Foreign funds for farms, fishponds fan faith PHL can pull through pandemic

SOME Filipinos have been found with a blood type of “H”: Hero. Two groups of Filipinos don’t know they have it. But with hard work and a shared love for their families and the motherland, they’re able to carry the economy now clambering from a rut.

The first group wires money from over-200 countries and territories, as migrant workers, permanent residents, naturalized citizens and many more. They had been hailed “heroic” by a former Philippine president. Decades after, and with more than $400 billion of cash sent home over a 45-year period, these Filipinos push commerce, lift consumer spending and attract investment amid a recession.

But the second group of heroes—agricultural workers—surprised mainstream development analysts. The agricultural sector became the Philippines’s saving grace during a pandemic.

Agriculture and international migration are strange bedfellows for economic growth in previous decades. The former is associated with rural poverty, one of the causes for overseas employment. The latter forms the foundation of food security, one of the motivations for raising cash through work overseas. Migrant workers experience some affluence, one of the causes for luring the younger generation away from seasonally-earning farming and fishing.

Webinar, meet-up

OVERSEAS Filipinos and overseas Filipino workers (OFWs) want business ventures leading to immediate, more gainful profits—like their overseas earnings. But with an infectious disease stalling growth in the services and manufacturing sectors, agriculture became a bright spot of Philippine growth last year.

The government remains steadfast that the agriculture sector last year was resilient despite a full-year 1.2 percent contraction in production due to supply disruptions caused by the African swine fever, the Taal volcano eruption and typhoons.

No less than President Duterte lauded the efforts of the Department of Agriculture (DA) in averting a possible “pila-pila” for food supply during the height of the pandemic.

Policy makers now want overseas Filipinos and the more than 400,000 repatriated last year, to band with agriculture and harvest gainful incomes in aid of the green buck. Loan facilities have been rolled out. Encouragements to invest in agriculture have flooded cyberspace through webinars and online meet-ups with compatriots abroad.

The pressures of reintegrating repatriated migrant workers pushed the agricultural sector to provide entrepreneurial opportunities. Rural areas house these farm and fishing harvests. And some economists think mobility restrictions may have turned into a blessing for agricultural entrepreneurs to collar their internal markets and provide them with food.

Expand markets

IN lands of green fertilized by monetary harvests from across seas, agriculture and overseas remittances may provide a new normal for making Filipinos’ international migration work for rural development. Philippine agriculture may find migration a shot in the arm if farming and fishing families use foreign remittances to buy farm inputs, farming technologies and fisheries equipment.

Thus, economist Alvin P. Ang of the Ateneo de Manila University thinks localized farm ventures within the rural origins of Filipinos abroad may reap dividends for them during this pandemic. Localized farm ventures may not require much capital and logistical expenses. These ventures will “solve local food requirements and contribute to local food security,” Ang added.

That’s because neighbors and town-mates became the instant target markets. While restrictions have eased, previous lockdowns choked rural-to-urban agri-value chains. Surplus farming produce then got wasted.

If local farming ventures want to dare expand markets to Covid-stricken cities, for example, let excess produce from local production handle them, Ang said.

This localized approach may help would-be-OFW and non-OFW farm entrepreneurs to collar rural hometown markets, Ang said.

“And when there is excess produce from local production, then farmers can sell outside,” he added.

Laid off, suit

FILIPINO farmlands frequently get hit by typhoons. Damaged crops are staple fare.

For Filipinos abroad and their families, the global contagion the coronavirus caused had swept years of bountiful harvests. Alternatives had to be made.

Gina Pomida-Delgado had to make a choice: her husband is stuck in Italy.

Her husband was laid off from the hotel where he worked for 21 years. A labor suit followed, but Delgado’s husband and fellow Filipino hotel workers must continue to make ends meet.

Back in Borongan City, Eastern Samar province, Delgado was quick to the draw. This daughter of farmers had been running a  palay  farm since 2015. The venture then became the Delgados’ economic safety net as her husband was unable to wire euros home.

Good thing our earnings from  palay  “are more than half of what we (are earning) in our other businesses,” Delgado said.

Chances of imports

AS early as 2015, when Gina decided to reunite with children Loanes and Diego and permanently settle in Borongan City, the Delgados spread their financial risks and diversified their income sources. Previous and current overseas earnings and savings (including her husband’s) and profits from farming and non-farming businesses did the trick.

Delgado’s husband, along with more than 165,000 Filipinos, remain in Italy, amid 2,475,372 confirmed cases of Covid-19 as of January 26, according to World Health Organization (WHO) data. The future of their source of income remains uncertain in the short term.

That uncertainty could be dispelled by venturing into agricultural production, Scalabrini Migration Center (SMC) Director Maruja Asis has said in an online seminar.

And if the Filipino abroad and the family in rural Philippines invested in farming and fishing prior to the pandemic, agriculture may well be their “best investment,” according to rural finance practitioner Marvi dela Cruz.

“It is more profitable to engage in agricultural ventures now,” according to Dela Cruz, who heads the Tarlac Provincial Cooperatives and Enterprise Development Office.

“There are still limited chances of importing food from neighboring countries that are also experiencing this pandemic.”

Offering loans

YEARS of advocacy efforts—by the DA and by some migrant civil society groups—to link dollar remittances with agriculture suddenly became a major policy effort last year.

In May last year, Agriculture Secretary William D. Dar pronounced that the government would be offering interest-free loans to overseas Filipinos that would invest in the farm sector. Dar’s sales pitch? Filipinos abroad are “the new breed of ‘agri-preneurs’ who will help revive and reboot the countryside,” Dar said.

“Now is the time to tap the overseas Filipinos sector as they start to reintegrate themselves back to their respective homes, communities, and provinces,” the DA chief said at a time when OFs lost jobs and their remittance expected to plummet significantly this year.

Dar directed his agency’s rural finance arm, the Agricultural Credit Policy Council (ACPC), to offer agricultural credit facilities for repatriated (and some current) overseas Filipinos. With the continued droves of repatriated migrant workers, the ACPC had to direct a specific credit window for them.

ACPC Communications Head Emmalyn J. Guinto prodded OFWs to avail themselves of three loan facilities: the expanded “Sure Aid and Recovery” (Sure) for Covid-19 project; the “Kapital  Access for Young Agripreneurs” (Kaya) loan program; and, the “Agri-Negosyo” (Anyo) loan program. The ACPC acts as the wholesaler while partner rural banks, government financial institutions (GFIs), non-GFIs and co-operatives retail these loans at “affordable” interest rates.

Micro, small

ACPC’s Anyo lending program is for micro-scale and small-scale agricultural enterprises and sole proprietors who are registered in the farmers’ databases of local agricultural offices at provincial, city and municipal levels. The Anyo is the loan facility that specifically prioritized repatriated overseas workers.

The ACPC said its Anyo loans will be for activities in the food supply chain. These activities include production, processing and distribution, as well as purchase of farm and fishery equipment and acquiring fixed assets.

Micro-scale farm enterprises run by eligible repatriated OFWs can borrow up to P300,000. Small-scale farm ventures by these same clients can borrow a minimum of P300,000 and a maximum of P15 million. Both of these loans carry zero interest and are payable in five years.

The ACPC said the Sure project provides “working capital loans” for agri-fishery micro-scale and small-scale enterprises (MSEs) “to continue operations and ensure the availability of food supply amid the enhanced community quarantine” measures implemented last March to May and, to this day, under general community quarantine.

Emergency assistance

THE Sure project also provides “emergency assistance” for individual small farmers and fishers “whose incomes were affected by the ECQ (enhanced community quarantine),” Guinto said during an online seminar organized by the SMC.

MSEs can borrow up to P10 million, with a repayment period of up to five years, under the Sure project. Households of individual small farmers and fishers, for their part, can get Sure’s non-collateralized loans of up to P25,000, payable up to ten years.

The ACPC said the Kaya loan program aims to provide working capital to 18- to 30-year-old agri-entrepreneurs running farming and fishery ventures. With no collateral needed, borrowers can borrow up to P500,000 through Kaya, also payable in five years.

OFWs can lodge applications online through ACPC’s website, with the ACPC serving as a wholesaler of these loans.

Helping OFWs

ACPC Operations Division Credit Programs Chief Allen Ducusin told the BusinessMirror this is the first time they engaging OFWs in the agriculture sector.

Hence, ACPC took time to mold the Anyo program to repatriated OFWs because of “legal constraints.”

This is because ACPC’s mandate is to “purely” provide rural credit to farmers and fishermen, Ducusin explained. But for repatriated and current overseas Filipinos to be eligible for ACPC’s loan programs, they or their farming family members should be registered with the Registry System for Basic Sectors in Agriculture.

Funds for ACPC’s loan programs come from the General Appropriations Act, which are then downloaded to its partner financial lending conduits and includes rural banks, non-GFIs, cooperatives, among others.

Ducusin said Anyo is “very concessionary” and the partner-lending conduits would not charge interest rates but only a minimal fee of 3.5 percent to cover administrative costs. The loan program for OFWs does not entail collaterals as well, he explained.

Online portal

MEANWHILE, repatriated OFWs seeking to access ACPC’s loan programs are directed to an online sign-up portal in order to be facilitated by ACPC staff. The OFWs are then given a schedule for an orientation seminar about the loans and about their value as investors in agriculture.

The ACPC helps the OFWs to capacitate and mentor them with basic knowledge on investments and how to create a business plan, a critical requirement for them to get their loans.

However, Ducusin pointed out that finishing a seminar is not a guarantee that a loan would be approved. Loan availment then becomes the decision of ACPC’s partner financial institution. The decision is also contingent on its assessment of the OFW-cum-agricultural entrepreneur’s business plan.

Ducusin said other ACPC programs are available for current overseas Filipinos wishing to invest in agriculture but who still earn incomes abroad.

Majority of proposals

BASED on data provided by ACPC, about 18 repatriated OFWs have been granted loans with a total amount of P8.9 million, out of 318 applications as of January 13 this year.

Mayeth Samson, who oversees ACPC’s Anyo-OFW loan program, told the BusinessMirror about 62 applications are in the pipeline; 36 loans applications are already pending for approval, while lending conduits still review 26 loan applications.

Samson said majority of the business proposals by OFW-farmers are in poultry industries like broiler and layer raising, as well as high-value crop production such as banana and mushrooms.

“Perhaps, they see the demand in these commodities in their areas during this pandemic,” she told the BusinessMirror. “These are the commodities that are easily sold, like chicken eggs.”

Samson said some OFWs who have availed themselves of the Anyo-OFW loan program have existing properties where they put up their agriculture venture. The others engage with land owners for lease contracts in their hometowns.

“The age profile of the OFW applicants is very wide,” she said. “There are those in their late 20s until late 60s.”

Samson told the BusinessMirror that at least 2,000 OFWs have inquired about their loan program since it was launched last year.

Entrepreneurial credit

EVEN as lending conduits rolling out the ACPC programs offer affordable interest rates, ACPC’s messaging last year of offering “zero-interest loans” during this pandemic may backfire.

Dela Cruz thinks these zero-interest loans run the risk of becoming doleouts for borrowing farmers, fishermen and OFWs affected by the pandemic.

She “disagrees” with interest-free loans “because people are used to the dole-out mentality” and this may lead to non-payment of loans.

These zero-interest credit programs may rekindle previous episodes of “bad” track records for loan collection by these agencies, says this 7-year manager of localized agricultural and entrepreneurial credit programs for Tarlac province.

“Filipinos from all walks of life are politically-inclined, that’s why all loans from government are not given serious thought. They think these are their money anyway.”

Ducusin admitted that delinquency is always a concern for any design of loan programs, especially for a zero-interest no-collateral portfolio.

“We try to mitigate the delinquency. For example, we will blacklist every farmer who will not be able to pay. We explained to them that we will deliberately blacklist them,” he said.

I would prefer loans with interest, Dela Cruz reiterates, “to give emphasis on the ‘loan’ side rather than the ‘dole-out’ side.” This is because majority of Filipinos “are not yet matured in terms of financial literacy, especially on the utilization of borrowings and their repayments.”

If it insists on zero-interest loans “without stricter terms and conditions, and no collaterals at all,” Dela Cruz said the ACPC “may be simply repeating the same mistakes of previous administrations where borrowers just eluded payments, which resulted to failed government (credit) programs.”

Joint ventures

THE ACPC credit facilities directed at overseas Filipinos are not the DA’s first forays in the OF sector.

Eight years ago, then Agriculture Secretary Proceso J. Alcala and Labor Secretary Rosalinda D. Baldoz inked an interagency agreement to promote agri-business ventures for returning and current overseas Filipinos.

A DA unit, the Agribusiness and Marketing Assistance Service (Amas), had been staging overseas road shows to promote farming ventures since this unit launched an “OFW Agriculture Business Investment Program” in 2017. That time, Amas prodded overseas Filipinos to invest in cacao production by parking money in a cacao farm.

The Amas was even prodded by a migrant NGO, Atikha Overseas Workers and Communities Initiative, to roll out agricultural investment packages to overseas Filipinos.

In 2016, former Agriculture Secretary Emmanuel F. Piñol had connected OFWs in Dubai, United Arab Emirates, to the Don Bosco Multi-Purpose Cooperative in M’lang, North Cotabato, to finance a 156-hectare farm for organic rice. Per hectare, Dubai-based OFWs provided P20,000 loans to organic farmers in M’lang.

But as early as the 1970s, rural Filipino families with breadwinners and loved ones abroad have been quietly bankrolling agricultural ventures in their home towns like planting high-value crops and starting fishing ventures. Even ex-migrant workers formed farming cooperatives and registered agricultural corporations.

Apart from the ACPC loan facilities, the Land Bank of the Philippines also has prevailing interest-bearing loan programs for farmers and for OFW entrepreneurs, the latter being also a similar program by the Development Bank of the Philippines (DBP). In July last year, the Small Business Corp. launched a P100 million loan facility for repatriated OFWs, also interest bearing.

Multiple cropping

HOWEVER, as agricultural credit facilities flood the market, seasonal yields from agriculture do not easily attract risk appetites of Filipino dollar earners.

While some repatriated OFWs together with non-migrant Filipinos launched online businesses last year, these were predominantly retail and non-agricultural ventures (even though ventures include prepared meals).

Asis’s nonprofit research group did a survey of 285 repatriated seafarers. Only 3.6 percent of them want to try out farming in the next three months.

And even during the prepandemic period, a study by the SMC and the Organization for Economic Cooperation and Development (OECD) found that households of returned OFWs see agriculture as “subsistence living rather than a business and investment opportunity,” and they may “not likely invest in agriculture.”

However, geography plays a role in making farm investment decisions. Surveys in Dingras town, the rice granary of Ilocos Norte province, showed that agricultural incomes make up 63.6 percent of OFW households’ earnings. Meanwhile, multiple cropping in Bansalan, Davao del Sur (to include rice, banana, corn, coconut, sugarcane and coffee) saw surveyed OFW households having 42 percent of incomes coming from agriculture.

Overseas remittances by these OFW households comprise 23.6 percent and 28 percent, respectively for Dingras and Bansalan, according to a 2020 study covering Dingras and Bansalan by the Japan International Cooperation Agency-Ogata Research Institute.

OF’s behavior

THE limited attractiveness of agriculture for investment may be tied to OFs’ financial behavior.

Immediate harvests and profits aren’t possible from agricultural ventures, Ang said in an online seminar. Immediately earning big from farming leads farmers to vie for outside markets that are now struggling to contain the spread of Covid-19.

“Agriculture is not a simple business and earnings are not immediate (mabilisan agad),” Ang said.

Delgado’s rice farming and trading venture took four years for Delgado to grow. Her husband is taking care of an elderly Italian who covers his board and lodging, and some pay.

Delgado expressed gratitude for this development.

OFs venturing into agriculture may mean good news to a country seeking to expand the economic benefits of dollar remittances, especially in the countryside. As repatriated, returning and current Filipino migrants become farmers and fishers or agricultural investors, they morph themselves into a new breed of heroes in this pandemic era.

That is, if they’re ready and up to the challenge.

Thanks to farm equipment that Delgado’s maternal family had purchased years back, and that continue to bear fruit, she realizes that agriculture “is a good business to invest in” despite the Covid-19 pandemic.

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