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S.M.N.I. Truth That Matters

... The thing with those things is it will involve agriculture, whether it's negative impact or positive impact. The hope of the government is positive. But let's talk about RCEP first. What's your view? Because the Philippine Chamber had a position about that. Are you happy with how it's coming about? Are there any other issues you'd like the policy makers to look at?

I think agriculture represents barely 10% of the total package. However, in the RCEP ratification of the Senate, there is a conditionality that was passed in Resolution No. 42. This resolution enumerated those conditionalities that has to be in place in order to protect the agricultural sector.

We put up this Bantay RCEP advocacy group. We were invited by the FFF to be part of it. We are now looking at that. Some of the major things are that the private sector should be part of the oversight committee in the anti-smuggling.

Number two, that we will be part of a group of private sectors to also be participants in the monitoring of where the budget of the Department of Agriculture is going. Of course, all the things that we have enumerated, consolidation, fertilizer, these things, has to be in place, irrigation.

These are the conditionality in Resolution No. 42 that if it is not followed, there's an oversight committee headed by the Senate pro tempore. If the conditionality is not followed, then they can recommend to the President the withdrawal from the RCEP.

The RCEP did not replace existing free trade agreements. So anybody who's dealing through the RCEP deal transactions can invoke other free trade agreements if they want to and not go with the RCEP. That's my understanding.

Let me clarify what I'm trying to get at. I think the point of the government now is to see how we can develop export products. Agriculture seems to be one of the candidates. Of course, we already have bananas. We export coconuts. How difficult is that to expand and to involve other commodities from the Philippines? What do we need to do?

Not only to help out farmers, to supply local demand, but produce enough so that it becomes a viable export product. Or is that too ambitious of a leap?

That's part of the challenge. We have 69 billion exports. That's the amount of exports from 2019 to 2021. But compared to Indonesia, which has 170 billion, I think Malaysia has 234 billion. Thailand has 245 billion and Vietnam has 251 billion.

Even though we include our service sector, what we earn from the service sector, from the 69 billion, we still cannot meet even match Indonesia. What is the basic problem? The basic problem is that we need to support the raw materials that come in to support.

For example, we just have a new market for durian. The problem with durian, we do not have durian as raw materials. So you need to plant the durian trees. It will take about four to five years before they bear fruit. Calamansi, we have a problem. Root crops like purple yam. There are several. And banana chips. We do not have Saba.

These are things that we need to be synchronized, develop our backward linkages to the raw materials input so that we can put it in. Perhaps at the beginning we can import these raw materials, but we should not depend on import because it is cheap.

We need to pursue productivity of our rural sector because at the end, food autonomy is what is needed. We could be targeting self-sufficiency, but we should also think about food security.

We might be sufficient in food, but if it is not affordable and accessible, then you are not food secure even though you are sufficient in food. So that's the thing that we have to look at.

And because of geopolitical conditions going on in the Asia-Pacific region and the other things that are not within our control, we have the climate change, we have El Nino, we need to have strategic buffer stocks of all the basic commodities that we have.

Strategic buffer stock meaning rice, corn, all the products that are onions, and that requires warehousing and cold storage facilities, post-harvest facilities. That's the key. Post-harvest facilities should be present because we submit that agriculture is not only producing food from the soil.

It involves processing, value chain, delivery, packaging, marketing, the entire staff, and that is what we do. That's what I think is good in dairy.

Almost all of our dairy cooperatives are complete in the value chain, from the grass to the milk collection, to the processing, to the delivery, packaging delivery, and marketing on the retail.

And all of us are like that. We should have all of this in the different cacao, coffee, or high-value crops, fruits, mangoes, and so on. We have to have this complete, including fisheries.

Our small fishermen has no access to cold storage facilities, to ice plants. And perhaps we can have vacuum sealers, and we can have oven for tinapa.

And that will make the shelf life of these fish longer if you have the blast freezers and so on. And they're the poorest of the poor, the fishermen, and in the coconut farms.

So would you agree that this is a good policy of the government to try to maybe change the mindset to maybe look at possibly not just supplying local demand but exporting?

And what crops should we be looking at? You mentioned earlier coffee and cacao.

Fruits.

Are those the crops that are prime candidates as the next export?

Yes. We have good products, even peanut. As I said, root crops. We need to produce these things already. Mangoes, our mangoes are going down. We need to be competitive in mangoes.

Other countries are taking over from us. Our coconut should not only be on copra. It has to be other products or coconut oil. Other products are intercropping, as I said. We should not only plant cacao. We should be selling chocolate and coffee.

And all the other fruits. Bananas. We have mangoes. Avocado. We have durian. There's a lot of fruits that we can grow here as a tropical country, and that is our competitive advantage. Especially, we are a nation of islands. We're a marine country.

Right.

We're not supposed to be importing fish. We should be exporting fish. We have 220 million kilometers of territorial waters, including East Sea. We have 750,000 of inland waters that we can have aquaculture. And we need to develop this. The basic problem is fries. We do not have the fingerlings.

You were mentioning when we talked that we even import.

Yes.

We import the fries.

Based on the resolution of the Senate, 70% of our fingerlings are imported. Why cannot we produce it here? And not relying on Indonesia, on our bangus fries, which can be done.

Right.

It's just a matter of providing support. Support meaning cheap credit.

Right.

Do you know that we have the Philippine Guarantee Corporation who absorbed the Agricultural Guarantee Loan Fund?

Right.

They also absorbed the Small Business Corporation, the IGLF.

Right.

And do you know that 96% of the guaranteed account of the Philippine Guarantee Corporation are in condominiums, in real estate?

Okay.

The national government is guaranteeing the rich people in BGC and in Makati condominiums.

Okay.

While you have no, it's 2.5% for agriculture and about 1%, less than 1% for micro and small enterprise.

We need to review the operation of the Philippine Guarantee Corporation because if the government is subsidizing, giving budget to the national defense, to our security, we have to give also to food security because food security is national security.

Could you put on your banker's hat for a minute?

What needs to be done?

You talk about the Phil Guarantee.

What needs to be done to make it happen so that it will lend more to farmers?

Is it because they don't have IDs or is it because they don't have the, I guess, the social preparation to go to a building and fill out forms?

It's easy for them to go to the 5-6 and borrow 40% instead?

First of all is our farmers, majority of them did not finish elementary.

Okay.

We need extension work or groups to prepare this and help them prepare for this.

Project proposals, loan proposals, cash flow, balance sheet, projected income statement.

How will the farmers know how about this?

Corruptorals and so on.

The central bank has a risk management system that a bank should follow.

If they do not follow this credit risk management system, their license can be taken off from them.

So the bank has no choice but to go to the process of what the central bank, to strengthen the financial system.

We do not blame that.

We do not blame it for them.

But the Guarantee System uses partners, financial institutions partners to be their front.

In doing that, the institutions, the financial system has to go through the central bank regulation.

In doing that, it already put a stop to difficulty, a challenge for the farmers to come in.

Even land bank or DBP, how much has been loaned out by land bank directly to the farmers?

Because the farmers cannot, there's no takers what they said.

Because the farmers cannot make a proposal.

So what they do is they lend to LGUs which is guaranteed by IRA and so on, which is easier to do.

Just to comply with the Agri-Agra.

They'd rather pay interest penalties of one half of 1% rather than the 25% Agri-Agra credit.

So there's nobody who's complying with that.

But the compliance is 10 to 11% out of 25.

So it's more than, I think, what is available is more than a trillion money that's available for lending.

Because 25% of the total outstanding obligation of the banks is what is ready for lending.

Thank you.