Social return on investment ups value of agri business

MANILA, Philippines - A government agency that provides technical assistance to the country’s rice farmers is out to help agribusinesses determine their social return on investment (SROI) as a measure of their true value and their socioeconomic impact on the host community.

The importance and benefits of SROI and how it is computed can also help agribusinesses determine the future site and direction of their expanding operations so as to maximize their socioeconomic value.

This subject will be discussed comprehensively by the Philippine Rice Research Institute (PhilRice) through its Social and Agro-Industrial Ventures unit during the forthcoming Agrilink, Foodlink, and Aqualink, which constitute the country’s biggest and most prestigious annual international trade show on agribusiness, food and aquaculture.

SROI differs from the standard return on investment (ROI), which simply measures the profitability of an enterprise based on its annual income as a percentage of total investment.

SROI also differs from the price earnings ratio, which computes the number of years it takes to recover one’s investments.

Both ROI and price earnings ratio pertain to the financial viability or profitability of an investment venture.

On the other hand, SROI is a methodology for measuring and managing the social and economic impact of an investment, which may not be immediately profitable financially, but can have an enormous value to the community in many ways, including enhancement of trade and commerce, improvement of quality of life, and generation of livelihood and enterprises that will ultimately result in increased national productivity and more tax revenues for the government over the long term.

Such factors, according to PhilRice, are important to individual donors and multilateral institutions that support and finance activities with high SROI.

Thus, projects that can clearly demonstrate high social impact, which is measurable in monetary terms, may qualify for financial support, with the level of SROI spelling the difference between an investment and a subsidy from the funding agency.

The SROI methodology enables relative impact assessment such that all business plans should include the SROI analysis as an evaluation tool.

How to conduct the SROI analysis will form part of the seminar/workshop that PhilRice will hold at the Agrilink, Foodlink and Aqualink 2009 slated at the World Trade Center Metro Manila on Oct. 8-10.

With the theme “Sustainable food production: Focus on the Filipino market”, Agrilink 2009 will showcase the best in Philippine agribusiness in the face of the global financial crisis and the threat of foreign competition.

The show includes international exhibits, technology seminars, product presentations, live plant and animal display, wholesale and retail, and many other business activities.

In time for the National Rice Awareness Month in November, PhilRice will also stage a two-day workshop on the social e-valuator®, a web tool that enables quick and easy SROI analysis.

The workshop, which will be conducted by Amsterdam-based international SROI consultant Prof. Peter Scholten of the Scholten and Franssen Consultancy, will have three batches with limited seats from November 25 to 28. Interested participants may email [email protected] for details.