MANILA — Three hours from traffic-choked Manila is the Science City of Muñoz in the province of Nueva Ecija, a land of lush greenery and known as the center of agricultural research and innovation in the Philippines.
As China continues to grow as a global power, so too does its footprint on the development sector. Its rise comes at a moment when the status quo is shifting in the aid industry. Traditional standard bearers such as the U.S. and EU may still drive the majority of funds and set the agenda, but protectionist policies and changing domestic priorities are setting in motion significant changes.
In this special series, Devex examines China's expanding role in aid and development across the globe. From tensions in Ghana to projects in Pakistan, from climate financing to donor partnerships, from individual philanthropy to state-financed investment, this series traces the past, present and future of Chinese aid and development.
Among the city’s structures is the Philippine-Sino Center for Agricultural Training (PhilSCAT), launched in 2003 and a result of technical cooperation between China and the Philippines. The program’s aim is to explore the potential of Chinese hybrid rice varieties in the country, as well as introduce China’s modernized farming technologies to local farmers. The center is a 10-hectare property composed of buildings that serve as a workshop, lodging for Chinese experts and office space for PhilSCAT staff members. Part of the property is an experimental land area for hybrid seed varieties.
While other Chinese aid-funded projects here have come under fire for alleged corruption, PhilSCAT’s work has avoided such accusations. The center is a rare development program between China and the Philippines. In its office lobby is a wall-to-ceiling painting showing two white birds and a shower of rice grains on Philippine farmers. On the adjacent wall hangs a plaque that says, in Filipino, that the artwork serves as a symbol of friendship between the two nations.
PhilSCAT through the decade
The need to rapidly grow more food in the Philippines is dire. With more than 100 million people to feed, the country ranks 13th in the world in terms of population. Prime agricultural land is increasingly being converted to highways, residential areas and commercial centers. In order to address this, the government placed a two-year moratorium on the conversion of 4.7 million hectares agricultural land in 2016. The Department of Agriculture, meanwhile, is eyeing 1 million hectares for hybrid rice production by 2018.
The government believes hybridization is a key element in reaching the Philippines’ rice self-sufficiency goals. Many agronomists and industry players believe hybrid rice varieties produce higher yields than inbred ones, whose yield performance, they said, had plateaued over the years. Some hybrid varieties produce twice as much rice per hectare, making them an attractive option for a heavy rice-consuming country such as the Philippines. The country’s population growth and dwindling space for agriculture due to industrialization have created an imbalance between rice demand and supply and PhilSCAT fits perfectly into the country’s push for seed hybridization.
The PhilSCAT center was built with a $5 million grant from China’s Ministry of Agriculture, and an estimated $2.9 million of counterpart funding from the Philippine government. It is one of the few known Chinese-aid funded projects in the Philippines that come in grant form and whose establishment is far from the showy economic and infrastructure projects China is often known for in countries where it has an aid presence. The project has been renewed twice and is set to continue into its third phase after China’s Ministry of Commerce approved a new $10 million grant to expand its operations.
“We will build a laboratory to develop super hybrid rice, which we will test for quality, resistance to pests and diseases, and yield,” said Dr. Carlos Abon, Jr., head of technology and product development at the center.
There are also plans to “recreate” PhilSCAT or set up a satellite branch in Davao Oriental in the island of Mindanao.
In over a decade of operations, PhilSCAT has made a number of breakthroughs. The center was able to identify Chinese hybrid rice lines that can be adapted in the Philippines and were eventually certified by the country’s National Seed Industry Council as seed varieties. It was also able to produce hybrid seed varieties using local seeds.
The center distributed farm machinery from China to cooperatives in the provinces of Nueva Ecija and Isabela, all in grant form. Its staff members conduct regular technological training and demonstrations for farmers, sometimes in collaboration with experts from the the Central Luzon State University and the Philippine Rice Research Institute (PhilRice), a government research and development entity that creates high-yielding rice varieties, but at a lower cost. Over the years, hundreds of farmers have received training on everything from hybrid rice seed production to modernized ways of rice farming, including the repair and maintenance of farm machinery that was provided by the Philippines’ Department of Agriculture. Mechanized agriculture is a priority of the President Rodrigo Duterte’s administration.
Due to its modest budget and set mandate, PhilSCAT’s contributions to the Philippines’ goal of rice self-sufficiency has been limited. The center has developed a number of hybrid rice varieties that have received approval from the NSIC, but because of its mandate as a research facility, it has a smaller land area for production.
PhilSCAT has turned to the private sector for assistance in expanding production. For its Mestizo 38 hybrid rice variety, for example, PhilSCAT entered into a Memorandum of Agreement with two seed entities, Prasad Seeds Philippines Inc. and the Davao Oriental Seed Producers Cooperative, to produce and commercialize the said variety.
Private sector involvement in hybrid rice production is common in the Philippines, and is often welcomed by the government given the private sector’s resources and capacities to produce at a much larger scale. Private sector companies are seen by the government as partners in the push for rice self-sufficiency. Industry watchdogs, however, warn of downsides to over-reliance on the private sector. It allows for wider corporate control over the food system.
“Seeds are a political commodity. If you own them, you’re very powerful,” Jean Lugasip, program manager for Visayas and Mindanao at NGO Rice Watch and Action Network (R1), told Devex. R1 advocates more government support for grassroots-led innovation on the research and development of high-yielding, high-quality rice seed varieties.
China’s tied agricultural aid
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The transfer of Chinese technology in agriculture is not new. In Africa, training centers have been operational for decades. Since the turn of the century, China has regularly launched or incorporated hybrid rice programs in technical cooperation.
This technology transfer, however, has been criticized by civil society organizations and perceived as openings for Chinese business interests, even though China has often labeled such programs as assistance for countries trying to reach rice self-sufficiency.
Genetic Resources Action International, a small international nonprofit that analyzes trends in food systems, captured the business aspect of China’s hybridization promotion in an article published in 2010.
“It is often not realized that China’s international hybrid rice activities are almost always led by private Chinese seed companies, and mostly often by one company — LPHT,” according to the article. “Over the years, with the support and blessing of the government, this state-owned company has grown into a major multinational corporation, with 26 subsidiaries, and a listing on the Shenzhen stock exchange, with a large stake now owned by the world’s fourth-largest seed company, Vilmorin Limagrain of France.”
The article identifies the different Asian countries — such as Indonesia, Bangladesh, Pakistan and Myanmar — that import most of the seeds for their hybrid rice programs from China.
PhilSCAT’s case is no different. The parental lines the center has been using to develop hybrid rice varieties come from China’s Yuan Longping High-Tech Agriculture Co. Ltd.
As hybrid seeds lose their vigor when replanted — they won’t be able to produce the same number of yields — PhilSCAT will require imports of the Chinese hybrid rice lines to continue producing the same hybrid rice varieties. Not only will this create reliance on imports, it is also in contrast to the government’s goal of rice self-sufficiency, one that is not measured by the ability to meet the country’s rice demands alone.
“Self-sufficiency is about ensuring food being served is safe and that farmers are earning enough for producing them,” R1’s Lugasip said.
Patricia Bernal, information officer for knowledge management at PhilSCAT said, however, that not all of their varieties were produced using Chinese hybrid rice lines. Mestizo 38, she noted, is produced using local hybrid parental rice lines — and that is done with help from modern technologies and knowledge shared by Chinese experts.
“We were able to see and develop local hybrid rice varieties for our own purposes,” she said.
Of the 79 hybrid rice varieties currently available in the Philippines and approved by the NSIC, however, it is unclear how many were developed using local versus imported hybrid parental rice lines. Breeders of these varieties — public or private — often don’t disclose parental lines to the public, said Joanne Caguiat, senior science research specialist and head of the three-line hybrid rice breeding project at PhilRice.
PhilRice and the International Rice Research Institute continue to develop the genetic diversity of local hybrid parental lines. Most of the seven hybrid rice varieties PhilRice was able to develop from 2011 onwards were mostly produced using local hybrid parental lines, said Caguiat.
“The Philippines can produce and develop its own hybrids using local parental lines,” Caguiat told Devex. “It’s just that China’s seed lines can produce higher yields. In addition, China has a long and vast research and experience when it comes to hybrid rice production compared with the Philippines.”
Locally bred hybrid rice varieties produce 6 tons per hectare on average while those from China can produce as much as 14 tons per hectare, she said.
Altruism or business?
Bernal stressed that under the terms of their agreement with seed companies, hybrid rice varieties developed by the center will need to be sold at a low price given that the variety is cultivated by a public entity.
This means the Indian company, Prasad Seeds, and the Davao Oriental Seed Producers Cooperative will have exclusive rights to market Mestizo 38, but they will have to do so at a rate of 3,800 Philippine pesos ($75) for 18 kilograms of hybrid seeds — good for one hectare. By comparison, private companies usually sell hybrid varieties at PhP4,800 to PhP5,000 (roughly $100) for the same amount of seeds, Bernal said.
This is clearly not the case for other of their cultivated hybrid rice varieties.
During PhilSCAT’s first five years, staff members and experts tested more than 50 Chinese hybrid rice lines on different farms across the country. The goal was to find varieties that could adapt well to local conditions. At the end of this period, scientists were able to select three Chinese hybrid rice lines that would become Mestizo 12, Mestizo 13 and Mestizo 14 rice varieties in the Philippines.
But for all its efforts, PhilSCAT did not get to keep any of the three hybrid rice varieties. Yuan Longping High-Tech, which supplied the Chinese hybrid rice seeds PhilsCAT tested, sold them to the private sector, said PhilSCAT’s Abon. Mestizo 12 was procured by vegetable seed producer Allied Botanical Corp. Mestizo 13 was sold to Pioneer, a U.S.-owned hybrid rice seed company.
Abon said he doesn’t know what happened to Mestizo 14 or what the terms for selling the two other hybrid rice varieties. He said PhilSCAT didn’t get any royalties from both sales.
“I don’t know why. They said there was no Memorandum of Agreement [barring Longping from selling the varieties],” he told Devex in Filipino.
“We can’t run after it since there weren’t any signed MOAs,” she told Devex. She did say the negotiations were under the guidance and supervision of PhilSCAT’s Chinese co-director, Cheng Liangji.
Mestizo 14, it turns out, is also now with Longping-Allied Hybrid Research and Development Inc., a merger between Yuan Longping High-Tech and Allied Botanical. It has exclusive distribution rights for Mestizo 14 in the Philippines.
Bernal said Yuan Longping High-Tech has also ventured into seed production in the Philippines as they now know the areas and networks where PhilSCAT conducted technology demonstrations and adaptability trials for hybrid seed varieties.
Different project, same rhetoric
Activities at PhilSCAT underscore a familiar perception often associated with Chinese assistance: mixing aid with commercial interests.
China is known to use development assistance for diplomacy, as well as business. It is not uncommon for Chinese-funded projects to be contracted to Chinese companies or state-owned enterprises. Materials used for infrastructure projects come from China, and the government often insists on hiring its own experts on any of these projects and programs.
In PhilSCAT’s case, materials for the buildings in the 10-hectare property came from China, as did the hybrid seed varieties they tested, the machinery they use for farming, and the experts who conduct hybrid testing and machinery training.
Dennis Trinidad, professor of international relations at De La Salle University in Manila, explains the logic behind China’s strategy:
“The main concern [of China] is to simply look for opportunities for its state-owned enterprises. So, if there’s a state-owned enterprise that would want to get the contract, the Chinese government is willing to finance. And this is because the nature of the project is tied. It’s always tied. And the projects are always awarded to a Chinese company,” he told Devex. “It’s primarily business. Chinese state-owned enterprises get contracts because of Chinese assistance, so imagine, that’s a huge [sum of] money.”
Trinidad said it is “always beneficial” for the Philippines to have a wide variety of financing sources given its immense development needs. But given the corruption often linked to Chinese aid programs, he emphasized the importance due diligence in recipients’ contracts and engagements with the nontraditional donor.
“It’s up to the recipient country. [If they don’t provide due diligence], then, basically, China will just implement. Then after implementing, they will run. After they get the money, they will run,” he said.
The Philippines’ due diligence practices will be tested as several Chinese-funded projects are set to be implemented in the country in the next few years. President Duterte secured a multibillion aid package and several investment projects during his visit to Beijing in 2016. Some of these ventures are in the area of agriculture — hybrid rice production even — but many of them are huge infrastructure projects worth billions of dollars.
PhilSCAT’s case, however, exemplifies China’s win-win approach to development.
“The assistance provided was tied to Chinese agricultural equipment. It was also an opportunity to promote Chinese technology in agriculture,” Trinidad said.
He noted that very few donor countries under the Organisation for Economic Co-operation and Development Development Assistance Committee provide technical assistance on agriculture because many of them have little or no experience in rice cultivation. China has a vast resources in this area.
“It's a win win for the Philippines obviously because there is a need to increase our agricultural productivity and self-sufficiency,” he added.
PhilSCAT’s Abon agrees. The center comes with strings attached, such as its right to sell the hybrid rice varieties Mestizo 12, 13 and 14, whose profits could have been in the range of millions of dollars. But he insists that the Philippines has benefited massively, though not always in monetary terms. Chinese assistance was key in training researchers and farmers on modernized hybrid rice production and farming technologies.
“When it comes to rice, they are helpful,” he said. But of course some of their deals, he noted, “involve large sums of money.”
The grassroots organizations Devex reached out to — those working with and for the benefit of farmers — remain wary.
Cris Panerio, national coordinator for Magsasaka at Siyentipiko para sa Pag-unlad ng Agrikultura, a farmer-led network composed of people’s organizations, NGOs and scientists “working towards the sustainable use and management of biodiversity through farmers’ control of genetic and biological resources, agricultural production and associated knowledge,” admit they are not familiar with PhilSCAT and its work, but they are against the generally aggressive push for hybridization in the country.
“The common argument with hybrids is that they produce higher yields and are necessary for rice self-sufficiency,” he said. “But hunger in rural areas is not a function of production, but a function of distribution.”
The approach to the Philippines’ agricultural problem should be holistic and not entirely just about technologies. Until then, the impact of such development projects will remain minimal, Paneiro said. But with the Philippine government’s continued push for hybridization and mechanized farming, programs such as China’s agricultural assistance is likely to continue and expand.
In this special series, Devex examines China's expanding role in aid and development across the globe. From tensions in Ghana to projects in Pakistan, from climate financing to donor partnerships, from individual philanthropy to state-financed investment, this series traces the past, present and future of Chinese aid and development. Join the conversation on our Facebook discussion forum.