Ombion: Agri-oriented development financing


NOT only to ease the pressure, but help the agrarian reform beneficiaries and small agricultural producers raise their capacities, and improve and expand their production.

With the government strong adherence to neoliberal policies of liberalization, deregulation and privatization, our country’s agriculture is dying. It lacks the much needed support to make it stand again. In fact, it is the only hope of our country to gain real sustainable development.

Agriculture production has long been stagnant. Since 1980s, posting a 0.60 growth rate from 1996 to 2000, and averages 1.4 from 2001 to 2015. From a net food exporter, our country is now a leading net food importer.

Since the post Marcos era, public investment policy has been less favorable to agricultural sector as shown in the steady shift in government expenditures from productivity-enhancing investments such as irrigation, agricultural technology research and development, rural infrastructures, land reform and development, environmental resource management and development, to non-agricultural investments.

Agriculture is further neglected both by government and the private sector, yet it remains as the main resource of the country, the main source of cheap labor and income for most Filipinos.

The government’s agricultural loan quota policy intended for agriculture and agrarian reform beneficiaries was very small and got minimal results so far. This has been compounded by its higher interest rates, and inefficiency in implementing and managing credit programs. In effect, agriculture is further put into the sideline.

These conditions have also been the cause of the breakdown in our social fabrics, e.g. separation and brokenness in Filipino families; isolation of new generation of youth from their cultural roots; secularism and meaninglessness in contemporary professionals, among others.

There’s no way our country, or any local development can prosper and become sustainable, without addressing the multi-faceted problems of agriculture.

As an agricultural country, it is our only hope to leap from economic morass and oblivion towards an all-around and sustainable development amid “a highly competitive globalized world”.

Hence, the much needed push for more agri-oriented development financing.

Today there are several dozens of development funding houses, development banks, and microfinance corporations, but only a handful few have support services geared to develop agriculture and capacitate our agricultural producers.

Majority is in the wholesale and retail of soft and hard goods and in the sector of services.

Only a few is into agricultural programs and services. Why? For government and private business groups whose mindset are for big profit in the shortest time possible to avoid high administrative costs, agribusiness ventures are simply far below the desirable because of its basically slow development character, and therefore its cash flow is likewise slow.

It maybe slow but agri-oriented development financing is one of the critical means to infuse flesh and blood into the foundations of our national economy. Agri-oriented development refers to the various businesses based on agriculture and involved among others, food production, livestock production, seed production and supply, agricultural machineries fabrication and development, production inputs, food processing and packaging, wholesale and retail sale of all agri-based products.

Agri-based enterprises cover livestock, crops, orchards, food (meat and crops) processing, farm inputs, agricultural tools and equipment, irrigations, farm management and development systems, etc.

An investment in livestock alone can cover a wide range of services, e.g. loans for pigs, poultry, ducks, goats, carabaos, cows, etc.; loan for livestock infrastructures; loans for feeds; loans for agricultural tools and equipment; loans for food processing; loans for marketing; and many others.

Had the government and private groups invested enough for agrarian reform beneficiaries and small agricultural producers, we could have already spurred agricultural production, increased productivity of small and medium agricultural producers, attracted domestic and foreign investors, increased supply of agricultural materials for our industries, opened job opportunities, increased quality and cheaper food supply to our urban consumers, and increased the income of the agricultural sector.

Agri-oriented enterprises are sure business; with right people and right working tools and management systems, agri-oriented ventures are bound to succeed in definite production cycles and time.

This is a reality that government and private financing groups and institutions must recognize. And they can engage not only in specific agri-based investments, but more important in integrated and coordinative enterprise ventures, involving financing, production, marketing, and trading.

The development financing must be bigger or a package of small loans to cover wider areas and production systems. It is basically developmental in nature because it gears towards development of an area, or a sector, or an industry, or a set of products, hence the impact is bigger.

However, the development and financial institutions must rid themselves of the traditional credit systems whose terms are often harder for small farmers to access and manage. And there are already several innovative ways being practiced by development organizations which the financial institutions can draw lessons from.

To ensure steady growth and encourage more investment support, the government must set the right models, with enough legislative and institutional support.

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