A reader talks about his agri experience

Today, we give way to one of our readers. This one comes from Guillermo R. Andres of Gen. Trias City in Cavite. He has quite a number of ideas about revitalizing our agricultural sector and deserves the space. Here goes.

“I read twice your column on ‘Agri’s Catch-up strategy,’ published on Aug. 15. I just delivered (Aug. 28) my letter on banana chips for export to the new Secretary of the Department of Agriculture, and it contained basically a similar assessment as yours.

“I do not have the figure at hand, but when you said DA’s 17,000 agricultural extension workers that ‘need retraining and a new mindset to become more effective,’ are you referring to technical people of the department?

“Or probably, I was more ‘brutal’ in saying some technical people in government are either ‘ignorant’ or simply ‘not concerned.’

“I proposed to him that the government must finance the farmers to establish Cardaba (more popularly known as saba) banana farms in six production areas, five exporting regions, and one major region that produces Cardaba bananas.

“This is aimed at helping the banana farmers increase their incomes; exporters and/or processors of banana chips by supplying them with fresh bananas for processing or first fry chips at stable prices; solve the supply problem of the banana chips for export industry; and stabilize the price of fresh bananas for processing and the price of fresh bananas for the fresh market.

Increasing demand

“The increasing demand of the fresh market for fresh bananas has already forced the processing market in Region 11 (Davao City) in 2017 to raise prices to P12 per kilogram. The region accounted for 94 percent of the country’s export of banana chips in 2018, subsequently decreasing the profit margin of the exporters and/or processors.

“Any increase in the price of fresh bananas for processing will ultimately make banana chips from the country not competitive in the world export market. This should be recognized as such by the government and other stakeholders.

“This increase in the price was and is the result of ‘indifference’ of the private sector and ‘inaction’ of the government. The export industry has been left to the private sector for almost 30 years, and the government ‘abetted’ this by not doing anything to help the banana farmers.

Failed attempt

“The exception, probably, was the failed attempt of banana farmers in Agusan del Sur in the 1990s to produce banana chips for export. The government provided the funds for the farmers to establish their own banana chips processing plant, but after one or two months, the operation was declared ‘not economically viable.’

“One production area, 40 hectares, requires P8 million in two years: P6 million for the first year, and P2 million for the second year. The P8 million will be treated as a loan, payable in three years. This is for production loans (P144,000 per farmer per hectare) and for start-up capital, at eight percent and four percent interest rate, respectively.

“The proposal is based on estimates of the Bureau of Plant Industry (Davao City) and the 2018 wage rates of the Department of Labor and Employment. 

“In Davao City in 2017, the processing market price was P12 per kilogram, while the fresh market price was P8 per kilogram. In Metro Manila markets, the price of fresh bananas ranges from P30 per kilogram (medium) to P35 per kilogram (large).

“In the proposal, I suggested P13 per kilogram as the price of fresh bananas for the processing market and P18 per kilogram as the price of fresh bananas for the fresh market. This is aimed at stabilizing the prices in both markets.

Agri-Pinoy trading centers

“I hope to discuss this in more detail, particularly the reasons for my proposal, but I have another topic to share with you: the Agri-Pinoy trading centers.

“The government started establishing these trading centers or bagsakan markets in the country, with the cooperation of local government units, during the last years of the Aquino administration. As of 2013, 16 trading centers have been established in 11 provinces.

“The project is good, a long-felt need by the farmers, but as conceptualized and implemented, the project needs to be ‘redirected.’ I believe this is not what the farmers really need to increase their incomes.

“I proposed a similar market concept, using the Urdaneta bagsakan market as a model to the city council of Santiago City in the late 1990s. It was approved, and the council created a committee to visit the Urdaneta market.

“Local politics muddled the project and it failed to materialize. It is good because as I look back, Santiago City is not an ideal place for a trading center.

“I discussed my concept with one DA staff and she suggested I should contact a business firm as it involves business. Probably, I failed to explain it clearly.

Learning from bagsakan markets

“If you have visited the bagsakan markets in Urdaneta, Binan, Tanza, and the failed food terminal complex in Taguig City, you can appreciate the concept. I purposely did not include Divisoria because of its distinct and many advantages over other markets.

“The experiences of these bagsakan markets and other similar markets in the country are instructive. The DA should learn from them.

“Moreover, the trading centers must incorporate the needs of mall markets. I am afraid most of the established government trading centers eventually would become ordinary public markets.”

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Should you wish to share any insights, write me at Link Edge, 25th  Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.