Researcher pushes value chain approach to find ways to help agri, fisheries sector

Sunday, June 12, 2011

AS THE agriculture and fisheries sector suffers from the lack of financial sevices, experts on the field believe there are things that can be done to make financial services more accessible.

Philippine Institute for Development Studies researcher Dr. Gilbert Llanto suggested that rural financial institutions use the value chain approach to identify various interventions in rural markets.

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Llanto, who was one of the speakers during the fourth Microfinance Best Practices Forum, said institutions can do their part by providing or upgrading market information and organizing producer groups to scale up supply links with suppliers.

He added that institutions can also design their products to develop lending strategy techniques, calculate lending costs and determine how best to lower the risks of lending to farmers.

The high costs and risks of having farmers as clients is one of the reasons microfinance institutions and banks are not keen on providing loans to the agriculture
and fisheries sector.

For Llanto, the government should also look beyond the need to cultivate rice.

He said the government should take the lead in identifying the constraints of rural households and small farmers from participating in higher stages of a value chain.

He noted that in Thailand, the private sector and the government coordinate on everything, including the packaging of their products.

Llanto said the government should exercise a critical role in coordinating market activities to aid farmers and make sure that the contracts farmers get into with suppliers and processors are fair.

He noted that some contract growing arrangements do not allow the farmers to sell the surplus of their harvest to other entities, while they are also made to pay penalties if they fail to meet the number agreed upon.

“This is an area that government can look into. They can be the third party to look into the contracts and make sure there is fair implementation,” he said.

He added that in most cases, farmers who are not members of organized groups end up at the losing end of the bargain.

Dr. Rolando Dy, executive director of the University of Asia and the Pacific’s Center for Food and Agri-business, said that for the Philippines to be competitive in agriculture, products should be able to compete with the imported products that are available in the domestic market.

He said that with rice, the country lags behind its Asean neighbors due to the lack of rice land and urbanization.

He said local farmers should be taught discipline and should be organized to come up with agricultural products that meet expectations of clients.