The Market Monitor Minding the Nation's Business
By Jerry Maglunog
Farming is the source of revenues of half of the local labor force. If there are about 44 million workers, more than 20 million of them are likely farmers.
Even among banks, the focus is now on the farming sector, based on the agreements forged by leading banks with farm-tool manufacturers. In March 2015, Yanmar, a giant farm firm based in Japan, has sealed a tie-up with Ropali.
Ropali is the leading motorcycle distribution firm with tie-ups with so many banks, led by PR Savings Bank, a leading thrift bank based in Isabela. The bank believes that given the right farming tools, many Filipino farmers have chance of making it big in their field.
“Some of the best and most in demand farm produce are found in the Philippines. There is a very big chance to make that big,” the bank said during the formal signing of the agreement with Yanmar.
Prior to the memorandum of understanding signing, Yanmar said there are only 17,000 tractors in the Philippines. The number pales in comparison with Japan and United States that have two million and 17 million tractors, respectively.
No less than the Philippine Institute of Development Studies that said one of the main reasons why farming output of most farmers don’t increase is the continuous use of carabaos instead of high tech farming equipment.
Roberto Alingog, the president of the company, said many provinces in the country are severely low tech due to use of carabaos and other primitive farming equipment. “The volume of dragon fruit, rice and corn that farmers produce can increase fast if many mechanical equipment will be provided,” Alingog said.
The bank is not the sole entity that said carabaos are not that helpful anymore when it comes to farming. Even the national government has already removed carabao as one helpful animal, owing it to the huge mammal’s size. “In fact, it’s lazy and small,” a former agriculture secretary said.
Another bank that just recently sealed a deal with a farm tool firm is Metrobank. the bank is the second larkest unibank in assets at P1.6 trillion.
In a tripartite agreement with Kubota Philippines and Sumitomo Mitsui Banking Corporation-Hong Kong (SMBC Hong Kong), Yanmar said that it aims to assist farmers in the aim to increase produce in an effort to boost the agricultural sector.
The program among the bank, Sumitomo and Kubota will create a mechanism for qualified single proprietors and cottage industries to get financial access for the purchase of selected agro-industrial machineries at Kubota Philippines.
“In Metrobank, we are committed to provide products, services and customized solutions that will ensure optimum performance for small and medium businesses. Our goal is to reach those that operate in various stages of the agricultural cycle, from the production of inputs, farming and cultivation, post-harvest, and retail marketing,” Mary Mylene Caparas, executive vice president and head of institutional banking sector of Metrobank, said.
To date, Kubota Philippines is the country’s largest agricultural equipment distributor in terms of volume sales and product range. The company offers machineries that have been enabling Filipino companies in the agriculture sector to boost performance since 1977.
The agriculture sector currently contributes 12 percent to the country’s gross domestic product (GDP) in the Philippines. The industry expanded by 1.83 percent in 2014 to reach P792-B—driven by the crops subsector’s share of 51.71 percent in the total agricultural production.
This is expected to continue to grow with the Department of Agriculture’s initiatives to make production less expensive, stabilize labor costs and reduce post-harvest losses.
The loan arrangement will be made possible with the coordination on the entire structure by SMBC Hong Kong.
Sumitomo Mitsui Banking Corporation (SMBC) is one of Japan’s three megabanks.
SMBC offers a broad range of financial services centered on banking, including deposit taking, lending, securities brokering and trading, securities investment, money transfer, foreign currency exchange, corporate bond trustee services and custody services, and other commercial banking activities.
“We are optimistic that through this farm equipment financing program, together with Kubota Philippines and SMBC Hong Kong, we will be able to assist the sector to boost its performance,” Caparas added.