FAO-APRACA Regional Roundtable (2004)
LANDBANK PRESIDENT AND CEO GARY B. TEVES
FAO-APRACA Regional Roundtable on Financing of Agricultural Marketing
LANDBANK Plaza, Manila
March 2, 2004
Mr. Andrew Shepherd and Mr. Kariyan Mei of FAO (Food and Agriculture Organization of the United Nations), LANDBANK EVP Gilda Pico, APRACA Secretary General Dick Bayaua, LANDBANK AVP Maurice Feliciano, other distinguished participants, guests from FAO and APRACA (Asia Pacific Rural and Agricultural Credit Association) member-countries, ladies and gentlemen, good morning.
LANDBANK is very pleased to host once again one of FAO and APRACA?s regional roundtable discussions. Today, our focus is small trader financing for agricultural marketing.
Our concerns have grown further than providing our people with sufficient food supply. To achieve sustainable economic growth, we need to aggressively promote the marketing and trading of our agricultural produce.
It is unfortunate that most countries in the region give very little attention to agricultural marketing compared to agricultural production.
Moreover, while there had been several studies on providing financial services to farmers and fisherfolk, there had been relatively few conducted on credit and financing for the traders of their produce.
Thus, I laud FAO and APRACA's efforts to explore these issues as the relate to agricultural marketing. I hope that after this event, we will all gain a better perspective on the agricultural and rural economies of our respective countries.
Some topics to be discussed today are the need for extensive and efficient marketing infrastructure, information systems, education and extension, buffer and stocks, as well as pricing and related policies.
As a prelude to today's discussion, allow me to briefly present our country's experience with marketing our agricultural products.
First, the legal framework for the Philippines' agricultural and fisheries marketing system was set in place under Republic Act 8435 or the Agricultural and Fisheries Modernization Act, also known as AFMA.
Marketing assistance was identified as one of the program's components along with irrigation, post-harvest facilities and other infrastructure; capability-building of farmers and fisherfolk cooperatives and local government units; and production, processing and manufacturing of agricultural and fisheries? produce.
LANDBANK contributed a total of P17.9 billion under AFMA in 2003. This exceeded our commitment of P17 billion in credit and technical assistance for the program. Nearly P6.5 billion of this went to marketing assistance for farmers and fisherfolk.
Our credit assistance was channeled through cooperatives and countryside financial institutions, benefiting more than 300,000 small farmers and fisherfolk throughout the country.
LANDBANK's total AFMA contributions accounted for more than 90 percent of our national government's P20 billion target for the program last year.
Second, various government financial institutions worked together to design a standardized lending program to meet the funding needs of small and medium enterprises. The SME Unified Lending Opportunities for National Growth or SULONG (which means "to go forward in English") is one of our national government's banner programs.
Traders of agricultural goods, including those in the export or export packing businesses can use SULONG's short-term or long-term loans to boost their working capital, purchase equipment or construct their buildings and warehouses.
For 2003, LANDBANK released a total of P11.5 billion under SULONG, surpassing our target of P9 billion by 28 percent. LANDBANK's total loan releases account for 47 percent of our national government's target for the year.
Third, our government recognizes the need to establish a modern technology network in agriculture to properly match production and market demand.
According to our National Food Authority or NFA, our farmers rely heavily on one another and on trader-millers for information on prices, prospective buyers and demand volume.
The Philippine government has undertaken programs to address this, such as upgrading and expanding the National Information Network or NIN, spearheaded by the Department of Agriculture. NIN links various research institutions for easy access to agriculture- and fishery-related research and technology.
Marketing-related statistical data, such as farmgate, wholesale and retail prices can also be obtained from the Bureau of Agricultural Statistics, while the NFA provides agricultural marketing services and information gathered from its daily operations.
LANDBANK has also tied up with B2Bpricenow.com to undertake the Strategic E-Commerce for Farmers Program. This is an Internet-based marketing platform that allows our farmers and fisherfolk to post their products and trade online.
B2Bpricenow.com has hosted the product postings of cooperative-participants, with their products valued at more than P3 billion.
Fourth, the government applies the total systems framework in agriculture by analyzing and formulating strategies in every process, or, as our Agriculture Secretary Cito Lorenzo puts it, from "seed to shelf".
One notable accomplishment in infrastructure expected to boost the country's agricultural and fisheries trading is the Strong Republic Nautical Highway project, which links the northern part of our country to major cities in the central and southern Philippines. A nationwide network of roll-on, roll-off (Ro-Ro) ports and vessels cuts travel time at sea by as much as 50 percent. Transport costs were also cut down by up to 43 percent for passengers and 25 percent for cargo.
All these government initiatives will contribute to the development of a robust agricultural and fisheries trade sectors. For us at LANDBANK, knowledge of these developments helps us in formulating more effective credit delivery strategies for our target clients, especially those in the countryside.
Our goal is to continuously extend timely credit and technical assistance to support the several stages of agricultural marketing. In effect, we strengthen the various participants in the supply chain: the traders, customers and the farmers and fisherfolk themselves.
By providing agricultural and fisheries traders with financial services that suit their needs, we hope to allow them to continue running their businesses successfully, as well as to achieve and maintain harmonious and productive relationships with each other.
Margaret Fuller, an influential 19th century author and educator once said: "If you have knowledge, let others light their candles by it."
I hope that today"s discussions and various presentations will provide us all with new insights on the potential financial services markets and other areas for development in our respective countries. All these are in line with FAO and APRACA"s mission to help our people in the rural areas achieve food security and sustainable development.
Thank you very much and good day. Good luck and may you have a fruitful and productive session.