Month: March 2021

March 30, 2021

The Indian government has proposed a bilateral exchange with the Philippines involving agricultural technology and fintech (financial technology) believing that vital technologies revolutionizing small farms in India can benefit Filipino farmers.

   On top of initially extending a $50,000 to the corn sector, Indian Ambassador to the Philippines Shambhu S. Kumaran said India can exchange technologies with the Philippines that are in the forefront of improving how small farms operate.

   “We like to invite you to a discovery of India’s agritech ecosystem.  We’ll look at a bilateral workshop so you will see this vibrancy in India.  And India will see the positive developments in agri-tech in the Philippines.  This will be a two-way street,” said Kumaran at  a Philippine Chamber of Agriculture and Food Inc. (PCAFI) business meeting.

   The bilateral meeting which may be co-organized by PCAFI and Indian Embassy may be held “sometime later this year.”

   Philip L Ong, PCAFI chairman, this fintech venture with India may involve PCAFI’s own Agrifood Hub Project.  The Agrifood Hub is also involved in technology that links farmers with the market.

   Since its launch in July 2020, it has so far linked 37,343 farmers and 315 farmer groups, primary traders, and cooperatives to markets involving 109 municipalities. 

   It had posted over the internet through its website, www.agrifoodhub.com and hotline 09178215408, a total of 980 food and crop requirements and matched these requirements with 924 sellers.  It has received 56 information requests and generated 55 active buyers per month, Ong reported.

   Kumaran said the Indian government has already touched based with Philippines’ Finance Secretary Carlos Dominguez for a possible agritech and fintech exchange.

   “An Indian company allows banks to use geospatial data, satellite data to make informed lending decision.   You have the software, the tool which gets all data in a region.  It allows banks to cut the risk and understand where and when credit dispersal is viable. They will have constant stream of data,” Kumaran said.

   Because of this agri technology, an e-bank raised “half a billion dollar using this tool that brings about the revolutionary changes that I talked about.”

   Indian fintech companies are not big, but they address the critical gaps in technology.

   “We offer to Philippines the possibility that DBP (Development Bank of the Philippines) could have this tool without having to procure it.  It will be free-of-charge.  The revenue model allows that the creditors and software companies, all have the benefit from using the technology.”

     Right now banks are afraid to lend to agriculture activities as they don’t have mitigation strategies and risk assessment tools to determine what is viable.  But this software makes that possible.

   From only a few agritech startups in 2013, India had 1,000 agri-tech startups as of 2020.
   These agritech startups are engaged in projects like addressing water stress and crop stress in farm production. They advise farmers on what crops to use.

   The possible replication of an Indian financing system called “Viability Gap Fund” (VGP) has also been proposed by the Philippine Maize Federation Inc.  This is to finance post harvest facilities critical to storing the corn production of farmers, according to PMFI President Roger V. Navarro.

   The VGP was put up in India to fund viable projects by “unviable” proponents, meaning small and medium farmers.

   Navarro said that the fund may come from the fund that form penalties from the Agri-Agra Law.  The penalties, he said, amount to billions coming from penalizing banks that do not allocate 10 or 15 percent of their loanable amount for agriculture or agrarian reform funding as mandated.

   As of 2019, given compliance of all banks, this agri-agra law fund would have been P1.384 trillion, according to the Department of Agriculture (DA).

   Kumaran affirmed the need for the VGF in the country.

   “We should have smart public policies.  Food security is an absolute non-negotiable. We have lots of small and marginalized farmers in India. They find it hard to access common assets, so government needs to come in,” he said.

   Kumaran said the bilateral meeting will have technical engagements, presentations, and contact building.  It will create platforms for conversation.

   Kumaran noted that while having been import-dependent for food in the 1960s, 1970s, now India is the largest producer of food grain. In addition to feeding its 1.3 billion population, it also exports some surplus.

   These are India’s other proposals:

1. A partnership on training of skills where India may conduct “pilot projects for modest funding from india.”
2. Strong dialogue on market access considering Philippines is a big garlic importer, while India is a garlic producer.
3. Solar energy production.  A lot of irrigation canals in India are now used as areas for lake solar panels.  These supply of energy is used for farmers’ needs, and any excess electricity goes to the national grid.
4. Exchange in integrated farming strategies. Here, waste generated from farming is used for other farming processes  (energy generation).  This helps in combatting climate change and its adverse effects.
5.  Partnerships in organic food production. (Melody Mendoza Aguiba)

March 26, 2021

At least 10% of the internal revenue allotment (IRA) of local government units (LGU) should be allocated for food security and agriculture to ensure rural development once national budget is devolved locally under President Duterte’s proposed executive order (EO).

   The Philippine Chamber of Agriculture and Food Inc. (PCAFI) has reiterated its call for government to raise the budget for agriculture.

   This is in consideration of agriculture’s big contribution of 9 to 10%  to the Philippines’ gross domestic product (GDP). 

   PCAFI President Danilo V. Fausto said a minimum of 10% of the IRA of LGUs should be made mandatory allocation for agriculture if national government fund will be devolved to local governments.

    “This is just proper since agriculture accounts for 10% of the GDP.  Budget for agriculture should increase, rather than decrease,” said Fausto.

   Senator Juan Miguel F. Zubiri, guest speaker of the PCAFI’s virtual membership meeting Friday, said given an increase in budget for agriculture, the proposed EO will play a significant role ensuring farmers’ welfare and agricultural production.

   “Some of our LGU leaders are lawyers or doctors.  That’s why it’s important to elect leaders who have the heart for agriculture,” said Zubiri.

   Fausto has been stressing that the agriculture sector gets barely 2% of the total national budget while contributing 9-10% of the GDP. With the P4.5trillion 2021 budget, DA should get at least P405 billion in the national budget, he said.

   Duterte’s draft EO ordering some executive functions’ transfer to local government supports implementation of the Supreme Court ruling on the Mandanas-Casas cases in 2022.

   Zubiri said he is pushing for other important agriculture policies to be legislated in order to advance growth of the farm sector.

   He noted that the proposed expansion of the minimum access volume (MAV) by eight times will cause a collapse of the local hog industry.  This should not be allowed if the local hog industry has to recover from the devastation of the African swine flu in say 3 to5 years.

   HE also supports an amendment to the Cabotage Law in order to allow entry of international players in the domestic shipping industry. 

   “It is cheaper to ship goods from New Delhi to the Philippines than to ship this from Bukidnon to Manila,” he said. 

   This shipping restriction must be one of the reasons why agricultural products such as pork and poultry products in Mindanao  cannot be easily shipped to where the market is in Metro Manila.

   In credit access, Zubiri said government will continue to prod Land Bank of the Philippines and Development Bank of the PHIlippines to minimize requirements for loans.  This is for easier access to credit of the smallest of farmers who rather resort to borrowing from loan sharks that charge onerous interest of 20% per month.

   Zubiri advised organic food producers to organize and establish a formal policing organization against unscrupulous food producers that claim to produce organic food that are not authentically organic certified.

   Fausto said livestock and poultry should get at least P112.5B billion from the national budget.

   Poultry and livestock plays a highly significant role in the economy as it has important multiple effect in many other sectors.

   “The feed industry is a P510 billion industry.  Assuming two-thirds (67%)  of feeds go to livestock and poultry, that represents P340 billion,” said Fausto.

   Fausto also said DA does not really need to raise imports of meat and poultry given adequate distribution nationwide of the supply. 

   The supply is enough to fill the local demand.  The need is to channel poultry and meat production, particularly from Visayas and Mindanao where these are produced, to where these are needed—Metro Manila and other cities. 

   Poultry and livestock plays a highly significant role in the economy with its multiplier effect in many other sectors.

   “The feed industry is a P510 billion industry.  Assuming two-thirds (67%)  of feeds go to livestock and poultry, that represents P340 billion,” said Fausto.

   The Supreme Court ruling was based on a petition of Batangas Gov. Hermilando Mandanas and former Bataan Gov. Enrique Garcia Jr. to base LGU’s IRA on 40% of the collection of all national taxes.  These include those collections of Bureau of Customs and Bureau of Internal Revenue. (Melody Mendoza Aguiba)