USAID Program by Ms. Patricia K. Buckles, Mission Director, USAID Philippines

69. Ms. Buckles presented some of the fundamental observations and learning USAID have gathered in the course of their work in Mindanao, as follows:

• Mindanao farmers can and will produce anything as long as there is a market for their

goods. • The nature and pace of development in Mindanao hinges largely on the pro-active

role that Mindanao’s private sector plays and that Government needs to support their efforts by creating a policy environment conducive to the development of competitive markets.

• Mindanao needs an appropriate share of the national infrastructure budgets. • Continued equitable treatment of the Muslim community. • Strengthening of private business support organizations or BSOs such as the Western

Mindanao Seaweed Council, the Mindanao Fruit Development Council, the Socsargen Fishing Federation, the Northern Mindanao Peanut Industry Development Council, the Trees Consortium Mindanao, and the Mindanao Business Council

• The need to reduce shipping costs in moving Mindanao’s agricultural products by increasing competition in the inter-island shipping, and the deregulation of pricing policies.

• To address rural poverty by building rural infrastructure like irrigation systems and farm to market rods, and to electrify the countryside.

Mindanao’s Potential

• Mindanao produces over 40% of the food grown in the Philippines and potential for

the further development of agribusiness, aquaculture, and fisheries is enormous. • Demand, both national and international, for agriculture, aquaculture and fisheries

products are strong and growing. Yet Mindanao producers are not increasing their market share when it comes to most high valued products.

• Their share of the market for products needed by institutional buyers like hotels and fast food chains even those located here in Mindanao, is small. This is partly due to lack of quality production and of an efficient cold chain that could assure that products get to those markets reliably and promptly.

• There is little product processing going on in Mindanao. To stimulate the processing of products here, Mindanao needs to attract more investment to strengthen its producer associations.

• Mindanao has very productive land and abundant water resources. It does not suffer from typhoons. With these advantages, Mindanao should be able to put food on tables all over Mindanao, the Visayas and Luzon as well as the entire Pacific region – all the way from China to the South Pacific.

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Necessary Actions to Achieve Potential

• Finalization of tenure arrangements to remove uncertainty associated with agrarian reform

• Expansion of network of farm-to-market roads and irrigation systems in places where they are needed most and where potential is greatest.

• As the quality of products becomes increasingly important in global trade, the Government needs to regularly and promptly disseminate to producers, processors, and marketers adequate information on sanitary and phytosanitary regulations and measures

• Privatization of ports. Shipping costs need to be reduced through increased competition in the operations of key ports. It is the only way to get the much needed investment in port modernization and expansion.

• Lower the perceived risks of lending so that, banks will lend more in Mindanao. A guarantee against “political” and “civil disorder” could be helpful.

• Mindanao to diversify its economy by developing other sectors, such as assembly industries, information technology, and tourism for sustainable development. Mindanao needs to generate more off-farm jobs to keep pace with its growing population.

70. Ms Buckles emphasized that both problems and solutions have been pointed out and it is now the time for action.

USAID Programs in Mindanao

71. Fifty per cent of all activities being carried out by USAID in the Philippines are focused on Mindanao. These are the ff:

• The Growth with Equity in Mindanao, or GEM Program which activities are all

aimed at accelerating economic growth on the island. One of the major activities carried out under the GEM Program is its ‘Targeted Commodity Expansion Program”, Business Support Organization Development Program

• Emergency Livelihood Assistance Program, or ELAP • Support Which Implements Fast Transitions, or SWIFT Program • Coastal Resource Management Program • Health and family Planning • Local Government Administration Improvement 72. Both ELAP and SWIFT programs are focused on assisting former MNLF combatants make the transition from being guerilla fighters to being productive farmers and fishermen.

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XIII. World Bank Program in Mindanao by Richard Anson, Rural Development Sector Coordinator, World Bank

73. Mr. Anson pointed out that increased food production, its shared distribution and enhanced food security among all Mindanaoan households is a core element of the vision for achieving peace and development in Mindanao. 74. The following are some of the relevant aspects of the context to attaining food security as a key element of durable peace and development in Mindanao. • Multi-faceted nature of conflict in Mindanao; links to political, religious, cultural

aspects and pervasive poverty. • Mindanao has the potential to be “locomotive” for development of the Philippines. • The “all out war” policy in 2000 complicated the peace development process. • New Government is taking position on peace process and evaluating previous

initiatives. • Need to learn and apply relevant lesson from past peace development efforts. What is the WBs Assistance Program in Mindanao?

75. The overall thrust of the WB is to support the accelerated reduction of poverty by strengthening the entire rural sector through a comprehensive approach to reducing rural poverty.

WB Strategies

• Support Priority Structural Reforms • Facilitate increased, prioritized and more effective public and private sector

investments • Improve natural resource management • Strengthen rural development (RD), institutional framework/arrangements, enhanced

capacity and performance partnerships

Overview of WB Project Assistance in the Phil./Mindanao

• 18 of 24 WB-financed projects (75%) amounting to US$1.7 B support activities in Mindanao (all sectors)

• Of WB total loans of US$1.7 B, $1.2 B is un-disbursed, with $770 M available to Mindanao

Rural Development Projects with Components in Mindanao

• Agrarian Reform Communities Development Project • Rural Finance II and III • Community-Based Resource Management Project • Conservation of Priority Protected Areas Project

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• Water Resources Development Project Exclusive Mindanao Projects

• SZOPAD Social Fund Project • Mindanao Rural Development Program ($290 M over 15 years) • Recently approved Post-Conflict Fund ($950,000) • IDF Grant to (US$260 M) to enhance RD and NRM Performance Indicators r Mgt.

Systems and Promote Better results

WB Projects in Mindanao in the Pipeline

• ARCDP II • River Basin and Watershed Management • MRDP (Phases 2 to 4) to cover all 24 provinces • Rural Electrification

76. Mr. Anson also underscored the main challenges and opportunities to enhance impact and achieve durable peace in Mindanao, as follows: • IAs/LGUs to Improve Performance and Sustainable Impacts of On-going Projects • Prioritize and Implement a Responsive & Mindanaoan-driven Peace & Development

Plan & Investments.

XIV. Land Bank's Role in Mindanao's Agricultural Development Plan by Hon. Margarrito Teves, President, LBP

77. Mr. Teves first presented the Growth Prospects of the Agricultural Sector, to wit:

• For 2001, the agriculture sector will be affected by the impending El Niño weather

disturbance, high cost of farm inputs, weak purchasing and escalating oil prices. • Based on estimates of the University of Asia and the Pacific, a decrease of 3% in

palay production in 2001 is expected with reduced hectarage especially for rainfed farms.

• Corn is projected to expand by 4% due to increased hybrid plantings particularly in Mindanao, which accounts for 30% of corn production.

• There would be a slight growth of 1.7% for coconut. • Sugar output will be down by 11.2%. • Banana will have minimal growth at 0.5% with El Niño. 78. The following are LBP's various programs and projects in Mindanao aimed at addressing food security:

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Loans to Small farmers and Fisherfolk and Agrarian Beneficiaries

• From 1995 to 2000, total loans extended to small farmers in Mindanao expanded

from P6.8 B to P 13.8 B notwithstanding the financial crisis in mid-1997 and the El Niño in 1998.

• Credit assistance to small farmers and fisher-folks doubled from 1.6 B in 1995 to P

3.8 B in 2000 benefiting mostly rice and corn farmers as well as livestock producers and those engaged in high-value crops production and marketing activities.

Land Bank’s Special Programs for Countryside Development (TODO-UNLAD). This links farmers’ cooperatives, agro-processing firms, countryside financial institutions, local government units and commercial enterprises around a comprehensive package of facilities, infrastructure, marketing and institutional-building support.

• A total of P1.9 B or 69% of TODO UNLAD total loans have been released in

Mindanao as of December 2000 representing 11 ongoing projects such as the Davao Rice Project in Panabo, Davao and Cattle Fattening and Banana Production Project in Datu Paglas , Maguindanao.

Accelerating Change in the Countryside thru Equity Sharing Strategy (ACCESS). Launched in 1999, ACCESS utilizes an innovative approach aimed at priming local agriculture-related and off-farm economic projects in priority areas outside of Metro Manila and Cebu. Under the ACCESS Program, Land Bank will provide equity participation of up to P 20M (or up to 49% of the entity’s capitalization, whichever is lower) and this shall be gradually divested or sold to potential investors.

79. As of 31 December 2000, there are nine developmental projects totaling P280 M. LB has put up P86.7M in equity investments under the program, of which two projects originated from Mindanao – an integrated rice commodity system in Matanao, Davao del Sur (P20M) and a rubber latex project in Naga, Zamboanga del Sur (P15.4M). LB is currently reviewing a proposal for a shrimp processing plant in Cabadbaran, Agusan del Norte costing P35 M. The project is collaboration among the De Oro Marine Resources, which will invest 54% in the project; the Municipality of Magallanes and three Land Bank assisted cooperatives.

LBP Financing Programs and Multilateral and Bilateral Partners

• Countryside Loan Fund III (CLF). This is a US$150 M loan facility implemented

by the bank in August 1999. Supported by the World Bank, CLF aims to assist private investments in the countryside particularly the small and medium enterprises in the areas of agro-processing, manufacturing services, environmental protection, tourism-related projects and trading of agricultural goods are qualified under the

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program. Cumulative loan releases under CLF III as of December 2000 reached P1.1B with Mindanao getting the largest share of loans with 67% (P742M).

JBIC – Rural Farmers and Agrarian Reform Support Credit Project (RASCP). Funded by a loan facility from the Japan Bank for International Cooperation (JBIC) since 1996, this facility is the largest credit window of the Bank focused solely on farmers cooperatives and ARB cooperatives in agrarian reform communities (ARC). Eligible projects include agriculture related activities such as production of cereals/grains, vegetables, fruits, seeds and other crops, livestock and poultry production, fisheries development, and food and agro-processing and support services. As of December 2000, a total loan o P677 M or 33% were channeled to various Mindanao projects involving crop production activities, livestock fisheries, working capital and fixed assests acquisition.

LBP’s Commitment to Mindanao

• Loans to deposit ratio stood at 105% as of yearend 2000. This means that for every

peso in deposits that Land Bank generates in Mindanao, it plows back more in loans for various economic progress across the island.

• Empower people through the TODO UNLAD • LBP is maximizing strong linkage with multilateral and bilateral • agencies

XV. Agricultural Priorities for the Next 100 Days by Hon. Leonardo K. Montemayor, Secretary, DA

80. Secretary Montemayor stressed that the economic growth of the country would be influenced largely on how the development and growth of the agricultural sector will be managed. He then proceeded by presenting the Performance and Projections of the Agriculture Sector and the 11 Point Agenda of the DA, as follows:

• Agriculture posted a growth of 3.5% in CY 2000, driven mainly by output increases

in palay, coconut, banana, and in poultry, livestock and aquaculture. • The sector's growth is expected to slow down between 2.4 to 3% owing to the

expected recurrence of the El Niño.

Eleven (11) Point Agenda of the DA

• El Niño Mitigation by fast-tracking measures to help farmers access markets and technology, raise farm productivity and incomes, and generate non-farm and off-farm jobs. In line with this, the DA has allocated a budget of P59.& M for cloud-seeding over some 1.21 M ha of rice farms and 420,364 ha of corn farms that may be affected by drought between January and May 2001.

• Accelerate the implementation of the SAFDZ (Strategic Agriculture and Fisheries Development Zones) as provided for by AFMA.

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• Address immediately smuggling activities that adversely affect the agriculture sector and most importantly, the hardest hit, the small farmers and fisher folks.

• Pursue full implementation of the Fisheries Code and ensure the participation of small fisher folks

• Address infrastructure support for agriculture such as roads and irrigation through innovative schemes such as the Build-Operate-Transfer (BOT)

• Design of innovative credit and financing schemes that will entice banks and other Financial Institutions to extend credit to farmers / rural entrepreneurs who are partly or unable to produce loan collateral.

• Recast MAKAMASA Program into a total agribusiness system approach, directed towards increasing farmers' productivity to achieve competitiveness for the framers and consequently, improve their incomes and quality of life.

• Enhanced Trade & Fiscal Incentives for Agriculture • Development Programs for Mindanao to support and further improve agriculture and

fisheries production and domestic and food trade with the implementation of the five (5) new foreign assisted projects in the region costing P30 B: a) the Mindanao Rural Development Programme; b) Upland Development Programme; c) Davao Integrated Development Programme; d) SOCSKSARGEN Agricultural Programme; and e) Cotabato river Basin Integrated Augmentation Support (Cotabato BIGAS)

• Recovery of Coco Levy Funds • People Empowerment through institutional development and organizational

strengthening.

XVI. President Gloria Macapagal Arroyo’s Speech 81. After presenting important facts on Mindanao, the President proceeded by presenting the national agenda of her administration particularly on Mindanao. The administration’s highest priority is to push for Mindanao’s peace and development through a comprehensive policy that addresses the interconnected problems of poverty, secession and insurgency. She emphasized the need for the Filipinos to come to terms with Mindanao not only with the Mindanaoans but people from Luzon, and the Visayas to attain our full potential as a nation. She also spoke of the three principles that will guide the Mindanao development policy, as follows: • First, the ultimate objective must be both peace and development • Second, the framework must be based on constitutionality, national sovereignty and

territorial integrity and • Third, our society, being a multi-ethnic society, should be founded on the social

justice for all, and institutionalized accommodation of ethnic tradition. 82. On the policy question if Mindanao continue to be the country’s targeted food basket, the President assured the Mindanaoans of the continuing support of her administration to make Mindanao as such. However, she said that a lot of things have yet to be done. As the RP’s food basket, the promise is yet to be reached – it is not yet a food basket. Further, she said that it is ironic that despite Mindanao’s excellent climate, it has not even reached its own self sufficiency in rice. For this, she underscored the

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importance of developing agribusiness not just agriculture in order for Mindanao to be a sustainable food basket not just on rice but also in corn, meat, fish, fruits and vegetables. 83. In pursuing this, she said it must be anchored on a productive and generally competitive agriculture with extensive linkages with agro-industries and services. It must have the infra that efficiently moves people, goods and information. And above all, it must be market-oriented. This means widening and deepening of the inter-linkages among sectors. 84. She also drew the attention of the producers to try to diversify and to export from the island not only fresh or primary produce but also processed products with high value-added. Most importantly, she stressed that small farmers particularly those with less purchasing power and those isolated from markets must be assisted to produce food not only for others but also for their own families in quantities and kind that ensure good nutrition for themselves. 85. Furthermore, she pointed out that farm production must be diversified so that market and production risks are reduced. Jobs in industries and services must expand because farming in the long run may not be able to absorb the growing labor force. 86. On the 13 resolutions presented by the Congress, President Arroyo responded to them positively. Aside from resolutions on irrigation and postharvest needs, emphasis was given to the resolution to repeal Letters of Instruction (LOIs) 58 and 790 which limit the hectarage that would go into the planting of bananas. On the resolution to maintain the competitiveness of vegetable oil industries in Mindanao, the President acknowledged the glut in the world market on vegetable oil – the reason why Filipino copra farmers are suffering now as they have never suffered before. She maintained that competitiveness will need a medium and long term program to be able to get to that point where Filipino farmers can compete in market conditions. However, emergency measures to assist coco farmers are being put in place by her administration, as follows: • For NFA and DSWD to include coco farmers in the targeted food subsidy program • DA to provide planting materials to coco farmers • Five projects for coco farmers (?) for additional sources of income. 87. On the resolution for the reclassification of boats for Socsargen, she emphasized the need for a thorough consultation among the stakeholders before it can be decided. On this, he asked Sec. Montemayor to do the consultations. 88. In conclusion, she thanked the people of Mindanao for the opportunity given to her to address the Congress and for the business sector and the bilateral and multilateral assistance community for the works they’ve done for the development of Mindanao.