Group makes inroads in inclusive business in Mindanao conflict areas

Without a doubt, Mindanao is a magnificent place. It not only boasts of valuable rich natural resources, but also possesses the Philippine’s world renowned islands with pristine beaches, and mountain ranges lush with forests and watersheds, teeming with exotic wild life. It is also a melting pot of people of different faiths and ethnic backgrounds – the Indigenous People (IP or Lumads) and Muslims (Moros) - as the original inhabitants of the island, and Christian settlers—all of whom consider Mindanao as their home.

Mindanao holds much potential and currently produces majority of agricultural products and exports of the Philippines, mostly in the form of fresh fruits. It provides over 40% of the food requirements of the country. Yet, Mindanao still has more than 170 thousand hectares of fertile arable land still waiting to be tilled. When optimized and employed well, Mindanao can not only assure food security for the country, but provide much needed produce to neighbouring countries.  It is the gateway to Southeast Asia and the Peoples Republic of China. 

Notwithstanding, the promise of Mindanao remains unrealized and confronted by today’s stark reality. 

Mindanao faces rapid depletion of its natural resource base, with the headwaters of Bukidnon - home of nearly half a million  Lumads, the source of water for over a million residents, over 500 industries, irrigating over 65,000 hectares of farmlands in the provinces of Bukidnon, Misamis Oriental, and Cotabato -- continuously facing the threat of illegal logging, slash and burn agriculture (Kaingin), and natural grass fires caused by extreme heat and drought.  Nonetheless, Mindanao still has more virgin forests than anywhere else in the Philippines. 

Climate change is further exacerbating resource depletion with increasing siltation and flooding downstream -- jamming up the Pulangi-Agus hydroelectric dam which supplies  31.3% of electric power to Mindanao, but is now running at only half its capacity.  

In just the last 30 years, some major rivers have reduced water discharge by up to 75%, greatly shrinking irrigated agriculture during the dry season when water is needed the most.  With diminishing water resources and availability of land due to sea level rise and salt water intrusion in inland provinces like Davao del Sur and Davao del Norte, agricultural production and productivity are compromised significantly.  

The consequence of all this is growing discontent due to rapidly rising income disparities and marginalization of especially the Indigenous communities.   Mindanao has always been  known for insurgency and rebellion, the causes of which are rooted not in any kind of ideology or religion, but in poverty, hunger and isolation of rural communities.   

The hard reality is that existing agriculture and industry will come to an end with the exacerbation of environmental degradation and enduring conflict - leading to much more extremism. 

The last five years have seen over 100 attacks on agriculture and industries by the New People’s Army (NPA).  Major agribusiness enterprises have all been effected by such attacks costing billions of pesos in damage to property and loss of human life.  

As mining, illegal logging and irresponsible agricultural activities and as conflict caused by the continued disparity between the local communities and enterprises continue their course, the fragile promise of Mindanao will slowly begin to turn into a nightmare.

Thus, there is dire need to think of doing business in a manner that is truly inclusive, providing for economic equity and social justice by sharing prosperity right across the value chain.  Also critical is a values-based leadership premised on universally-shared values– values that are common to people of all ethnic backgrounds and faiths.  

Hineleban Foundation is at the center of the fight against poverty and insurgency in conflict-affected Mindanao as it addresses these through  Program for Equitable Advancement of Rural Livelihood (PEARL), an inclusive business model for “rainforestation” that aims to restore the forests and watersheds by providing food security and livelihood opportunities to the Lumads in the upper reaches of the four mountain ranges of Bukidnon.  

Hineleban holds the philosophy that companies need to go beyond safeguard compliance and doing minimal harm (risk minimization) policies, and aim to proactively create positive “societal value”.  

This requires optimizing the external multipliers of their own business operations and engaging innovative social investments, rigorous stakeholder consultations and policy dialogue, advocacy and civic institution-building, including collective action with other companies. 

The realization of this approach in conflict-affected areas further requires a strategic commitment at the level of the CEO or the Boards of companiesalongside risk and impact analysis, to forge longer-term partnerships with those living on the margins of society.     

In 2012, Hineleban initiated an agreement that brought together the Seven IP tribes in Peace and Unity through a “Sacred Customary Compact”.  

The leaders of the Seven Tribes, Hineleban and one of its corporate partners, Unifrutti Group of Companies - an agricultural company engaged in the business of fresh fruit production in Mindanao- are all signatories to this “Sacred Compact.”  

Under the Compact, Unifrutti committed to provide annually the IP Tribes the amount of P1, 000 per hectare for all its banana plantations and P 500 per hectare for its pineapple plantations in Bukidnon as a form of Payment for Environmental Services (PES). This facilitated the establishment of the Bukidnon IP Fund, which served as seed capital for food security and livelihood projects for the Lumads.

Highland Arabica coffee is the first crop choice that is grown mostly in the buffer zones of the high mountains, which is in fact the ancestral domains of the Lumads, who incidentally, constitute 90% of the constituency of the NPA.

Hineleban provides training and capacity building to coffee farmers, farm inputs, and post-harvest and transportation support to Hineleban coffee processing facilities also in Bukidnon. Hineleban teaches the farmers methods and approaches of good production and harvest technologies, and links the farmers to the market.   

As a result, farmers are now paid up to P18 per kilogram of coffee berries, from P6 which they were getting before due to poor quality, inconsistent production, and unscrupulous middlemen who keep a big margin for themselves.   

This 300% increase in farm gate price is further augmented by a more consistent and stable harvest cycle through more accessible farm inputs. 

At the end of this value chain is coffee sold nationwide at Healthy Options stores and other chains, while the revenues generated by Hineleban Coffee are plowed back into the communities for scaling up and expansion to other mountain communities in Bukidnon.  

In the words of Hineleban and tribal leaders, this is really a “Transformational Business Partnership” as it truly transforms the lives of Lumads into becoming once again true “guardians” of the forests and ecosystems.   

This approach is attracting hundreds of Lumad coffee-families to seek assistance from Hineleban.  

The current 40 farmer families are expected to double this year, and triple by mid-2019. The coffee production areas and harvest are also expected to double by next year. 

Furthermore, Hineleban has planted over 4.4 million trees of various species which capture an estimated 250,000 tons of carbon each year -- addressing the threat of climate change and increasing the availability of water. 

Agribusiness companies operating in Bukidnon such as Del Monte, Dole and Sumifru are now also seeing the light in following the Hineleban/Unifrutti way of doing inclusive business by bringing social investments in the communities.  

Recently, with financing made possible from the Office of the Provincial Governor, these companies are exploring ways of providing project management support for livelihood projects.  

Other private sector companies are also now partnering with the Lumads through Hineleban including Globe Telecommunications which is interested in reducing their carbon footprint through tree planting, Metrobank Foundation is supporting capacity building initiatives for coffee farmers, and BPI Foundation which is supporting the production of Abaca as a crop to promote inclusive business in Lanao del Sur.  

Hineleban is now replicating its inclusive business models and approaches in the Autonomous Region in Muslim Mindanao (ARMM) through its partnership with the Philippine Business for Social Progress (PBSP) with its large membership base of premier private sector companies.   

This initiative has also facilitated forging partnerships with the ARMM Regional Board of Investment together with its Economic Cluster members comprising various sectors notably, agriculture, environment, trade and industry, and the planning and development board.    

On account of these actions, there has been a growing sense of peace and unity among the Seven Tribes of Bukidnon, thus resulting in positive outcomes for the “Sacred Customary Compact.”

With the promising initial results, Hineleban recognizes the need to sustain these initiatives in the long term. Lasting peace will only be achieved when all communities (especially the Lumads and Moros) have enough food on the table to feed their families, and livelihood opportunities through cash crops that bring a sustainable disposable income.  

Hence, Hineleban is now pushing stronger in establishing more communities and private sector partnerships for successful inclusive business practices.   

Mindanao is one of the final frontiers of agriculture and industrial production.  There is a real, and perhaps last, opportunity to draw on the island’s rich potential for food supply and responsible utilization of its natural resources, while also tapping on its diverse human resource base.  

Without peace and unity however, this potential will never be realized.  Inclusive business approaches that help create “societal value,” reduce income disparities, and provide dignity of life for all is key to bringing peace to the island and further raise the bar for the Philippines on ways to achieve inclusive growth and development.  

Dr. Malik is Chairman and CEO of Hineleban Foundation, an environmental and social development organization working for ecological restoration and conservation in Mindanao.  He holds senior advisory positions at the Unifrutti Group Philippines, Bangsamoro Development Agency, and the Provincial Government of Bukidnon.
[Photos: Celebration of Peace and Unity of the 7 Indigenous Tribes of Bukidnon following the signing by the Tribes & Hineleban of the Sacred Customary Compact; Hineleban’s model farm for promoting reforestation — Carribean Pine intercropped with Calliandra species as a means for accelerated forest succession; Weekly Values and Leadership Training session with the farmers.]