Agriculture Industry

[obelix]

By MELODY M. AGUIBA
The Manila Bulletin


The Department of Agriculture (DA) is asking Congress to refrain from imposing many restrictions for commercial bank’s lending to small and medium enterprises (SMEs) in compliance which will just constrain banks from freely funding an integrated farm operation.

In a letter to House Committee on Small Business and Entrepreneurship Development (SBED) Secretary Raul C. Banez, DA assistant secretary for policy planning and Romeo S. Recide said financiers may find agricultural lending unattractive given too many restrictions.

"We express reservation on the proposed credit quota for each category. We propose instead that at least 10 percent of the banks’ loan portfolio be treated as generic quota for all micro, small, and medium enterprises," Recide said.

What will help expand farm loan at all levels of operation are incentives.

"We support mechanisms that will encourage lending to micro and SMEs such as the establishment of an incentive program for banks lending beyond the mandatory credit allocation; possible reduction of banks’ reserve requirement; institution-building activities, and provision of basic infrastructure support services," Recide said.

The Bangko Sentral ng Pilipinas must also strictly monitor compliance to the total credit resource allocation and must consistently impose violations on non-compliance, DA said.

The SBED house committee proposed that banks be compelled to allocate eight percent of their loanable fund for the micro and small enterprises and two percent for medium enterprises.

But this amendment to the law, Republic Act 6697 or the expansion to the charters of Small Business Corporation and Micro, Small and Medium Enterprise Development Council, may turn out to become more prohibitive for lenders.

"(With the absence of credit quota for each category), this will allow banks to have flexibility in the allocation of the loan quota along the different beneficiary sub-sectors on the basis of project viability and borrowers’ credit worthiness," Recide said.

Giving banks a free will on their choice of clients also puts burden on borrowers to prove their projects’ financial viability and profitability.

In relation to lending to micro and SMEs, agriculture financing officials indicated that commercial banks have actually been complying to the law for lending to small enterprises.

"Even without the law, banks would want to lend to small and medium enterprises" because the nature of SMEs enable these to be managed efficiently and with faster growth, said a DA official.

DA has been implementing a similar law, the Agri-Agra Law (AAL) which compels all banks to lend 15 percent of their loanable fund to agricultural operations and 10 percent to agrarian reform beneficiaries.

It remains a fact, though, that banks are able to comply with the AAL because there are alternative forms of compliance to the law which are lending to educational institutions, hospitals, social housing, and investments in bonds and development loans.

Even then, strictly putting a rein on banks’ lending will not help raise loans to agriculture.

Lending to "agribusiness" should also include all farm-related loans, DA said, instead of excluding "farm level agricultural, crop production."

"Agribusiness should cover not only ‘manufacturing, processing, and production of agricultureal produce but should include all farm operations—manufacture of farm supplies, production, farm and storage, processing, and distribution of farm commodities," Recide said.

Records showed that compliance of commercial banks to the AAL, including alternative compliance, as of 2003 was at 25.2 percent, thrift banks at 25.5 percent, ad rural banks at 49.4 percent.

[obelix]

Inquirer


CARRAGEENAN and other seaweed products are expected to become the export leaders in the $700-million aquaculture industry next year, an industry official said.

"The Philippines is still the top exporter of high grade carrageenan in the world," said Ramon Macaraig, president of the Chamber of Aquaculture and Ancillary Industries in the southern province of Saranggani.

"Seaweed exports may even overtake the shrimp trade as the top dollar earner" of in the aquaculture industry, he said.

The Philippines accounts for $50 million of the $80-million US market, Macaraig said at a recent National Aquaculture Congress.

[obelix]

Inquirer


STATE-OWNED Land Bank Of The Philippines expects to lend at least P78 billion to companies venturing in the export of agricultural commodities, Land Bank president and chief executive officer Gilda Pico said.

With the country's inclusion in China's Early Harvest Program of import tariff cuts, Filipino exporters of food products are expected to do well as early as the first quarter of 2006, Pico said.

[obelix]

by: Mercedes E. Rullan
The Manila Times


STATE-RUN Agricultural Credit Policy Council (ACPC) has launched a project that will harness the surplus resources of strong cooperative banks nationwide to improve financial services catering to smallholders in the agriculture and fisheries sector.

Agriculture Secretary Domingo F. Panganiban, ACPC chair, has signed Resolution 26-01 approving the development and implementation of the iInnovative Financing Schemes-Capacity Enhancement Program for Cooperative Financial Institutions.

The project will boost the financial capacity of the cooperative banking system in view of the industry’s capital inadequacy.

“Majority of co-op bank owners are also small farmers who belong to agri-based cooperatives. Many of them have difficulty in continuously investing additional capital to expand the operations of their co-op banks. This, in turn, constrains improvements in the delivery of financial services, such as credit, to the main clients of co-op banks—their farmer and fisherfolk members,” Panganiban said.

ACPC reports show that cooperative banks have managed to devote 57 percent of their loan portfolio to agriculture over the last decade.

Through the new project, a fund pool owned and managed by cooperative banks would be established to serve as a primary source of financial support for these banks, particularly in their lending operations.

The government will act as a catalyst by matching cooperative bank funds invested in the fund pool, but ownership, control and management of the pool would gradually transfer to the industry.

Unlike previous government-led funding programs, the new project would involve risk-sharing by the private sector, Panganiban said.

ACPC recently held a consultation workshop with representatives of cooperative banks nationwide to firm up the features of the project and secure the industry’s commitment.

Present during the workshop were board members and officers of cooperative banks from Benguet, Isabela, Bulacan, Tarlac, Zambales, Quezon, Bata­ngas, Palawan, Cama­rines Norte, Camarines Sur, Aklan, Misamis Oriental and Bukidnon. Also participating were resource persons from Bangkoop, the federation of cooperative banks, the Land Bank of the Philippines and the Quedancor.

Benguet, Agusan del Norte farmers benefit from fund

In a related development, the ACPC has released close to P800,000 in grant assistance to the Cooperative Bank of Benguet Inc. (CBBI) and the Agusan del Norte-based Associates for Integral Development Foundation to be used for the two cooperatives’ institution-building.

The CBBI plans to use the grant to support 50 agricultural cooperatives in Benguet, allowing credit delivery to small farmer producers by increasing the human-resource capability level of their organizations.

The foundation, on the other hand, will use the proceeds of the grant to help 10 farmer organizations in Agusan del Norte develop and enhance their organizational, administrative and financial capability.

[obelix]

The Manila Bulletin

The government is expecting to exceed by 500,000 metric tons (MT), or by 3.3 percent, its 14.75 million MT rice production target for the year with the absence of a major calamity and the increasing national average yield which is close to hitting the four MT per hectare mark due to high-yielding varieties (HYVs).

The last quarter of this year saw the absence of a storm similar to the four consecutive strong typhoons that struck the country in November and December 2004.

The Department of Agriculture (DA) also reported that national average harvest for the last quarter is reaching to 3.97 per MT which is significantly higher than the 2004 fourth quarter average yield of just 3.56 MT per hectare.

"That is the impact of our hybrid rice program which has two-pronged effects. It increases yield in hybrid areas and also raises yield in certified seeds (or other inbreds) because of farmers’ improved cultural practice. In the process, farmers get to apply the techniques in hybrid on inbred," said Frisco M. Malabanan, DA rice program director in an interview.

At the projected 14.82 million MT rice output for 2005, this will be higher by two percent than last year’s 14.5 million MT, a slower growth compared to the 2004 rice production growth of 7.4 percent from 2003’s 13.5 million MT.

DA’s new estimate, which is based on actual farmers’ planting, is substantially higher than earlier forecast made by the Bureau of Agricultural Statistics (BAS). BAS released in October a forecast predicting rice output to reach to only 14.59 million MT. However, this is based on an earlier standing crop from a sample population compared to the DA regional field units’ actual planting report.

The September to December production is seen to pull up the entire year’s output with its 6.12 million MT, up by 9.67 percent from 5.58 million MT in the last quarter of 2004.

Agriculture Secretary Domingo F. Panganiban said DA is reviewing this year’s production and is yet to set to rice production target for 2006.

"We’re still reviewing the figures," he said.

The Philippine Rice Research Institute earlier came up with an agro-industrial clustering roadmap for rice which targeted a 15.8 million MT output for 2006 which should ramp up in 2007 to close to a 17 million MT harvest with a grand sufficiency plan. But the plan remains elusive with a thin budget of just a little more than P1 billion compared to the hoped P3 billion for 2006 and P4 billion for 2007.

Rice area for the year, according to the DA estimate, totals to 4.01 million hectares. Average rice yield for hybrid rice is at 5.77 MT per hectare, more than one MT per hectare higher than that of certified seed which is at 4.54 MT per hectare. Other inbred seeds’ average yield is at 3.53 MT per hectare.

[obelix]

The Manila Bulletin


The government is expecting to exceed by 500,000 metric tons (MT), or by 3.3 percent, its 14.75 million MT rice production target for the year with the absence of a major calamity and the increasing national average yield which is close to hitting the four MT per hectare mark due to high-yielding varieties (HYVs).

The last quarter of this year saw the absence of a storm similar to the four consecutive strong typhoons that struck the country in November and December 2004.

The Department of Agriculture (DA) also reported that national average harvest for the last quarter is reaching to 3.97 per MT which is significantly higher than the 2004 fourth quarter average yield of just 3.56 MT per hectare.

"That is the impact of our hybrid rice program which has two-pronged effects. It increases yield in hybrid areas and also raises yield in certified seeds (or other inbreds) because of farmers’ improved cultural practice. In the process, farmers get to apply the techniques in hybrid on inbred," said Frisco M. Malabanan, DA rice program director in an interview.

At the projected 14.82 million MT rice output for 2005, this will be higher by two percent than last year’s 14.5 million MT, a slower growth compared to the 2004 rice production growth of 7.4 percent from 2003’s 13.5 million MT.

DA’s new estimate, which is based on actual farmers’ planting, is substantially higher than earlier forecast made by the Bureau of Agricultural Statistics (BAS). BAS released in October a forecast predicting rice output to reach to only 14.59 million MT. However, this is based on an earlier standing crop from a sample population compared to the DA regional field units’ actual planting report.

The September to December production is seen to pull up the entire year’s output with its 6.12 million MT, up by 9.67 percent from 5.58 million MT in the last quarter of 2004.

Agriculture Secretary Domingo F. Panganiban said DA is reviewing this year’s production and is yet to set to rice production target for 2006.

"We’re still reviewing the figures," he said.

The Philippine Rice Research Institute earlier came up with an agro-industrial clustering roadmap for rice which targeted a 15.8 million MT output for 2006 which should ramp up in 2007 to close to a 17 million MT harvest with a grand sufficiency plan. But the plan remains elusive with a thin budget of just a little more than P1 billion compared to the hoped P3 billion for 2006 and P4 billion for 2007.

Rice area for the year, according to the DA estimate, totals to 4.01 million hectares. Average rice yield for hybrid rice is at 5.77 MT per hectare, more than one MT per hectare higher than that of certified seed which is at 4.54 MT per hectare. Other inbred seeds’ average yield is at 3.53 MT per hectare.

[obelix]

NEW YORK, (Reuters) — Sugar’s explosive rally could soon lift prices to the psychological 20-cents level as a "perfect storm" of tight supplies and unstinting investor buying stokes the surge in sweetener values, analysts said.

The benchmark March raw sugar contract on the New York Board of Trade closed on Friday at 17.15 cents a lb, its highest level since 1981 based on the monthly closing charts for the market.

In London, the March white sugar contract climbed , or 4.7 percent, to close at 1.10 per tonne, just down from a new contract peak of 3.20, as white prices bounded to their highest level in nearly 10 years.

"We’re in uncharted waters," James Cordier, chief analyst for Liberty Trading Group, told Reuters. "I say we’re going to travel at least to 20 cents."

Alex Oliveira, the sugar analyst for brokerage house FIMAT USA Inc., quipped that 20 cents may be hit soon, given that the March contract blasted through 16 cents on Thursday and then 17 cents on Friday.

"It’s anybody’s guess. The only selling we’re seeing is (spec and fund) profit-taking," he said.

Even then, a surge in the price to 20 cents for sugar is still far from the 45 cents sugar hit in 1980 and the area above 60 cents it enjoyed during its mid-1970s heyday.

Judy Ganes, analyst for commodity firm J. Ganes Consulting, said the market could edge higher, but pointed out that "the most powerful (action) in a bull move is the ending."

"Most certainly, we’re overextended. I thought it was a stretch to get to 15 cents," she said.

Marius Sonnen of Sonnen and Co. said he feels sugar’s rally has been too sudden and sharp, and that "at this point, the market may take a little breather."

Some analysts feel the enormous rally on Friday was caused in part by producers junking their marketing strategy of selling just above the market.

Normally, exporters of sugar would have selling or buying programs in place to sell the sweetener once it hits certain price levels.

"I think some of the producers got rid of their hedges and raised it, which could be seen as bullish because they think this thing has a lot higher to go," one said.

Expectations that leading grower and exporter Brazil will churn out more ethanol from cane in the 2006/07 season, lower European and Thai output, and steady demand from countries like Pakistan, China and Russia have combined to provide the fundamental underpinning for the advance.

There are also investment funds, which have poured billions of dollars into the sweetener.

Indexes providing access for long-term investors to commodities had seen investments swell to around billion by the end of 2005, from around billion by the end of 2004 and only billion by end-2003, according to Goldman Sachs , which runs one of the biggest commodity indexes.

"The funds can drive this thing higher beyond what anybody is expecting. A lot of people will say sugar is overdone and the fundamentals have been blown out of all proportion, but you have to remember that it is the funds who will determine when it is time to get off the train. Until then, hang on," a dealer said.

[obelix]

By Rocel C. Felix
The Philippine Star

The Department of Agriculture (DA) is not allowing the private sector to import corn duty-free.

Agriculture Secretary Domingo F. Panganiban reports the department granted requests from the feed millers and traders to bring in corn at zero tariff.

"We are not allowing and there isn’t even any plan of allowing traders to bring in imported corn at zero-duty. There isn’t even a pending request. First if there is one, we will need to get the approval of the President, secondly and it is quite obvious the Secretary Gary Teves will not allow it," Panganiban said in a press briefing.

Panganiban noted that currently, what the DA allows is the importation of corn under the minimum access volume (MAV) which has been reduced to 35 percent from 40 percent.

MAV refers to the minimum volume of a commodity committed by member countries of the World Trade Organization that they are obligated to allow entry into their markets at preferential tariffs.

Corn allocation for the private sector under MAV is about 217,000 metric tons for the year while the government through the National Food Authority (NFA) has been given the authority to import up to 2,000 metric tons of corn for 2006.

The inter-agency on rice and corn of the DA determines the specific MAV allocation for any given year.

The DA said there is no basis for news reports and columns alleging the department acceded to requests of feed millers and traders to bring in corn at zero tariff, and subsequently, bringing down local corn prices.

Corn price at the domestic front went down by P0.50 to P10.30 to P10.50 for the year, as corn harvest from Mindoro are now en route to Luzon and Manila via Batangas Bay. Corn from General Santos City and Cagayan de Oro are higher at P10.50 to P11 per kilo due to higher transport costs.

Last week, the private sector placed an order of about 24,050 metric tons (MT) of Chinese corn at $139.44 per MT C&F.

The Philippine Association of Feed Millers Inc. (PAFMI) bought Tuesday last week corn from China through the international trading house Bunge. The commodity is due to arrive not later than Feb. 15.

Local feed millers said earlier they prefer to import corn because of unstable supply in the local market which results in erratic pricing, along with the poor quality of domestically-produced corn.

Agriculture Undersecretary Segfredo Serrano said local corn farmers should not fear competition from corn imports.

"With regards to our farmers, there is no longer competition here. It is now a matter of supply. If our supply is not sufficient to meet the feed mill sector, they have to bring it in, or else livestock production will be affected," he said.

The private sector wants to import 150,000 MT of corn and so far, brought in 24,050 MT of corn imports and 60,000 to 70,000 of corn substitutes like feed wheat.

Last year, corn production was down by 2.95 percent, in sharp contrast to the 17.28-percent growth in 2004.

[obelix]

By Rocel C. Felix
The Philippine Star


The National Irrigation Administration (NIA) is embarking on an ambitious P25-billion, three-year program starting in 2006 to rehabilitate the country’s major national and communal irrigation systems that would support government’s goal of achieving self-sufficiency in rice by 2009.

"We are kicking off the rehabilitation program for national irrigation systems (NIS) and communal irrigation systems (CIS) this year with the initial P500 million that was already released by the Department of Budget and Management (DBM)," NIA director Baltazar Usis.

Usis said that with most of the country’s critical NIS and CIS properly functioning, the government’s targeted rice self-sufficiency by 2009 is not too far-fetched.

"A big factor in the previous years’ failures to produce enough rice to meet the country’s growing rice requirements is that more than half of the irrigation systems built couldn’t be used during the planting season because so many of them have deteriorated due to lack of money for operation and maintenance especially when the communal irrigation systems were devolved to the local government units," said Usis.

A government-owned-and-controlled corporation, NIA does not receive subsidy from the government for its operations, thus, it uses internally generated income such as irrigation service fees and management fee. Its other sources of income include equipment rentals, pump amortization, sale of fixed assets and others. Only its NIS projects are given budget allocation through the general appropriations act.

He said that if properly implemented, NIA’s rehabilitation program for NIS and CIS would be the most practical and short-term response to increase productivity in rice farms.

The NIS which are under the jurisdiction of the NIA, are those with capacities capable of servicing more than 1,000 hectares of rice lands while the CIS are those with smaller capacities or below the coverage area of 1,000 hectares.

NIA data show that of the total 3.126 million hectares of rice lands nationwide, only 44.84 percent or 1.402 million hectares have functioning irrigation systems while about 1.724 million hectares have either defective irrigation systems or rely primarily on rainwater for their rice planting activities.

NIA assistant administrator Antonio Galvez said the P500 million recently released by the DBM will enable the agency to revive the identified priority NIS and CIS that would cover some 83,000 hectares this year.

[obelix]

The National Food Authority (NFA) received yesterday 13 offers from Vietnam, Pakistan, and Thailand for its second tranche of rice importation totaling to 400,000 metric tons (MT) out of its approved 1.838 million MT approved rice import for 2006.

Jessup P. Navarro, NFA deputy administrator and bidding and awards committee chairman, said NFA will purchase within five days a total of 300,000 MT of 25 percent broken rice, 50,000 MT of 15 percent broken rice, and 50,000 MT of iron-fortified rice. The rice are for the February to May arrival.

[obelix]

By Marianne V. Go
The Philippine Star

Filipino fruit and vegetable growers, as well as local fruit and vegetable importers, will now have a chance to tap a wider market by participating in the first Asia Fruit Congress to be held in Bangkok, Thailand next year.

This as Messe Berlin, a well-known trade show organizer, has decided to bring to Asia its version of the Fruit Logistica held annually in Germany.

In a press presentation, Gerald Lamusse, project manager of Messe Berlin, elaborated on the goals of the Asia Fruit Congress.

Unlike most other food and beverage trade shows, Lamusse pointed out that the first Asia Fruit Congress is a focused trade show on fresh fruits and produce.

Thus, instead of a horizontal approach to food and beverage, the Asia Fruit Congress adopts a vertical approach focused on fresh fruits and vegetables and offers more depth from markets, sources, regulations, packaging, harvesting and transport.

Asia is now a growing market as more Asian consumers demand fresh fruits and vegetables, Lamusse noted.

Asian consumers are also gradually moving away from wet markets and patronizing supermarkets. Reaching such markets would take a lot of time, travel and money, he added.

By attending a trade show, the producer or importer would be able to maximize his opportunities in bringing his product to the market and learning the latest trends, technologies and regulations, Lamusse said.

[antediluvianist]

"the first Asia Fruit Congress in Bangkok"

Oh, that's nothing. We have one of those convocations of fruits every year in Malate.

[obelix]

by Maricel E. Burgonio
The Manila Times

The Monetary Board has approved a microfinance loan from a United Nation’s unit and new insurance product by the Bank of the Philippine Islands (BPI).

The MB has given the nod for the International Fund for Agricultural Development Fund (IFAD), to provide to Peoples Credit Finance Corp. (PCFC) a $2.5-million loan.

PCFC is a source of microfinancing for the poor while IFAD is a special UN agency that finances agricultural development projects primarily for food production in developing countries.

Around 7.1 million families belonging to the lowest income strata are engaged in microfinance activities, but owing to the absence of microfinancing sources, they are forced to rely on more expensive credit system such as informal money lenders, limiting their capacity to grow.

Meanwhile, MB authorized the BPI to sell new insurance products of Ayala Life Assurance, which will be introducing two new products—the Peso Protector 300 and Dollar Protector 300—that will cater to BPI clients.

The product will be an addition to the Express Dollar Protector 5, a single-pay five-year endowment plan, the bank said.

BPI has an existing marketing and distribution channel of BPI insurance companies such as BPI /MS, Ayala Life and Ayala Plans called BPI Bancassurance Inc. (BBI).

BBI sells investment-type insurance products catering to BPI’s clients in all the bank’s branches nationwide.

Last year BBI contributed 30 percent of the total premiums to Ayala Life alone from 22 percent in 2004. In 2005, Ayala Life netted P389.6 million in profits from P219 million in 2004.

Ayala Life sells a good mix of insurance products covering peso term insurance, peso and dollar whole life products, peso and dollar endowment products, group products and a packaged product.