The investment arm of the Ayala-led Bank of the Philippine Islands (BPI) Inc. is keen on exploring more opportunities in the agribusiness sector, which presents a huge potential for diversifying its portfolio.
“The agribusiness sector is underinvested, so there’s room for growth and improvement,” former BPI Capital Corp. (BCC) and current BPI Head of Corporate Products and Support Reggie Cariaso told the BusinessMirror in an interview.
“[Plus food is] a basic need and we have and know many clients we could potentially partner with,” Cariaso added.
BCC ventured into agribusiness last year by acquiring a stake in Advanced Protein Inc., a waste management firm that specializes in rendering business by turning meat by-products into animal feeds.
The venture into agribusiness, Cariaso said, is in line with the goal of BCC to expand its portfolio. He said the bank saw its foray into agribusiness could be profitable for BCC.
“When we see opportunities to partner with some of our clients in sectors we like [and if it is under] the right structure, then we do it. Investing in [agriculture] was a sustainable way of improving how agribusiness can be conducted in the Philippines,” he said.
“It had a lot of things that we like from a commercial bank standpoint: it is self-sustainable, it is not a charity, this thing will make money. Then we saw a lot of the economic advantages of these transactions,” Cariaso added.
He also noted that the back-end segment of agribusiness, which includes waste management, presents a lot of investment opportunities as firms tend to spend more on improving the efficiency of their production lines.
Cariaso cited as an example poultry firms that tend to overlook the fact that wastes and by-products, such as chicken feather, could be turned into something profitable.
“What we saw was an interesting way to recycle waste products into something more productive. And these products could be created for feeds, to create protein meal,” he said.
“So now there is an alternative. Instead of buying soybean meal for feeds, we could produce [a substitute] locally,” Cariaso added.
The BPI official noted that the poultry industry is one of
the
fastest-growing agribusiness segments due to the increasing demand of Filipinos
for meat products.
The National Economic and Development Authority (Neda) said in 2014 that private-sector investments in agriculture will improve the competitiveness of the sector.
The Neda noted that constraints, such as the lack of infrastructure and high input costs, prevent small farmers from taking advantage of opportunities in cities and foreign markets.