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Rediscount borrowings surge on funding needs

MORE BANKS turned to the central bank to avail of short-term loans in 2018, with the figure surging compared to a year ago due to higher funding needs for investments.
Peso rediscount loans reached P14.706 billion in December, a sharp rise from the P9.642 billion availed by lenders from the Bangko Sentral ng Pilipinas (BSP) the previous month. This also soared from the P447 million credit lines availed by banks in December 2017.
The BSP’s rediscount facility serves as an avenue for banks to get hold of more cash by posting their collectibles as collateral for short-term credit. The banks can then use the fresh money supply — either in peso, dollar or yen — to hand out more loans for corporate or retail clients and service unexpected withdrawals.
December’s availments brought the full-year tally to P71.524 billion, the central bank said in a statement yesterday. This jumped from a mere P1.591 billion worth of total borrowings in 2017.
This comes at a time when market players are seeing “tight” liquidity conditions after the central bank launched a series of rate hikes to temper inflation expectations. Higher benchmark yields made borrowing money more expensive.
The central bank said more than half of the rediscount credit were used for capital asset expenses, with these investments accounting for 53.62% of the total. This was followed by commercial credits (25.08%) and lending for other services (14.51%), while the rest went into permanent working capital, production and housing.
On the other hand, the dollar and yen rediscount windows for exporters remained untouched the whole year, sustaining a trend seen previously.
For January, rates for rediscount loans remain steady after policy makers voted to keep benchmark yields unchanged during their Dec. 13 meeting.
Rediscount rates for peso loans stand at 5.3125% for loans maturing in 90 days or shorter, while those with a 91 to 180-day term are priced at 5.375%.
Meanwhile, yields for foreign currency credit went up to mirror a movements in global interest rates.
Dollar borrowings will be slapped a higher rate of 4.80763% for one to 90-day loans; 4.87013% for 91- to 180-day loans; and 4.93263% for 181- to 360-day loans, the central bank said.
Rates for yen loans also inched higher to 1.92733% for one to 90-day loans, 1.98983% for 91- to 180-day loans, and 2.05233% for 181- to 360-day loans. — Melissa Luz T. Lopez

Jaguar Land Rover to cut thousands of UK jobs after China, diesel slump

LONDON Britain’s biggest carmaker Jaguar Land Rover (JLR) is set to announce “substantial” job cuts in the thousands, a source told Reuters, as the company faces double-digit drops in demand in China and a slump in sales for diesel cars in Europe.
The company builds a higher proportion of its cars in Britain than any other major or medium-sized carmaker and has also spent millions of pounds preparing for Brexit, in case there are tariffs or customs checks.
JLR swung to a loss of 354-million pounds ($450 million) between April and September and had already in 2018 cut around 1,000 roles in Britain, shut its Solihull plant for two weeks and announced a three-day week at its Castle Bromwich site.
The Tata Motors-owned company has unveiled plans to cut costs and improve cash flows by 2.5 billion pounds including “reducing employment costs and employment levels.”
Those cuts will be “substantial” and run into the thousands, the source told Reuters.
“The announcement on job losses will be substantial, affecting managerial, research, sales, design,” said the source, who spoke on condition of anonymity.
Production-line staff will not be affected “at this stage,” said the source.
The company, which employs nearly 40,000 people in Britain and has been boosting its workforce at new plants in China and Slovakia in recent years, declined to comment when contacted by Reuters on Thursday.
JLR, which became Britain’s biggest carmaker in 2016, had been on course to build around 1 million vehicles by the turn of the decade, but output in 2018 looks set to have fallen as sales in the first eleven months dropped 4.4 percent.
Sales in China between July and September fell by 44 percent, the biggest slump of any market for the central England-based firm, turning the country from its biggest sales market to its smallest.
Its chief financial officer said in October that the firm’s Changshu plant in China “has basically been closed for most of October in order to allow the inventory of both our vehicles and dealer inventory to start to reduce.”
Diesel accounts for 90 percent of the firm’s British sales and 45 percent of global demand, the company said last year, as demand in the segment tumbles following new levies in the wake of the 2015 Volkswagen emissions cheating scandal.
Like fellow automakers, the company could see its three British car factories grind to a halt in fewer than 80 days if lawmakers next week reject a deal by Prime Minister Theresa May, leading to tariffs and customs checks after a no-deal outcome. — Reuters

Margot Robbie to play Barbie in live action film

LOS ANGELES — Australian actress Margot Robbie is to play Barbie in the first live-action feature movie about the iconic and controversial doll, who has enjoyed multiple careers in her 60-year lifetime. Toymaker Mattel and movie studio Warner Bros. on Tuesday announced they were partnering to make the film, which will star the Oscar-nominated actress. Ms. Robbie, 28, will also co-produce the film, the companies said in a statement. No plot, title or release date was announced for the film, which comes 60 years after the adult-figured Barbie fashion doll was launched in March 1959. —Reuters

Having an overstaffed work force without knowing it

I’m the owner of a fast-growing restaurant business. We opened our third branch last year and we’re looking forward to having seven branches this year. That’s why we keep on hiring new workers from all sources just to fill the vacancies as demanded by each branch. Now, each branch is averaging more than 30 workers each, including the chefs, cashier, and branch head. And yet, our overhead expenses have also increased due to overtime payments made to people who are forced to work as many as 16 hours a day, which to me is impossible to do. I can’t understand what’s happening; no matter how we increase the number of workers for each branch, we still encounter excessive overtime work and other manpower-related expenses for each branch. Could you please tell us what’s wrong? — Losing It.
A frugal old woman who, instead of seeking professional help from a pest control company, called the village handyman to seek free advice on how to remove a skunk in her basement. She was told to make a trail of bread crumbs from the basement to the yard, and then wait for the skunk to follow it out of the basement. The woman complied.
The following day, the woman called again and reported that she had done as told, and now she had three happy skunks frolicking happily inside the basement.
That’s what happens when you try to solve a problem resulting in another major problem.
Your restaurant business may be earning a lot of money, but at the end the day, you have no recourse but to deduct all expenses, including necessary and unnecessary costs, visible and invisible things, for you to arrive at your net profit. Is it enough for you to continue with your business?
Reduction, if not the elimination of waste, is a fundamental, bottom-line approach to business management. Sometimes, in our desire to earn more, we make many careless decisions like putting in more workers resulting in more costs, only to discover that the measure is not part of a durable solution. And worse, it has created more problems.
Operational waste, many of which are invisible to the untrained eye, contributes not only to high costs, but delays, quality issues, poor employee morale and customer dissatisfaction, among other related problems. That’s why you’ve shifted to fire-fighting mode now without knowing of what’s hitting you.
You’ve resorted only to curing the symptoms but not the root cause or causes of the problem. If you continue doing it that way, you’ll also continue perpetuating all the issues that you’ve been encountering. Take for instance, when you consult a doctor for an ailment. You tell the doctor: “My head aches when I work until one o’clock in the morning.”
To which the doctor prescribed the obvious solution: “Then, don’t work until that time. Change your work schedule and soon, your situation will improve. In the meantime, buy and take this medicine three times a day. That’s one thousand pesos for consultation.”
Sooner or later, you’ll find that your condition persists even if you cut your work to the barest minimum. Then you’ll go to another doctor to seek a second opinion. The same thing could happen when you do the same thing in your business operations.
From what I gather from your short story, you’re probably suffering from a management blind spot. Most business owners are just like that. If they’re earning money, they keep on spending even for unnecessary things in the hope that it could be eventually recovered, until it’s too late.
Now, let’s explore at the following basic approaches for handling the situation as you’ve described:
One, conduct a manpower audit to determine the right number of workers. In addition, review the job description of all basic functions in an ordinary branch. Take stock of all standard job functions you think are necessary to operate a restaurant. Keep an eye out for duplicated functions, like the case of waiters and bus boys. It’s better to have one worker (like a waiter) doing the same job of taking orders from customers, serving them, and cleaning the tables as well.
Two, explore the idea of multi-tasking versus specialization. This is related to number one above. Further to merging the work of waiters and bus boys, you may also want to experiment with the idea of making the branch head work also as cashier, waiter, or bus boy as the need arises. There’s no need for you to embark on specialization as it breeds complacency rather than efficiency.
Three, learn from many best practices of other restaurants of your size. If not, you can also learn from major restaurants, except that benchmarking with other similar businesses, regardless of size could be a major challenge as they might not allow you to “discover” their secrets. If this is a long shot for you, then your next option is to read as many articles that you can discover about restaurant management.
Four, consult with a professional efficiency expert. Don’t rely on free advice from your “village helper” who could bring you more “skunks” or trouble in your household. You need to hire a management professional who can help you establish a system that attacks many sources of operational waste. You need to spend something to seek the advice of a professional consultant capable of implementing many time-tested solutions.
Last, do management by walking around on a regular basis. The Japanese call such an approach the Gemba Walk. Visit all your branches without establishing a firm schedule. But don’t make it look like an audit with the intention of catching people doing something wrong. Instead, talk to people, even to the dishwashers, bus boys and janitors and offer help that can make them happy and motivated, regardless of their employment status.
Therefore, whenever you plan to make changes, ranging from the way a single job is to be performed, it’s always necessary to consult with those who will be affected. Doing this will help generate workers’ acceptance of the changes, which will go a long way toward guaranteeing its successful implementation.
ELBONOMICS: A solution can be found in the same place where the problem was first created.
 
Send any workplace questions or feedback to elbonomics@gmail.com or via https://reyelbo.consulting.
Anonymity is guaranteed to those who seek it.

SEC renews warning against Paysbook

THE Securities and Exchange Commission (SEC) has reiterated its warning to the public against investing in Paysbook E-Commerce System Corp., as it has no license to solicit such investments.
In an advisory posted to its website, the SEC’s Enforcement and Investor Protection Department said it received information that Paysbook has been posting several photos on social media of its officers appearing before the commission, implying that it has settled its issues.
This is despite an earlier warning against Paysbook that the SEC issued last Aug. 1, 2018.
“To date, the Department has not issued any order lifting the Aug. 1, 2018 Advisory on Paysbook E-commerce System Co. Ltd. finding no sufficient ground or justification to lift the same. Thus, the general public is hereby informed that the Advisory remains valid and in effect,” the SEC said.
The commission said that Paysbook’s scheme involved enticing the public to buy online account activation codes so they could join its online platform. From there they could earn by simply logging in and out of the website, in addition to recruiting other people into the platform.
An investor would have to create a Paysbook account on paysbook.com, after which he or she will immediately earn P300. The activation code worth P1,000 will allow the investor to earn up to P1,200 every six days for log-in and log-out rewards.
Meanwhile, recruiting new members could generate commissions of up to P40,000.
The SEC said Paysbook is a registered corporation whose primary purpose is to engage in e-commerce system services, online selling, online advertising services, franchises business, website development and customized online system development.
While a registered company, it has not secured the license to solicit investments from the public, which requires a secondary license from the commission as per the Securities Regulation Code. The securities being sold must also be registered with the SEC.
“To reiterate the contents of the Advisory, the general public is hereby warned that all investment schemes are subject to the regulatory authority of this Commission,” the SEC said, noting that recruiting investor members into the system is considered a form of investment solicitation or a sale of securities.
Those found to be acting as salesmen, brokers, dealers, or agents of such companies can be penalized with a fine up to P5 million, or be imprisoned for up to 21 years. The names of the people involved in such schemes will also be forwarded to the Bureau of Internal Revenues so their taxes and penalties can be assessed accordingly. — Arra B. Francia

Cloud computing — cloudy no more

IT WAS in 2007 when I started to talk about cloud computing in public fora, company and client meetings, and articles in newspapers. It was too early during that time. I remember presenting its concepts during a management committee meeting in a global IT services company, and I either got blank stares or jokes about cloud. One executive asked, “So what is cloud?” I said, “Cloud is what you want it to be — software, hardware, security, etc.”
Now, cloud computing is already mainstream. Those who heeded the call of opportunity command large market shares. As of third quarter of 2018 according to Synergy Research Group, Amazon Web Services (AWS) holds 34%, Microsoft 14%, Google 7%, and the rest are with other players like Alibaba, IBM, and others. Globally, 80% of large companies or enterprises are both running apps on or experimenting with AWS as their preferred cloud platform; 67% of enterprises are running apps on (45%) and experimenting on (22%) the Microsoft Azure platform. 18% of enterprises are using Google’s Cloud Platform for applications today, with 23% evaluating the platform for future use according to RightScale’s 2018 survey. Cloud adoption is growing more than 50% year on year.
If you’ve been living under a rock, “cloud computing is the on-demand delivery of compute power, database storage, applications, and other IT resources through a cloud services platform via the internet with pay-as-you-go pricing”, as defined by Amazon. Cloud provides a host of benefits such as trading capital expense for variable expense, benefiting from massive economies of scale, increasing speed and agility, stopping spends on running and maintaining data centers, and going global in minutes.
In the Philippines, conglomerates use cloud for as much as 80% of their workloads whereas medium-sized companies use as much as 40% in our estimates. Amongst small enterprises, around 30% of them already use some form of cloud may it be subscription email, apps, or storage. Overall, we estimate that 30% of the total workloads in the country are already in the cloud.
But it shouldn’t stop here. The multiple benefits cloud brings to transform organizations cannot be overemphasized. Interestingly, our country is ranked 9th in Asia Pacific when it comes to Cloud Readiness Index, according to the 2018 study of Asia Cloud Computing Association (ACCA), which evaluated four areas such as cloud infrastructure, cloud security, cloud regulation, and cloud governance. We are ahead of Thailand, Indonesia, India, China, and Vietnam which are ranked 10th, 11th, 12th, 13th, and 14th, respectively. But this is no reason to celebrate.
While we are ahead of many countries, our country has regressed in the area of cloud infrastructure. Specifically, we have regressed in the aspects of international connectivity and broadband quality which declined to 10th in 2018 from 7th in 2014, and 13th in 2018 from 12th in 2014, respectively.
In my conversations with small and medium enterprises (SMEs), there is willingness to move to the cloud; but they always highlight the issue of connectivity. Our country is still reputed to have the slowest and most expensive internet in the region, preventing SMEs to take advantage of the cloud.
But technology is also adjusting to the internet situation of countries like ours. In my conversations with rural banks and technology providers, there’s already close to 40 rural banks using core banking system in the cloud.
I wondered how and why. It turns out that technology providers have adapted their cloud applications to make it lightweight, i.e. does not require much bandwidth, and has on offline mode, i.e. can still run processes without internet connectivity. If technology providers can achieve this, then they can capitalize on the close to a million SMEs in the country.
An additional challenge among SME owners is that still a lot of them think cloud in not secure. In fact, cloud from known providers is more secure than legacy systems on premise. Cloud providers invest heavily in securing their data centers, hiring the best security professionals, and instituting controlled access. Cloud providers need to reach and better educate SMEs on this aspect.
Cloud computing is already in the mainstream consciousness of business owners. Our regulators should push for a better internet infrastructure to enable massive and fast adoption among enterprises.
 
Reynaldo C. Lugtu, Jr. is President & CEO of Hungry Workhorse Consulting, a digital and culture transformation firm. He is the Chairman of the Information and Communications Technology Committee of the Financial Executives Institute of the Philippines. He teaches strategic management in the MBA Program of De La Salle University. The author may be emailed at rey.lugtu@hungryworkhorse.com

How PSEi member stocks performed — January 10, 2019

Here’s a quick glance at how PSEi stocks fared on Thursday, January 10, 2019.

Philippine Stock Exchange’s most active stocks by value turnover — January 10, 2019.

Storm-lashed 2018 dampens farm output, growth falls to 1%

AGRICULTURE output rose 1% in 2018, dampened by storms that damaged farmland and fisheries, the Department of Agriculture (DA) said on Thursday.
“Philippine agriculture and fisheries were hobbled with a mere 1% growth in 2018 as a super typhoon and 12 more tropical storms battered the country almost every month of the year destroying 1.8 million metric tons of crops with an estimated value of P36 billion,” Emmanuel F. Piñol Agriculture Secretary said in a Facebook post.
“A review of the performance of the sector during the Management Council (MANCOM) meeting yesterday in Tanza, Cavite showed that the Department of Agriculture (DA) missed most of its target production levels for the year, except for poultry which exceeded growth projections,” Mr. Piñol added.
According to Mr. Piñol, rice production in 2018 amounted to 19.1 million metric tons (MT), missing the 19.4 million MT target by 1.54%. It also fell 170,000 MT from the year-earlier total.
Corn, meanwhile, lost about P10 billion worth of production, Mr. Piñol said.
“The 2018 Agri-Fisheries Performance paled in comparison to the vigorous 3.9% growth posted by the sector achieved by the Duterte Administration in 2017, a year with fairly good climate and fewer typhoons,” Mr. Piñol said.
“In contrast, 2018 opened with Tropical Storm Agaton in January, Tropical Depression Basyang in February, Domeng in June, Henry, Inday and Josie in July, Karding in August, Super Typhoon Ompong in September, Rosita in October, Samuel in November and the year-ender Tropical Depression Usman towards the end of December,” he added.
The MANCOM, meanwhile, identified five key areas of focus for funding in the agriculture sector to support a new growth outlook of 2.5% to 3.5%.
These are: 13,000 kilometers of farm-to-market roads, solar-powered irrigation projects (SPIP) covering 500,000 hectares over the next three years, post-harvest facilities to minimize losses and boost productivity; investments in logistics and transportation facilities especially for the movement of goods from the remote regions to urban centers, and greater focus on the Easy Access Credit Program.
“The MANCOM identified the key focus areas for 2019 and set a growth target of between 2.5% to 3.5% for the year,” Mr. Piñol said.
The Philippine Statistics Authority (PSA) is scheduled to release its data for gross domestic product (GDP) growth for 2018 on Jan. 24. Farm data output for the year is usually published days prior to publishing of GDP data. — Reicelene Joy N. Ignacio

Senate lists priority measures for action next week

SENATE PRESIDENT Vicente C. Sotto III on Thursday listed the priority measures that the chamber is seeking to pass on third and final reading, aside from the proposed 2019 national budget, when it resumes session next week.
At the Kapihan sa Senado media forum, Mr. Sotto said the Senate’s list of priority bills, which he noted will be finalized on Monday, included the following measures:

• Proposed amendments to the Human Security Act, pending in the committee on public order and dangerous drugs

• The medical scholarship bill, pending in the committee on health

• Proposed amendments to the Public Service Act, pending on second reading

• The proposed Mindanao Railways Authority measure, pending in the committee on government corporations and public enterprises

• Unified uniformed personnel retirement benefits and pension Reform Act, pending in the committee on corporations and public enterprises

• The budget reform bill, pending on second reading

• The rightsizing the national government bill, pending on second reading

• The value for money procurement bill, pending at the committee on finance

• The traffic and congestion crisis bill, pending on second reading

• The salary standardization bill, pending on second reading

Mr. Sotto also cited the Senate’s priority measures among those whose bicameral conference committee reports were ratified by both chambers of Congress last year, such as the tax amnesty bill, the universal health care bill, the coconut levy bill, and amendments to the fair elections act.
The Senate leader noted that Malacañang has its own “wish-list” of priority bills as well, which he said came from the Legislative Executive Development Advisory Council (LEDAC) technical working group.
This list includes the Allowable Recoverable Systems Loss bill, the Security of Tenure bill, amendments to the Public Services Act, the National Transport Act, federalism, the rightsizing the national government bill, the budget reform bill, and the national land use bill.
“We’re trying to be practical to say that this is what we can pass within the next two or three weeks. But hopefully we can fit it all in since we have a good record of what we have passed from the previous year,” Mr. Sotto said.
“I’ll be very honest about it. In the list that we mentioned, if we’re able to pass more than 50% of these then, we will be very glad and we’ll be very happy in the performance of the 17th Congress,” he added.
Asked if the Senate will also prioritize the bill increasing tobacco and alcohol taxes after President Rodrigo R. Duterte agreed to certify it as urgent, Mr. Sotto said, “if he (referring to Mr. Duterte) is going to certify it as urgent, then I’m sure the Senate committee handling it ill act on it. I just hope that we have enough time to be able to tackle it.”
The bill, which seeks to impose a P60 tax per pack of tobacco, is being eyed as among the measures to help boost funding for the expected roll-out of the government’s universal health care program this year.
Asked for comment, Senator Juan Edgardo M. Angara said the committee on ways and means, which he chairs, will “do its best” to push for the passage of the bill.
“We’ll do our best to push it forward under the circumstances. I’m sure the leadership of the Senate will also see what can be done in the few remaining weeks of congressional sessions,” he said in a text message to BusinessWorld.
Congress is set to resume session on Monday, Jan. 14 with only four weeks before it adjourns on Feb. 8. — Camille A. Aguinaldo

Inflation projected to dip below 4% in 2019

By Melissa Luz T. Lopez
Senior Reporter
INFLATION is expected to fall 4% this year with risks to prices seen balancing, the Bangko Sentral ng Pilipinas (BSP) said, after the indicator spiked in 2018.
The Monetary Board (MB) opted to pause its tightening cycle in December as it projected a tamer inflation outlook over the next two years, coming from jolting price increases observed during the second half of 2018.
Policy makers voted to keep benchmark rates steady at 4.25-5.25% during their Dec. 13 review, breaking a five-meeting streak of rate increases cumulatively worth 175 basis points (bp). This brought the key rate to 4.75%, the highest in nearly a decade.
“[T]he MB observed that the risks to the inflation outlook have become more evenly balanced for 2019 and lean towards the downside for 2020 amid a more uncertain global economic environment, which could further mitigate upward pressures from commodity prices in the coming months,” according to the highlights of the central bank’s policy meeting.
Back then, the central bank saw inflation slide sharply in November to 6%, coming from a nine-year high of 6.7% in September and October.
“The latest inflation outturn confirms the BSP’s assessment that price pressures have started to ease in Q4 2018,” the policy makers added.
Data released by the Philippine Statistics Authority last week showed a sustained decline to 5.1% in December, which kept the 2018 average at 5.2%.
BSP Assistant Governor Francisco G. Dakila, Jr. said last month that the authorities are now “a lot more comfortable” that inflation will return to the 2-4% target band, even as early as late in the first quarter.
“The risks to future inflation are seen as evenly balanced for 2019. Meanwhile, downside risks to the outlook will dominate in 2020 largely due to downside risks to global growth,” the report added.
The BSP expects 2019 inflation to average 3.2%, while the 2020 figure is seen settling at 3%. A sharp decline in world crude prices, the P1 rollback in minimum jeepney fares, and the series of rate hikes from the central bank are seen tempering price adjustments moving forward.
Slower global economic growth dampened by a trade war between the United States and China is also expected to help tame inflation, despite upside risks drawn from higher electricity rates and a fresh round of sin tax increases this year.
Still, the central bank said it will take further policy action “as appropriate” to ensure stable prices.
Bank analysts have said that the BSP is now at the end of its tightening cycle as inflation is becoming less of a problem, with some even noting that there may be room to unwind by lowering bank reserves anew as well as possible rate cuts later this year.
The BSP will hold its first policy meeting for 2019 on Feb. 7.

Poe signals court challenge to two tower-company limit

SENATOR Grace S. Poe-Llamanzares on Thursday said she will go to the courts if the common tower policy proposed by Presidential Adviser for Economic Affairs and Information Technology Communications Ramon P. Jacinto goes ahead.
“I will really oppose that and I will not just oppose that because in case they will not listen to us — Because you know, when they face the Senate, all the good points are being mentioned but are not being implemented, so we will file a case because we really need to stop this type of policy, which I think will harm the public,” she said in a radio interview, the transcript of which was released in a statement.
A draft memorandum circular (MC) on the common tower policy put together by Mr. Jacinto only allows two independent providers to build towers for the first four years of the implementation of the policy.
Potential tower companies have noted that such restrictions may reduce the number of towers that can be built while the Philippine Competition Commission (PCC) has said the draft policy may anti-competitive.
Department of Information and Communications Technology (DICT) Secretary Eliseo M. Rio, Jr. also said last week in a Facebook post that Mr. Jacinto’s draft policy may be challenged in court due to possible violations of the franchises of Globe Telecom Inc. and PLDT, Inc., which authorize them to build their own towers.
Mr. Jacinto earlier pointed out that the implementation of the policy will be handled by the incoming DICT Secretary, Senator Gregorio B. Honasan, not Mr. Rio.
Ms. Llamanzares, chair of the Senate committee on public services, reiterated that the policy go against the government’s aim of improving the telecommunications infrastructure in the country.
She added that the government should work towards improving the infrastructure that will help upgrade Internet and cellular service.
“If (Mr. Jacinto’s proposed policy) happens, it will slow the pace of the construction of cell towers. Isn’t it true that the President wants more competition, especially in the cellular services so there will be lower prices and it will be more efficient? What the Presidential Adviser on Economic Affairs is doing is the opposite,” Ms. Llamanzares said. — Camille A. Aguinaldo

DA to compensate Cordillera farmers for dumped crops

AGRICULTURE Secretary Emmanuel F. Piñol said that the Department of Agriculture (DA) will compensate farmers in the Cordillera Administrative Region (CAR) who were forced to dispose of their vegetables due to oversupply and lack of means to transport the harvest to market.
“Cordillera farmers who were forced to dump or throw away truckloads of vegetables because there were no buyers will have to be compensated by the government,” Mr. Piñol said in a Facebook post on Thursday.
“I made this decision tonight following confirmation by Cordillera Agriculture officials that the reason behind the failure of the farmers to sell their produce was Tropical Depression Usman which caused floods in the Bicol Region,” Mr. Piñol added.
According to Mr. Piñol, traders were not able to buy the produce to transport to Bicol and the Visayas due to flooding brought by Usman.
Bicol is part of the overland supply route to the Visayas, connected by ferries.
“It was made clear that Tropical Depression Usman was the root cause. I made the decision to order the compensation of the farmers,” Mr. Piñol said.
Prices of vegetables such as cabbage, carrots and potatoes dropped to as low as P5 per kilo at the trading post level due to oversupply.
An economics professor specializing in agriculture said that there should be agroprocessing facilities in the Cordillera region to absorb the produce of the farmers, as well as farm-to-market roads (FMR).
“Agroprocessing plants are needed in Benguet. The current practice is to process in Clark because it’s an export processing zone and has good logistics,” Marites M. Tiongco, Dean of the De La Salle University (DLSU) School of Economics (SoE), told BusinessWorld in a mobile message.
“The vegetable production of Benguet can be distributed to different outlets — the domestic, processing and export markets,” according to Ms. Tiongco.
Ms. Tiongco also pushed for commodity contract trading to do away with middlemen.
“Commodity exchange center with cold storage facilities the solution, and efficient logistics,”
The Securities and Exchange Commission (SEC) said it is planning to set up a commodity exchange, with discussions set for the coming month.
“It’s among our plans. We will firm it up during our strategic planning next month. But it’s still a plan as of now,” SEC Chairman Emilio B. Aquino said in a text message.
Ateneo de Manila University (ADMU) Dean of the School of Government Ronald U. Mendoza, meanwhile, said in a Facebook post that technocrats, and not politicians should hold key jobs in agriculture.
“Farmers need support to be better organized and equipped into competitive and well managed coops. There should also be safety nets available for shocks. And we should mitigate smuggling,” Mr. Mendoza said in a text message.
University of Asia and the Pacific (UA&P) Center for Food and Agribusiness Executive Director Rolando T. Dy said that the oversupply was caused by supply chain problems with the region’s access to urban markets breaking own.
“It’s force majeure. It is related to supply chain infrastructure, [which] can be a rising problem,” Mr. Dy said.
Asked what is lacking in the agriculture industry of the region, Mr. Dy replied, “connectivity to urban markets from CAR.”
Mr. Piñol said that most of the farmers who lost their produce are beneficiaries of the DA’s Production Loan Easy Access (PLEA) program wherein farmers can borrow up to P50,000 at 6% annual interest.
Another lending program is run by the Agricultural Credit Policy Council (ACPC) which has allocated P100 million for Cordillera vegetable farmers. Some might have also borrowed funds from informal lenders, Mr. Piñol noted.
“Tomorrow, the DA and the Philippine Crop Insurance Corp. (PCIC) will start the validation process which will involve the identification of farmers who suffered losses and the estimated value of the vegetables they threw away,” Mr. Piñol said.
“The validation process could take two weeks, after which the release of the insurance payments will start,” he added. — Reicelene Joy N. Ignacio

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