Financial Aid for Agribusiness

Financial Aid for Agribusiness -diarynigracia

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AGRIBUSINESS IS ONE OF THE IMPORTANT BUSINESSES

 

Farmers, processors, distributors, and consumers are all included in a system that produces, processes, transports, markets, and distributes agricultural goods. This system is referred to as an agribusiness. Above all, acquiring farming technologies, receiving training in more advanced farming methods, establishing stable supply chains, building transportation and agricultural infrastructure, investing in research and development, and securing a solid property rights regime are all necessary for turning agricultural farming into a thriving agribusiness-driven industry.

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Bogle’s concept was straightforward: instead of striving to outperform the index, a fund should emulate it, targeting greater long-term returns while incurring lower expenses. It’s easy to forget that the method was initially novel since it has been widely used. However, other companies had previously launched inexpensive products that tracked stock market indexes, these were designed for pension funds and insurers rather than regular consumers. So, instead of just looking for the small things in your business, always aim for something big.

 

What is Agribusiness?

Firstly, Agribusiness is the commercialization of agricultural goods. It is a phrase that combines the concepts of agriculture and business.

 

Secondly, agribusiness encompasses any commercial enterprises that purchase from or sell to farmers. The transaction may entail a product, a service, or a commodity and may involve feed, machinery, crop, electricity, fertilizer facilities, etc. For instance, effects of agriculture, such as food and fiber, etc. Such services include loans, insurance marketing, storage, production, transportation, packaging, and distribution.

 

Moreover, Agribusiness defined as “the total number of activities engaged in the cultivation, manufacturing, farm operations, processing, and distribution of agricultural commodities and products generated from them” (David and Goldberg, 1957), is a vital sector of the economy of many Asian nations.

 

It contributes significantly to rural employment and gross domestic product. Since most agriculture companies are located in rural regions, expansion may be a valuable instrument for slowing urbanization. In addition, agribusiness development may effectively reduce poverty and provide a substantial source of foreign currency earnings. In certain nations, it is seen as strategically crucial to national security.

 

Agribusiness may be defined as the science and practice of backward and forward-looking operations about production, processing, marketing, and trade, the distribution of raw and processed foodstuffs, feed, and fiber, as well as the supply of inputs and services for such activities.

 

In a growing nation like the Philippines, the agribusiness system with forwarding and backward links comprises four key sectors: agriculture, forestry, fisheries, and fish processing.

  • Input market
  • The agricultural manufacturing field
  • Product sector (storage, processing, marketing, wholesaling, and retailing)
  • Service sector (education, banking, finance, investment, and technical advice)

 

Most importantly, these four sectors act as interdependent components of a framework in which the success of each industry is heavily dependent on the correct operation of the others. Therefore, agribusiness is about how to operate a successful company in food and agriculture-related areas. Agribusiness management is just the application of agriculture management principles.

 

 

Agro-based Organized agricultural sectors:

  • Commercial service
  • Crops
  • Livestock
  • Meat and poultry
  • Aquaculture
  • Agro-Forestry
  • Agro-processing
  • Farming inputs
  • Agricultural Education.

 

According to research on agricultural practice in the Philippines, the absence of adequate value chain linkages between input suppliers, producers, merchants, processors, and service providers is the most significant barrier to agribusiness expansion (Agrico Limited 2014). Additionally, any impediment to the supply of goods to consumers in the value chain might lead to a decline in the total productivity of trade, which in turn can delay the achievement of the optimum benefit of better rural incomes and employment, limiting the potential for rural development.

The exploitation of prospective requirements is well established, and a comprehensive agricultural export promotion program would substantially influence agriculture and economic development. As a result, this will increase farmers’ revenues, allowing them to earn foreign currency and expand the agro-processing business.

 

 

The Importance of Agribusiness in the Philippines

Firstly, Agriculture derives from the Latin “ager cultura,” meaning field cultivation. Agriculture is a specialized industry that often comprises plant cultivation and animal husbandry. Since then, its scope has been extended to include fishing and forestry.

 

Moreover, Agriculture’s invention in about 6000 B.C. had a significant influence on the evolution of civilization. Before we discovered agriculture, humans subsisted on wild foods. They hunted, fished, and collected sustenance from various sources. Also, hey traveled from location to location where food was readily available.

 

 

As the population grew, hunting, collecting, and fishing became increasingly challenging. Nomads realized that they could produce crops and domesticate animals to secure a food source for their families. They wanted to establish a stable settlement to develop a fixed region rather than travel from place to place. Therefore. they were no longer concerned about what to eat or where to get food. This marked the end of their nomadic existence and the birth of civilization.

 

Most importantly, significant breakthroughs in people’s knowledge and comprehension of their surroundings have emerged from the development of agriculture. People were able to acquire more skills to better their life. Hence. this ultimately led to the developing of various agricultural equipment and techniques, including the plow and systematic irrigation systems. This is why agriculture is often said to be the based of society’s progress.

 

The agricultural sector is vital to the economic growth of a country, especially in tropical countries: the necessary materials and economic activity resulting from this.

 

  1. The agricultural sector supplies food. The Philippine soil is ideal for root crops, including rice, maize, sugar cane, potatoes, and many more. Additionally, abundant are mangoes, pineapples, coconuts, and bananas. Additionally, the agricultural sector offers seafood to meet mineral and protein demands.
  2. The agricultural industry offers the necessary raw materials to produce other goods. Forests, pastures, and oceans provide the raw materials for a wide array of handcrafted items.
  3. Exports from the agricultural sector contribute to economic growth. Many agricultural goods are exported to other nations, including sugar, flowers, fruits, and shellfish. The government’s primary source of revenue is the export of agricultural goods. Therefore, the government has prioritized improving the nation’s export capability of farming goods.
  4. The agricultural industry employs a substantial number of Filipinos. Those who live in rural areas rely on agriculture for a living, including farming, fishing, mining, and raising cattle.
  5. By providing the necessary raw materials, a progressive agriculture sector may assist other sectors of the economy, such as production, commerce, and services. When a nation desires industrialization, it must increase and enhance its agricultural productivity. But increasing productivity is not sufficient to boost the agriculture industry. We must remember that it constitutes a significant portion of the country’s population – potential buyers of other goods and services. In addition to measures to increase output, it is vital to improving the populace’s condition to increase their capacity as customers. This will result in a more robust interchange across productive sectors, and it is anticipated that both urban and rural regions will see development as a result.

 

Agriculture plays a crucial part in the overall purpose and endeavors to attain economic development. Additionally, many of today’s industrialized economies first focused on bolstering their agricultural industries. They continue to give financial assistance to their farmers, including scientists and researchers who seek to increase agricultural output.

 

 

 

Status of Agribusiness in the Philippines

As the Philippines coped with the ‘perfect storm’ – the COVID-19 epidemic, African Swine Fever (ASF), and the continuing Ukraine-Russia conflict – agriculture was among the hardest-hit sectors, experiencing every ounce of pressure and destabilizing the food chain as a whole. In addition, under the direction of departing President Rodrigo Roa Duterte, the Department of Agriculture (DA) left no stone unturned in its efforts to mitigate, if not eradicate, the devastating effects reverberating across borders and societies, thereby escalating the level of indignant instability.

 

COVID-19

Meanwhile, as the nation is gradually returning to normality after combating the COVID-19 epidemic for more than two years, the present health issue continues to impair global goods trade, exacerbating the employment and income losses of most middle- and low-class Filipinos. At the outset of the crisis, food supply systems were fettered, restricting the movement of products and people. These protective measures led to food price inflation, exacerbating hunger and poverty.

 

The DA moved swiftly, implementing steps to mitigate the epidemic’s effect on Filipinos who were already ill. To ensure food security, the Department restructured its public funding and programs without delay, permitting the circulation of agricultural commodities, offering access to inexpensive food, and protecting and intervening on behalf of local farmers and fishermen.

 

Access to credit and other financing programs and technical support for farmers and fisherfolk, the establishment of the Kadiwa ni Ani at Kita, provision and distribution of farm inputs, equipment, and pieces of machinery, and promotion of urban farming/gardening are among the DA’s interventions designed to maintain the food production chain.

 

ASF

The continuation of African swine fever (ASF) continues to hold the nation captive since its speed and severity of damage have caused the collapse of the swine sector. The DA took measures to prevent the ASF virus from spreading via preventative culls while compensating local pig farmers. As a result, the Department of Agriculture paid impacted pig producers almost P2 billion.

 

In collaboration with the Philippine Ports Authority, Bureau of Customs, and local government entities, the Department of Agriculture (DA) has enacted more stringent biosecurity control measures to prepare the nation for the spread of transboundary animal illnesses inside the Philippine borders (LGUs). According to the Secretary, this will be a typical practice in the future to avoid or at least mitigate the danger of transboundary animal illnesses. The Department has also cooperated with public and commercial partners to produce a vaccine against African swine fever, the first of its type in the Philippines.

 

 

According to Secretary Dar, the inaugural ASF vaccination experiment in San Miguel, Bulacan, from February 10 to May 6, had encouraging results. “During the experiment, no clinical symptoms of ASF sickness were seen, and non-ASF-related mortality was limited,” the farm chief said.

 

Rice Tariffs Law (RTL)

Since 2019, the passage of the RTL has been seen as the apex of the Duterte government. It has sparked several disputes, including accusations that the DA is anti-farmer.

 

Since the 1980s, stringent trade and regulatory regulations have hampered the expansion of the nation’s rice sector. More than three decades ago, the National Food Authority (NFA) controlled the rice market, whose monopolistic authority was based on imports and pricing. Consequently, Filipino consumers pay a high price for rice, the government continues to subsidize NFA losses, and rice farmers continue to be among the poorest of the poor. Inflation increased by ten due to a severe rice scarcity that emerged in 2018. Rice is an essential household expense for every Filipino family, regardless of wealth.

 

When he signed the RTL into law, President Duterte’s political will dramatically alter the rice industry. Tariffs essentially replaced quantitative rice import limitations. This resulted in two significant outcomes: (1) rice is no longer a major contributor to inflation, benefiting millions of Filipino rice consumers as rice prices were reduced by an average of approximately P7 per kilogram, and (2) a P10 billion fund to make rice producers more competitive.

 

 

“The RTL has enhanced the buying power of the poorest forty percent of income groups as a result of rice price reductions,” the head of agriculture remarked.

 

In addition, the government established a P10 billion Rice Competitiveness Enhancement Fund in response to the influx of tariffs (RCEF). Under the RTL, all import tariffs collected on imported rice would be allocated to the RCEF, which will eventually aid Filipino rice farmers by supplying quality, certified seeds, agricultural machinery and equipment, financial assistance, and training.

 

Three years after the installation of the RTL, the DA continues to observe enormous achievements, making the RTL a game-changer in the agricultural industry. In reality, the record “palay” yields over the last two years are evidence of the RTL’s success.

 

“RTL has been significant in the production growth from 3.69 tons per hectare in 2019 to 4.03 tons per hectare in the 2021 wet season. This is about P5,100 per acre gain at P15 per kilogram of dry play, as stated by Secretary Dar.

 

Ukraine and Russia War

Consequently, while the nation has been steadily recovering from these crises, it took another catastrophe for the Philippines to sink into another devastation — maybe the worst- the Ukraine-Russia war.

 

This continuing conflict has contributed to the worst levels of food insecurity. Because the two nations in conflict are among the world’s breadbaskets, food insecurity will likely become a more dangerous trend shortly. This threatens exports, placing other dependent countries, such as the Philippines, at risk.

 

The growing costs of energy, oil, fertilizer, wheat, and wheat products, along with export prohibitions enforced by other nations to “defend their people,” continue to put many nations at danger, including the Philippines, which relies on these major producing nations to cover its output deficit. Ukraine conflict exacerbated the disparities and inequalities in food production, necessitating imports to bridge the gap.

 

Importation is permitted in the most fundamental sense so that an economy may flourish – for example, to supply the nonexistence and scarcity of products and commodities, to cut local food costs, and to give consumers a more fabulous selection of items. Agricultural commerce is not exclusive to the Philippines; it is a worldwide phenomenon that stimulates economies.

 

“We continue to prioritize the safety of our farmers and fishermen. Our objective has always been food security, ultimately leading to food independence. The head of the DA said that imports are only permitted to make up for shortages or those that we cannot produce domestically.

 

“Even President-elect Ferdinand “Bongbong” Marcos Jr., who listed food sovereignty as one of his top priorities, emphasized how importation is forced on us since local production is insufficient,” Secretary Dar continued. The problems of local manufacturing. Food production cannot keep up with the astronomical increase in population.

 

The Philippine Statistics Authority (PSA) projected a population growth rate of 1.4% for the Philippines in 2019, but the agricultural industry expanded by just 0.5% by the end of 2020. These numbers demonstrate the food-population imbalance, in which the fast population expansion exceeds the ability to produce food.

 

Despite the impossibility of implementing steps to curb population increase at this time, the government should instead concentrate on increasing local food production. Secretary Dar continues to urge the national government to enhance the budget for agriculture, suggesting a P250 billion allocation as the first and essential step. “If next year’s budget is not increased or quadrupled and remains at the same level as the budget we have now, we will always have the same issue,” said the agri-chief.

 

 

To support this drive, the DA developed the National Agriculture and Fisheries Modernization and Industrialization Plan (NAFMIP), a 10-year strategic plan with a long-term vision of the commodities industry and agricultural infrastructure development that would guide the sector toward food sovereignty. Implementing the agricultural reform has also precipitated a substantial decline in the country’s food output. Farmers individually tended to tiny pieces of land due to this reform, which led to the fragmentation of farmlands. The typical size of a farmer’s land holdings is between one and three hectares, which is insufficient for commercial and industrial growth on a grand scale.

 

“The maximum amount of land a farmer may hold must be substantially increased to 25 hectares if we want to industrialize the agricultural industry. If not, we may take action by merging these tiny agricultural plots to foster technology and innovation, including infrastructure and mechanized development, which will open the door to larger markets, resulting in higher wages for our farmers, as stated by Secretary Dar.

 

 

Keeping the Balance

Despite its limitations, the DA will continue to fight for the greater welfare of Filipino farmers and fishermen until the agricultural sector receives its share of public money to realize the ideal of a food-independent nation.

 

Even if the farmer cannot expand farmland and food production remains an issue, the DA will continue to apply other effective strategies to ensure that every Filipino has access to food.

 

The OANDA Reform Agenda, the brainchild of Secretary Dar, has kept the agricultural sector alive and resilient for the last three years, despite the many obstacles. Built on four pillars: Consolidation, Modernization, Industrialization, and Professionalization, the ultimate objective of the OANDA Reform Agenda is to modernize and industrialize Philippine agriculture and make it a significant contributor to the country’s gross domestic product.

 

“It is a revolutionary plan that capitalizes on technology, creativity, and the desire to make our farmers and fishermen rich in the end,” said Secretary Dar.

 

Once entirely accepted and implemented, the OANDA Reform Agenda pledges to elevate the Philippines to agricultural parity with other ASEAN nations.

 

 

In its few years of implementation, the OANDA Reform Agenda has spawned achievements and innovations, leaving its mark on the Philippine agricultural sector. These include, among others, trade and export development, agri-industrial business corridors, youth engagement in agriculture, easy and affordable access to agri-financing for farmers and fishers, private sector participation in agriculture as “big brothers,” mechanization and infrastructure investments, and agriculture digitalization.

 

“What works, for the time being, is our intentional togetherness to strive toward the objective despite the many obstacles. We displayed it throughout this perfect storm: the COVID-19 pandemic, the African swine fever epidemic, the birth pangs of RTL, and now the Ukraine catastrophe. I promise you that the DA has been trying to assist our farmers, fishermen, and the rest of our countrymen.

 

 

Loans Programs for Agribusiness in the Philippines

 

SURE COVID-19 Loan Program

The Agricultural Credit Policy Council (ACPC) in the Philippine Department of Agriculture granted loans totaling Php246.3 million under the SURE COVID-19 finance program’s Expanded SURE Aid and Recovery Project in response to COVID-19.This initiative aims to promote food security in the nation, and it is therefore included in the Plant, Plant, Plant initiative.

 

 

How to apply?

For marginalized farmers and fisherfolks:

The Municipal Agriculture Office (MAO) will select affected individuals and program participants. After that those receiving aid must fall under the socially disadvantaged category and be included in the Registry System for Basic Sectors in Agriculture (RSBA). The DA-Regional Field Office(DA-RFO) will verify the list of acquired people.

Requirements:

 

  • 1 Government-issued ID with picture.
  • 1 pc of 1×1 picture
  • Loan application and a promissory note

 

Farmers and fishermen who are eligible and registered in the Registry System for Basic Sectors in Agriculture (RSBSA) may borrow up to Php25,000 with no collateral and interest, to be repaid over ten(10) years.

 

For agri-fishery micro and small enterprises:

Who can Avail of the Program?

Agri-Fishery small business —

  • Registered in CDA/SEC/DOLE and other registration in other agencies
  • One year active in the business
  • Capacity to build projects
  • Has agri-fishery products in their enterprise.

The business can be solo, partnered, corporation, or association

Requirements:

  • Letter of Intent with details of your project
  • Documents to register
  • Financial Statement

 

Loans for working capital are up to Php10 million for agri-fishery-oriented MSEs. So that afflicted MSEs may keep running throughout the epidemic, this loan has a 5-year repayment period with 0% interest.

 

Emails sent to pdd@acpc.gov.ph or surecovid.19@gmail.com will be processed as loan applications under the program. Don’t forget to include your company’s name, contact person’s name, phone number, and province in the email with your submission of the required papers.

 

Kapital Access for Young Agripreneurs (KAYA)

KAYA program is a component of the Department of Agriculture’s youth initiatives. It would assist fund the capital needs of start-ups or existing agribusiness ventures by young entrepreneurs and agri-fishery graduates.

 

 

The program also involves capacity-building training delivered by state universities and colleges, government organizations, and Business Development Services (BDS) service providers. Borrowers who qualify will get assistance and training in creative finance, company development, marketing, and product packaging.

 

How to Apply?

Who can Avail of the program?

  • Agripeneurs with age 18-30 years old
  • Graduate formal or informal in studying Agri-fishery from–
    • College or University
    • Department of Agriculture
    • Agricultural Training Institute (ATI) and TESDA
    • High school with the course of Agri-fishery

Requirements

  • 1 Government ID with a picture
  • Loan Application Form
  • Simple Business Plan

To apply for the loan, visit the closest government financial institutions (GFIs) or non-government financial institutions (NGFIs), such as rural banks, cooperative banks, non-governmental organizations (NGOs), and other private financial institutions. A zero-interest loan of up to Php500,000 is available to borrowers for five years.

 

Agri-Negosyo Program (ANYO)

The ANYO loan program provides agri-fishery MSEs with loans that may be used to finance their capital needs, operations, or fixed asset purchase (facilities construction, equipment, machinery).

 

Similar to KAYA, it offers capacity development so that borrowers may obtain technical support and training to enhance their businesses.

 

How to Apply?

 

Who can Avail of the Program?

  • Solo owner of a small business with regards to agri-fishery

Requirements

  • Documents needed to submit by the loaners to the bank or in other partners of DA

The program consists of two categories:

 

  1. The Micro Agri-Negosyo Loan program allows borrowers to borrow up to Php300,000 interest-free for five years.
  2. Small Agri-Negosyo Loan Facility: Borrowers may get a loan of up to Php15 million with no interest and a five-year repayment period.

 

 

 

Agrarian Production Credit Program (APCP)

The APCP is a collaboration between the Department of Agrarian Reform (DAR), the LandBank of the Philippines (LANDBANK), and the Department of Agriculture.

 

Above all, the program is designed for Agrarian Reform Beneficiaries (ARBs) whose organizations are ineligible for LANDBANK financing. It seeks to create sustainable agricultural production and raise the incomes of ARBs and their families. This is done via the provision of finance and help with capacity development.

 

How to Apply?

Who can Avail of the Program?

  • Agrarian Reform Beneficiary Organization
  • The farmer that is a member of Agrarian Reform that is a beneficiary, or there is one family member of it
  • Other lending banks such as Rural Bank, Coop, and other NGOs approved by ARB are not part of ARBO.

Qualification of Project

  • Agriculture and Fishery Production
  • Agri-enterprise and livelihood projects such as trading and manufacturing.

Interest rate

  • Short-term loans: 8.5% every year
  • Long-term loans: 9.5% every year

Collateral Requirements

  • Assigned promissory note based on collateral
  • Assigned insurance guarantee claims of deposit
  • Chattel Mortgage or contract of lease

 

 

FAQs

What are the events that affect Agribusiness in the Philippines?

  • Covid-19
  • African Swine Fever
  • Rice Tariffs Law
  • Ukraine and Russia War

These are the events that affect our Agribusiness here in the Philippines, Nationwide.

 

What are the Loans/Programs that the Farmers can Apply to?

There are a few programs/loans in the Philippines for farmers’. Some of which are NGOs.

  • SURE COVID-19 Loan Program
  • Kapital Access for Young Agripreneurs (KAYA)
  • Agri-Negosyo Program (ANYO)
  • Agrarian Production Credit Program (APCP)

 

 

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