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PH aims to bolster food security via agri-tech solutions as prospects remain uncertain due to pandemic

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As the world faces a blank wall as to when the pandemic would finally end, several businesses suffer due to the enhanced community quarantine to prevent the spread of the virus.

Food supplies, raw materials, logistical issues, and all supply chain issues have affected food security and other proactive people want to mitigate the impact on the agricultural sector which would affect the supply of the consumers.

With this scenario, the Philippine government gears up to ensure that the food security will be immediately addressed by extending financial assistance to the farmers and strengthening the seamless supply chains. Apart from these, the need to consider technological solutions will strengthen the industry through greater access to finance.

While the agricultural activities are allowed to continue during the community quarantine, there are some farmers whose activities became limited due to various provincial regulations such as in Quezon province, for example, last April 9 the residents in some barangays (wards) were only allowed to leave their homes only once per week – placing the harvest at risk of spoilage during the dry season.

To address some of these issues not just this time but also for any other future eventualities, the government rolled out the Philippine Development Plan 2017-22 as a key focus area for reducing the country’s reliance on imports and boosting self-sufficiency. This will solve the issue of food security in the areas most affected by movement restrictions.

Plant, Plant, Plant

Considering all the circumstances and issues, the Department of Agriculture Secretary William Dar announced last month the new ‘Plant, Plant, Plant’ program, a holistic approach to ensure that the food security will not be jeopardized.

To make the program work, the corresponding budget of P31bn ($615.4M) was earmarked to enhance inputs, provide seeds, and boost production in the main island groups of Luzon, the Visayas, and Mindanao. Of this, P8.5bn ($168.8M) will be allocated to the Rice Resiliency Project, which seeks to increase domestic rice production from 87% of consumption to 93%.

Linking farmers to markets

In addition to some of the hurdles to production, many farmers who have harvested their crops have faced challenges selling their produce, with restrictions on the movement of people disrupting many global and local supply chains.

According to local media, some farmers have turned to social media to search for buyers – and in some cases have resorted to giving away vegetables for free rather than allowing them to rot.

To strengthen linkages between food producers and the market, the Department of Agriculture created four food supply chain clusters around the country: two on Luzon, one in the Visayas, and one on Mindanao.

Through collaboration with government agencies and local government units (LGUs), these clusters were tasked with identifying prime agricultural products and potential markets to develop localized supply chains.

For example, farmers in Eastern Visayas have been connected with public sector organizations that include the region’s medical center, which is the designated referral hospital for Covid-19 patients; LGUs themselves, responsible for disbursing food support packages; and the body responsible for the oversight of the country’s jails.

Meanwhile, the administration of Iriga City, located in Luzon’s Caramines Sur province, launched a ‘Vegetables on Wheels’ scheme, which consists of a truck selling fresh local produce across the city’s 36 barangays.

In a sign of the success of the initiatives, LGUs had purchased P1.6bn ($31.8m) in agricultural goods directly from farmers over the two months to May 7.

Elsewhere, non-governmental initiatives to form localized supply chains include agriculture social enterprise Agrea, which in March launched a ‘Move Food Initiative’ to enable consumers in some areas of Metro Manila to order produce from local farmers via an online form.

Peer-to-peer financing

While government supports and initiatives are working to maintain agricultural production and linkages during the pandemic, a series of tech solutions would also be helping the farmers on improved access to financing.

With around 75% of Filipinos remain unbanked, it can be particularly challenging to finance rural businesses with limited access to financial infrastructure.

As a result of this low rate of financial inclusion, the market is characterized by a tradition of seeking financial support from within the family rather than from financial institutions.

Informal lending channels are not only absent of bureaucratic hurdles, but also avoid high-interest rates, and are accessible to those with limited financial literacy.

In recent years peer-to-peer lending via crowdfunding start-ups has emerged as an alternative form of financing for farmers or companies looking to enhance productivity through investment in improved farmer education, enhanced inputs, and increased mechanization.

One example is the Cropital crowdfunding platform, through which investors choose a Philippine farm for investment, and then receive a fixed-rate return on that investment depends upon the success of the harvest.

Beyond simply providing access to credit, the enterprise also links farmers with insurance providers and agricultural training resources – and has received support from institutions in the US, the Netherlands, and Malaysia.

Meanwhile, local start-up FarmOn offers an alternative lending model whereby investors select a crop – rather than a farm – for investment. The financing is then used by various farmers to purchase the necessary inputs and/or technologies from FarmOn, which is the start-up’s source of revenue.

After the farmer cultivates and sells the crop, they share the profits 50-50 with the investor. This solution also focuses on sustainable agriculture through increased mechanization and productivity.

Seeds of hope

Building on these initiatives, there is scope for the agriculture industry in the Philippines to benefit from the end-to-end agritech solutions already employed in other markets.

Nigerian start-up Farmcrowdy is a case in point. Launched as a crowdfunding platform connecting small- scale farmers to finance in 2016, it raised $1m in seed funding the following year and an additional $1M in 2019.

The company then expanded its offering to connect local farmers with major processors and international buyers, before announcing in April, amid the pandemic, the launch of an e-commerce arm to link its network of local farmers directly with consumers via a web platform and mobile app.

It remains to be seen whether the COVID-19 pandemic will provide a stimulus for agritech start-ups to expand their offering and their reach in the Philippines, and whether localized supply chains and supply chain clusters will continue to provide more efficient, sustainable market access once lockdown restrictions are eased. The capital Manila and various other population centers across the country have remained under enhanced community quarantine since March to contain the Covid-19 outbreak, which had resulted in 11087 cases and 726 deaths nationwide as of May 11.

These agritech solutions amid pandemic set to improve Filipino farmers’ access to credit, increase efficiency in the segment, and would address the Philippines on its medium-term objective of agricultural self-sufficiency.

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