(Part 2)
Digital transformation is part of what is known as the Industrial Revolution (IR) 4.0, which includes, among others, artificial intelligence, the Internet of Things (IoT), robotics, digitalization and data analytics. It must be pointed out, however, that the Philippines has failed to complete IR 1.0 (the Age of Mechanization), IR 2.0 (the Age of Electrification), and IR 3.0 (the Electronic Age).
Because of serious errors in economic policy making of the Government over the last 50 years, the first industrial revolution (which first happened in England in 1790-1830) was never completed in the Philippine economy because in the first place, we never had an authentic green or agricultural revolution, which, in a large economy like ours, is a pre-requisite to the first industrial revolution. In fact, we are still struggling to attain food security. Our agricultural sector is far from having benefited from the Machine Age, still using to a great extent the labor-intensive farming techniques that have been with us for centuries. The whole country is still suffering from serious shortages of energy, with large areas, especially in hundreds of small islands, still suffering from lack of electricity or high energy costs.
We can claim, though, that we have advanced quite a bit in the electronics revolution, with our consumers having the reputation of being among the biggest consumers per capita of smart phones and e-mail services. We are also among the larger exporters of electronic and semi-conductor components, although at the lower end of the manufacturing value chain.
The question that can be posed about the topic of digital transformation is to what extent can our backward agricultural sector (the Achilles heel of the Philippine economy) absorb the technologies of the Fourth Industrial Revolution. More specifically, to what extent can there be a digital transformation of the Philippine agricultural sector.
Here, we must turn to the distinction that we have made between the sector of agriculture that is composed of millions of small farmers growing such traditional crops as rice, corn, vegetables, and fruits as well as livestock (especially hogs and poultry) and aquaculture products (fish, seaweed, prawns, etc.). It is easy to conceive of the other sector — the commercial farms consisting of thousands of hectares of farms growing bananas, pineapples, coconut, coffee, cacao, mangoes, avocado, bamboo, durian, palm oil, etc.) — adopting the technologies of IR 4.0. These questions were answered by the speakers in the Forum on the Digital Transformation of Philippine Agribusiness that was recently sponsored by the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) and the University of Asia and the Pacific (UA&P).
Obviously, it is that sector of Philippine agribusiness consisting of large commercial plantations as already exist in the banana and pineapple industries where there are many opportunities to apply some of the more advanced technologies in digitalization (as well as mechanization).
Already, we are witnessing the banana and pineapple plantations in Mindanao using drones, robots, data analytics, and Artificial Intelligence in the growing, harvesting, and transporting of their respective crops. In this context, let me refer to the great surprise of a Philippine delegation to Spain when they were invited to visit a vineyard in Toledo owned by Andrew Tan’s Alliance Global Group through Emperador Distillers (a sister company of Megaworld), which bought the company that produces and markets the famous international liquor brand Fundador. When someone from the Philippine delegation asked the farm manager of the 700-hectare vineyard how many workers worked under him, he replied “12.” That vineyard is a prototype of farm operations in labor-scarce countries like Spain that has one of the lowest fertility rates in the world. Obviously, that vineyard in Spain should not be replicated in the Philippines where there are still abundant human resources as can be inferred from our rates of unemployment and especially underemployment.
Here let me refer to the agribusiness country par excellence in the world. I am referring to Australia, that despite being a First World country still has a high percentage of their GDP and labor force accounted for by agribusiness.
In a recent article that appeared in the Financial Times (Jan. 24, 2025) entitled “A test bed for the future of farming,” we can already envision the future of large-scale agribusiness ventures in the Philippines. Let me quote relevant passages from the FT article.
“Justin Dickens is driving his truck along the edges of his farm outside the town of Orange in New South Wales when he gestures to a group of calves in a field. They are going to make ‘good eating,’ he says, checking their weight gain in an app on his phone… Dickens and his wife Amy rear Speckle Park cattle — a breed that produces fewer carbon emission and less methane than rival breeds in Australia, they say. Now they have the data to prove it. Their farm is all about the numbers, Dickens says: they have installed Australia-made sensors that monitor how much how each cow is eating, which pastures are more productive, whether a specific animal is struggling…
“Agricultural technology — often called ‘agritech’ — has been dubbed the new green revolution. Robotics and AI have made their presence felt in commercial greenhouses, potato fields and fruit farms; synthesized products such as dairy-free cheese and plant-based proteins are now in supermarkets. Over $200 billion of investment has been poured into the sector globally in the past decade, according to AgFunder, a venture fund that compiles data on the food technology sector, funding attempts to grow crops, rear animals and create food more efficiently and sustainably — not to mention strengthen food security in volatile geopolitical environment.”
Despite our having failed to complete IR 1.0, IR 2.0, and IR 3.0, it is possible for our agribusiness sector to make significant advances in IR 4.0 as long as we can accelerate the reconsolidation of some of the millions of hectares of farms that were unwisely fragmented by a poorly implemented agrarian reform program.
In the forum on the Digital Transformation of the Agribusiness co-sponsored by UA&P and SEARCA, one of the resource speakers was Christian Moehler, CEO and Founder of Lionheart Farms, a pioneer in reconsolidating small coconut farms into as much as 3,000 hectares in Rizal town, Palawan, south of Puerto Princesa.
I am familiar with the way data analytics was applied productively to his operations. One of our graduating students from the UA&P’s Master in Business Analytics course, Jericho Bonostro, applied data science to the planning of where to plant new coconut seedlings in Lionheart’s reconsolidated coconut farm. He analyzed thousands of data points on the climate experienced by the region to which the farm belongs over a number of years. Through data analytics, the study was able to identify portions of the farm where it would not be advisable to plant the new seedlings because the data revealed that there was a very high probability that the specific area would be devastated by a future natural calamity. Such information saved the company significant capital that would have otherwise been invested in seedlings and planting expenses.
(To be continued.)
Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.
