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Filinvest Land earnings dip in third quarter

PROFITS of Filinvest Land, Inc. (FLI) slipped 6% in the third quarter, weighed down by higher costs.

In a regulatory filing yesterday, the listed real estate arm of Filinvest Development Corp. said its net income in the three months to September stood at P1.39 billion. This came amid an 8% increase in total revenues to P5.8 billion, including equity in earnings of an associate and other income.

Real estate sales inched up 5% to P3.76 billion as rental services grew 22% to P1.75 billion.

Costs, operating expenses and interest and other charges amounted to P4.19 billion, 17% higher than last year.

For the nine months to September, FLI’s attributable net income increased 7% to P4.44 billion as total revenues rose 15% to P18.43 billion. Total expenses stood at P12.8 billion, climbing 19% from last year.

In a statement, FLI President and Chief Executive Officer Josephine Gotianun-Yap said the company is expecting its residential trading and office rental businesses to grow further in the remaining months of 2019.

“We look forward to the growth coming from both the traditional and BPO offices, co-working spaces, as well as the entry of new locators and the expansion of existing clients,” she was quoted as saying. — Denise A. Valdez

United Auto Workers union unveils ethics reforms after US investigation into payoffs

DETROIT — The United Auto Workers (UAW) on Wednesday announced a series of ethics reforms in answer to a spreading US federal corruption probe that has resulted in charges or convictions for a number of former leaders of the union.

The UAW said those reforms will include the appointment of an independent ethics ombudsman who will not be an employee of the union; increased financial oversight by the union’s accounting department; and creation of an ethics hotline.

“I’m committed to putting in place the right mechanisms to safeguard our union, regaining the trust of our members, and ensuring the misconduct that has recently come to light will never happen again,” acting UAW president Rory Gamble said in a statement.

To date, 10 people have pleaded guilty in connection with the criminal investigation into illegal payoffs. Just last week former UAW vice president and former GM board member Joseph Ashton was charged with conspiracy to commit money laundering and wire fraud.

Earlier this month the UAW said that its president Gary Jones, who had been linked to the ongoing corruption probe, was taking a paid leave of absence.

Last week acting UAW president Gamble said he would scrutinize every department in the union in response to the probe and that the UAW would have to prove it could run itself in order to avoid a possible US government takeover of the labor organization.

In 1988, the US Justice Department sued to force out senior leaders at the International Brotherhood of Teamsters union and appoint a trustee because of the union’s connection to organized crime.

The government oversaw the union from March 1989 until 2015, when it agreed to a five-year transition period that will end in February 2020. — Reuters

Visa, Mastercard draw FTC inquiry over debit card transactions

THE FEDERAL Trade Commission has reached out to the card issuers.

VISA INC. and Mastercard Inc. are once again in the crosshairs of US antitrust regulators over policies that can prohibit merchants from routing card transactions over alternative debit networks.

The Federal Trade Commission (FTC) has been reaching out to large merchants and their trade groups over the issue as part of a preliminary inquiry, according to people with knowledge of the matter. At issue is whether Visa and Mastercard and large debit card issuers are blocking retailers from routing some mobile wallet payments and tap-to-pay transactions over alternative networks such as Pulse, NYCE and Star, said the people, who asked not to be identified because the inquiry isn’t public.

Representatives for Visa and the FTC declined to comment. Seth Eisen, a spokesman for Mastercard, said the network will cooperate with the FTC’s request.

A 2010 law known as the Durbin amendment — named for Senator Dick Durbin, an Illinois Democrat who ushered it into existence — limited the amount the largest US banks could collect for debit transactions and required that merchants have at least two options for routing them. When chip cards began arriving in the US roughly five years ago, they carried so-called application identifiers, or AIDs, which allow merchants to route debit transactions to their preferred network.

FTC investigators have asked questions about transactions made with mobile wallets, said the people. Such transactions can automatically route to the global AID, which uses Visa and Mastercard networks.

FTC investigators are also looking into whether the country’s largest debit card issuers are prohibiting transactions that don’t require a personal identification number from being routed over the alternative networks.

The FTC has examined issues with debit routing in the past. Visa amended its rules in 2016 in response to an FTC inquiry, clarifying that retailers wouldn’t be required to ask cardholders to choose a network for their debit card transactions. — Bloomberg

What to see this week

6 films to see on the week of November 15 — November 21, 2019

Charlie’s Angels

The Angels put their lives on the line when a systems engineer blows the whistle about dangerous technology. Directed by Elizabeth Banks, this reboot stars Kristen Stewart, Naomi Scott, Ella Balinska, Sam Claflin, and Elizabeth Banks. The Hollywood Reporter’s Beandrea July writes, “Banks peppers in the action-movie sequences that fans of this genre have come to expect, and they are well plotted and paced. (The final comeuppance stands out as expertly choreographed and executed with ballet-like precision.)”

MTRCB Rating: PG

Doctor Sleep

BASED ON the Stephen King novel of the same title, the film follows the events after The Shining. Dan Torrace is now grown up and meets a young girl whom he discovers has the same powers as his. He tries to protect her from the child predator, The True Knot. Directed by Mike Flanaga, it stars Rebecca Ferguson, Ewan McGregor, and Carel Struycken. The Washington Post’s Michael O’Sullivan writes, “Doctor Sleep will by no means make you drowsy, but it won’t keep anyone up at night either.”

MTRCB Rating: R-13

Countdown

YOUNG NURSE Quinn Harris downloads the Countdown, an app which predicts when a person will die. Demons come after her when the app tells her that she has only three days to live. Directed by Justin Dec, the film stars Elizabeth Lail, Jordan Calloway, and Talitha Eliana Bateman. The Wrap’s William Bibbiani writes, “Countdown starts out embarrassing but gets progressively more entertaining as time goes on, to the extent that you start to wonder if it was ever actually bad to begin with.”

MTRCB Rating: R-13

Ford v Ferrari


AMERICAN car designer Carroll Shelby and British-born driver Ken Miles battle corporate interference to design a race car for Ford Motor Company which overtook the popularity of cars by Enzo Ferrari at 24 Hours of Le Mans race in France in 1965. Directed by James Mangold, the film stars Christian Bale, Matt, Damon, and Caitriona Balfe. The New Yorker’s Anthony Lane writes, “Ford v Ferrari is directed by James Mangold, and it may be his strongest film.”

MTRCB Rating: PG

Red Shoes and the Seven Dwarfs

TWO PRINCES were turned into dwarves and they seek the red shoes of a lady to break the spell. Directed by Sung-ho Hong and Moo-Hyun Jang, this animated film features the voices of Chloë Grace Moretz, Sam Claflin, and Gina Gershon.

MTRCB Rating: G

The Annulment

A COUPLE faces challenges that may end their marriage. Directed by Mac Alejandre, the movie stars Lovi Poe and Joem Bascon.

MTRCB Rating: R-13

Employee attrition: The good, the bad, and the ugly

I’ve just received a campaign flyer about a public management seminar on “how to avoid attrition.” In the war for talent, a seminar like this is interesting piece, except I believe there’s something good about having attrition in any organization. Could you help me understand both sides of the coin? — Pink Torpedo.

Just like religion and atheism, we are forced to think of the advantages and disadvantages of two opposing positions. In doing so, we have to use our head and not rely on “tales” to come up with the best judgment. With this in mind, let me tell you that there are more than two sides of the people management coin. Hence the title of this article: the good, the bad, and the ugly sides of attrition:

One, the good side. As long as the turnover rate is maintained not higher than 5% per year, then your organization need not worry about attrition. If organizations can maintain that level of turnover, they can use it to welcome new blood and fresh ideas with the help of those who want to remain loyal. An organization may also choose not to replace a resigned employee at this level of turnover.

Instead, the work to be left unattended by the resigned worker could be distributed to the remaining workers. For example, if Andy who is receiving P35,000 a month has resigned, then the best approach could be to not replace him but instead distribute his tasks to his junior colleagues like Boy (receiving P20,000 salary), Cris (P18,000), and Danny (P16,000).

At this point, your company has already saved P35,000 a month, except you don’t consider it a windfall or a development that adversely affects operations. It might be better to increase the basic pay of Boy, Cris, and Danny by P2,333 each, to preserve the internal equity based on meritocracy and seniority.

So, how did I arrive at the pay increase for the three survivors?

My rule of thumb is 80-20. Twenty per cent is P7,000 out of the P35,000 salary of Andy. Divide the P7,000 into three equal portions and that should be your basis for the salary increase of the three loyalists who are required now to share in the load left by Andy. This also means an 80% or P28,000 monthly savings for the organization. That’s how you should be able to improve morale and productivity.

Two, the bad side. At 6-9% annual turnover over the last three years, prepare to review your empowerment and engagement programs. This includes a review of your salary structure if it is within industry standards. Or, if you’re not sure about the cause or causes on the steady increase in voluntary resignations, then better conduct a morale or satisfaction survey at the soonest possible time.

It could be that while you have a sophisticated engagement program and your salary package is above the industry average, the attrition rate could mean other things like the toxic management style of your frontline supervisors and other people managers. Or it could that your working facilities have degenerated into something bordering on violating labor standards.

Don’t guess why you have an increasing turnover rate. Do something right away.

Last, the ugly side. The worst thing that could happen is double-digit turnover rates. I’ve seen and heard of organizations with more than 25%, placing undue stress on its recruiters to deliver fresh candidates, failing which operations will suffer.

At times, trouble comes in with excessive, if not unnecessary praising of people. “Praise” here means many people have become comfortable with their work situation that they have degenerated into average performers who will not be kicked out of their jobs.

A case in point is the perfect attendance award. Some organizations use it to recognize workers who have logged zero absences and tardiness without looking at their actual tangible work performance. Chances are, you’ll discover that these people with perfect attendance routinely go with the flow without contributing any tangible accomplishments for the organization.

If this happens, many people who are not happy with the set-up would look for alternative employment in a more dynamic organization. It’s counter-intuitive, but just the same, I believe that organizations that don’t value meritocracy would often drive fast-trackers elsewhere.

In summary, having a low or high turnover rate is not good for any organization. Both extremes at some point could be harmful. Having an extremely low or zero attrition rate is bad, in the same manner as that of having a double-digit resignation rates. Let’s accept that. The only thing that we can do is to manage every resignation and make it a learning point for everyone.

The exit interview may not help management discover the reasons behind voluntary resignations. It’s too late for anyone in people management to do just that. The employee has resigned and it’s not a good idea to make a counter-offer, unless you want to establish a bad precedent.

Therefore, the best approach for managers is make sure they always have a finger on the pulse of their workers and respond with reasonable strategies to reconcile the interests of the workers with the vision, mission, and value statements of the organization.

ELBONOMICS: A painful resignation is often without a clear reason.

 

Send anonymous questions to elbonomics@gmail.com or via https://reyelbo.consulting

8990 Holdings’s 3rd quarter income rises by 36%

MASS HOUSING developer 8990 Holdings, Inc. reported 36% increase in its net income in the third quarter, driven by rising sales from its affordable housing development.

In a regulatory filing, the listed property developer said it booked a net income of P1.389 billion in the three-month period ending September from P1.018 billion a year ago.

Revenues grew 33% to P3.498 billion during the July to September period. Broken down, real estate operations went up 29% to P3.4 billion, while earnings from hotel operations reached P98.063 million.

Under real estate, revenues from low-cost mass housing grew 28% to P1.731 billion, medium-rise condominiums units contributed P129.033 million. Revenues from high-rise condominium units soared to P1.539 billion from P27.806 million.

For the first nine months, 8990’s profit went up 23% to P4.208 billion, on the back of a 21% rise in revenues to P10.508 billion. Most of the revenues came from real estate sales, which jumped 18% to P10.204 billion. Urban Deca Homes Manila accounted for 43% of 8990’s top line.

“Our results this quarter and for the year demonstrate the strong demand for housing. But, more importantly, it underlines the importance of not only building houses but developing new communities like what we accomplished at Urban Deca Homes Manila,” 8990 Acting President and Chief Executive Officer Alexander Ace Sotto.

Urban Deca Homes Manila is 8990’s P20 billion affordable housing complex, which offers more than 13,000 units.

Urban Deca Homes Ortigas, which will offer 19,046 low-cost condominium units, was launched in July. Two months after its launch, the company’s sales reservations reached P1.5 billion.

Shares in 8990 ended flat at P14.84 each on Thursday. — Vincent Mariel P. Galang

How PSEi member stocks performed — November 14, 2019

Here’s a quick glance at how PSEi stocks fared on Thursday, November 14, 2019.

 

The Philippines’ english proficiency erodes

The Philippines’ english proficiency erodes

Outmaneuvering themselves

It has taken on a life of its own, but it was evident that President Rodrigo Duterte’s only purpose was to stop Vice-President Maria Leonor “Leni” Robredo’s criticism of his so-called “war on drugs” when he dared her on Oct. 31 to take charge of it for the next six months.

The Vice-President had declared that the brutal Duterte anti-drug campaign was a failure and has to be “tweaked,” by which she meant re-studied and re-oriented. Mr. Duterte conveniently forgot that he himself had admitted early this year that he has failed to fulfill his 2016 campaign promise to put an end to the drug problem within six months.

Apparently on the assumption that Mrs. Robredo would refuse to take the Duterte dare seriously, Presidential Spokesperson Salvador Panelo went as far as to announce that if she accepted the post of “anti-illegal drugs czar,” the Vice-President would “have under her command all offices, bureaus, agencies or government instrumentalities involved in the enforcement of the law on prohibited drugs,” that they would be under her direct supervision, and that “to ensure her effectiveness in combatting the drug menace, she would have a Cabinet Secretary portfolio.”

Mr. Duterte himself then said that the post he was offering would last till the end of his term in 2022 and not just for six months, which was the length of time he had earlier said he was giving the Vice-President to address the drug problem.

Panelo in effect withdrew his earlier announcement when, despite her spokesperson’s statements to the contrary, Vice-President Robredo took Mr. Duterte’s dare in stride and accepted his so-called offer. Instead of repeating what he said before Mrs. Robredo accepted responsibility for the anti-illegal drugs campaign, Panelo then told the media that she should talk to Mr. Duterte first so she can be told what her powers and duties are as Co-Chairperson of the Interagency Committee on Anti-illegal Drugs (ICAD).

Mrs. Robredo’s acceptance of that post was apparently more than what the regime had bargained for. Because her statement on why she accepted the post despite reservations by her Liberal Party colleagues, human rights groups, and critics of the Duterte regime’s bloody and selective “war on drugs” was intelligent, sober, and statesmanlike, it immediately gained her widespread support. The next public opinion surveys will very likely confirm a boost in her approval ratings.

The Duterte dare was all too obvious in its intentions. If she had ignored the dare, it would have given regime allies, trolls and media hacks the opportunity to dismiss her as all talk. If she accepted it — which, judging from their earlier statements, Mr. Duterte’s accomplices thought was unlikely — the agencies involved, among them the Philippine National Police (PNP) and the Philippine Drug Enforcement Agency (PDEA) whose head would be her co-chairperson, could throw all sorts of obstacles in her path to make sure she would fail.

The political consequences of being perceived as just a nitpicking fault-finder or a failure are obvious enough. Among others, it would write off Mrs. Robredo as a possible opposition candidate for the Presidency in 2022, and, by validating Duterte regime claims that she and the opposition are incompetent, would help pave the way for the victory of Mr. Duterte and company’s candidate in the elections that year.

But what are at stake are far beyond what’s obvious. It is not only Mrs. Robredo’s and the opposition’s political future in the next eight years till 2028. On the block as well would be the fate of what’s left of Philippine elite democracy and the further entrenchment of the incompetent provincial despotism that has hijacked the political system, weaponized the law against its critics, and brought corruption to unprecedented heights while the rest of the country falls deeper and deeper into the pit of poverty, injustice, violence, and mass misery.

Mrs. Robredo had no choice but to accept under these circumstances. But she has wisely refused to be lured into issuing any declaration that she would succeed in the next two-and-a-half years in ridding the country of the drug problem that the Duterte regime has failed to eradicate in the more than three years it has been in power. Instead of making any such claim, she has pledged only to save as many lives as possible by redirecting the anti-drug campaign away from the wanton killing of suspected drug users and pushers to looking at the drug problem as both a public health and human rights issue.

The mindless assumption that the multidimensional drug problem — it is an economic, social as well as political, psychological and cultural issue — can be solved overnight by simply killing or jailing users and pushers has time and again been disproven. What the experience of other countries shows is that it will require both time as well as a multi-pronged, multi-disciplinal approach to even begin to address it.

Launched by then President Richard Nixon nearly 50 years ago in 1971, the United States’ own “war on drugs” has failed to curb drug abuse. Instead “it has ruined lives, filled prisons and cost a fortune,” said a New York Times op-ed piece in 2017.

The US is in fact still among those countries with the highest rates of drug use among their populations. Not original to the Duterte regime, but a phrase first coined by the US news media, the “war on drugs” is focused on making access to prohibited substances difficult. To combat their influx into its borders, the US spends billions in military aid to help Colombia — whose drug lords are among the main sources of the cocaine and other drugs that flood the US — stop the drug cartels. Drug abuse continues, however, and has led to the exponential growth of the US prison population as more and more young drug users end up in jail.

Closer to home, Thailand’s 2003 anti-drug campaign has similarly failed, despite the government of then Prime Minister Thaksin Shinawatra’s focus on killing drug dealers and users — a policy that by 2004 had cost over 3,000 deaths. Most of those killed, it later turned out, were not at all involved in the drug trade. Thailand’s drug problem has since worsened rather than abated.

Given these lessons from the experience of the US and Thailand, Mrs. Robredo wisely steered clear of promising the end of the drug problem under her watch. It isn’t only because her getting the full cooperation of the agencies involved is at least uncertain. It is also because the drug problem is rooted in, among other factors, poverty and the runaway corruption in some of those very agencies, among them, as the Senate hearings last September found, the PNP.

Meanwhile, the trap the regime set for Mrs. Robredo has backfired into a public relations disaster for it. It has enabled the Vice-President to focus on stopping extrajudicial killings (EJKs), while at the same time alerting the public to the imperative of holding Mr. Duterte to his pledge that the agencies under his command and control will provide Mrs. Robredo all the cooperation, support, information, and help she needs between now and 2022. By the end of his and her terms that year she could emerge the winner in the short-sighted attempt to silence and destroy her politically. Mr. Duterte and company have very likely outmaneuvered themselves.

 

Luis V. Teodoro is on Facebook and Twitter (@luisteodoro).

www.luisteodoro.com

The Triune Brain and Selling

By Raju Mandhyan

SELLING is a process, and the stages of this process can be nebulous. It takes a while to understand and master the process, and the stages differ from industry to industry. These stages also continuously change over time as trends, technology, and theories of doing business evolve.

In the 1950s, transactional selling was the trend. Sales professionals drew attention to their products and services, generated the desire to buy in the buyer’s mind, and then moved in to close the deal. The process was sales person-driven and was typically a one-way street called Push.

In the 1980s when the range of products and services began to grow and the roads to market became congested, companies employed efforts to sell their products and services based on improved features, better advantages and increased benefits for the customer. The traffic in the business of selling was still jam-packed but the sales process had to become shrewd and tactical.

By the 1990s and into the new millennium, the world had had enough of being a material world and the trends became a lot more strategic and ecological. Sales professionals began learning to walk in the shoes of their customers. They began to think in terms of providing long-term ecological and sustainable solutions for their customers. The selling world began to realize that the hit-and-run techniques of the past weren’t working and did not make business sense or monetary logic. At the turn of the century and deep into the second decade of the 21st century, the profession of selling and the business it represented began to think in terms of the big picture, in systems. The business world and the selling profession realized the power and the wisdom of being altruistic, eco-conscious, value creators in the world.

This does not, at all, mean profits and profit making have been put aside. It means people have realized the long-term sense of nurturing and sustaining the resources from planet Earth. They have realized that all people are inter-connected. Exploiting and taking advantage of one group of people eventually harms many others and affects the entire world. Business and professional sales people have realized that making better use of the Earth’s resources and treating people fairly makes mighty good business sense. This is how smart businesses reap huge profits year after year.

Selling from the heart is, yes, about closing more deals, but it is also about being ethical in approach, conscientious in analysis, and creative in proving value-creating solutions. Above all, it’s about making sure the interventions provided do no systemic harm to the consumer, to the company, and to the ecology. Thus, it is not about greedily closing deals in the old way but about diligently diagnosing needs, offering options, earning trust, and establishing long-term partnerships with the client/customer. Tapping into the thesis of Dr. Paul Maclean’s study of the triune brain, effective selling from the heart is about aligning the choices of the Reasoning Brain, the Romantic Brain, and the Reptilian Brain towards the solution and value creation.

From an organizational and corporate perspective, the Reasoning Brain represents the analytical business side of the company, the Romantic Brain represents the visionary aspirations of the company, and the Reptilian Brain represents its values and deep-rooted culture. These three aspects of an organization also need to align for the company to grow, flourish, and lead in its field.

I must also highlight the rapid growth of communication technology, the internet and the influence of social media in the last two decades. Because of this, the selling profession has had to adjust its stance, change garb, and fly rapidly to keep up with the explosive growth of information disbursement that has become part and parcel of the world we live in today.

Yet winning the heart is to orchestrate sales in such a way that the customer feels that he bought wisely instead of being sold to smartly. Yet the organization she represents must feel assured that all acquisitions will more than serve their needs in the near and long-term. Think about that.

 

Raju Mandhyan author, coach and learning facilitator.

www.mandhyan.com

Volatile Hong Kong poses a supply-chain quandary

By Jeffrey Goldfarb

THE CORPORATE calculus on Hong Kong is changing. For a third consecutive weekday, transport networks have been disrupted by violent anti-government protests, prompting schools to close and leaving workers stranded. Much the way toymakers and apparel vendors have accelerated their quest for factories outside China, its special administrative region poses an international supply-chain quandary.

Hong Kong boasts an admirable track record of surviving shocks, from regular typhoons to the SARS epidemic. Five months of demonstrations this year, however, present an unprecedented challenge. A day after police shot a protester at close range, college students battled law enforcement in a prolonged and fiery standoff. Tear gas was fired in the crowded central business district at lunchtime.

The unrest has exposed a government, led by Carrie Lam, and a police force ill-equipped to cope. A police spokesman saying the city’s rule of law has been pushed “to the brink of total collapse” can only prompt multinational companies to accelerate contingency planning. More than 1,500 of them, with nearly 200,000 employees, have stationed their regional headquarters in Hong Kong, in large part because of the city’s robust rule of law.

Nearly half of companies surveyed by the American Chamber of Commerce in Hong Kong said they were pessimistic about business prospects longer-term. More than a third reported wrestling with a possible talent drain and a quarter indicated plans to scale back or move away. And that was over a month ago, before the latest escalation. — REUTERS

So far, there have only been small signs of financial capital flight. Bigger changes are becoming inevitable, though.

Human capital will be a real challenge. Banks, consultants and others in the services industry will struggle to entice Western executives to move to a volatile Hong Kong. Likewise, violence being directed at the city’s mainland Chinese residents is bound to dissuade southbound relocations. And many Hong Kongers themselves will seek an escape hatch. It has happened before: About 300,000 of them were living in Canada in the late 1990s, around the time of the British handover.

Nearly half of companies surveyed by the American Chamber of Commerce in Hong Kong said they were pessimistic about business prospects longer-term. More than a third reported wrestling with a possible talent drain and a quarter indicated plans to scale back or move away. And that was over a month ago, before the latest escalation. Finding a different hub will be difficult, especially for those that need proximity to the influential stock exchange, depend on Hong Kong as a gateway to the mainland or relish an independent judiciary. Each day of fresh violence, however, makes alternatives look better.

 

REUTERS BREAKINGVIEWS

The platform is killing the middleman

By Diana Princess Yamashita

IF VIDEO killed the radio star in the 1980s and ’90s, the social web has its own version of the generational killer: The platform killed the middleman.

Our most famous platforms, such as Uber and Airbnb, don’t show this statement in action. They simply bridge two sides of a marketplace — cars and passengers, rooms and renters — and make the connection more efficient, maximizing what was once just unutilized capacity. But the platforms with longer supply chains do show the death of the middleman.

Take for instance the case of agriculture. Farm-to-table is so in vogue as a restaurant and conscious consumption choice because it is so unnatural. Food rarely makes its way straight from farmers to our homes. Instead, crops usually go through a whole chain of middlemen, who add their own margin to the cost of goods but nothing else of value for either the producers or consumers. Expressed as a term, the traditional supply chain might look like farm-to-middleman-to-second-middleman-to-third-middleman-to-fourth-middleman-to-fifth-middleman-to-table.

In this supply chain, middlemen hurt both farmers and consumers. Middlemen take away profit that could otherwise go to farmers, who, in the Philippine context, are primarily impoverished subsistence farmers who could use every centavo. On the other side of the equation, middlemen make healthy food prohibitively expensive for many Filipinos. If there can be blights on crops, middlemen are blights on the distribution process.

APPROACHES TO REMOVING THE MIDDLEMAN
Fortunately, some agri-tech companies are challenging the hold of middlemen on agriculture. In China, there is Meicai — which translates into “beautiful vegetable” — and that’s arguably what it delivers to consumers in 12 to 18 hours, beginning when an order is placed. Meicai began when founder Liu Chuanjun noticed that the price of 500 grams of corn had held steady at 90 cents for over 10 years, even though the cost of producing it had risen dramatically.

Founded in 2014, Meicai is now a unicorn several times over, proving that there is tremendous value to be gained in restoring profits to farmers and making fresh fruits and vegetables more affordable to consumers.

The success of Meicai shows that middleman can be cut out of the equation, so long as you have a sizeable enough customer base. Middlemen, after all, are only entrenched in the supply chain because farmers have relied on them so long to go-to-market. If tech companies can provide them with an even better go-to-market channel, then the heyday of middlemen is done.

The way that tech companies provide this go-to-market differs. In the Philippines, for example, fin-tech Asenso Tech Pte, Ltd. has created an end-to-end business enabler that rests on four pillars, including an aggregated demand marketplace that lowers the cost of agricultural inputs, responsible capital, microinsurance, and a consumer-facing marketplace that helps farmers get their products directly in front of customers.

“When harvest comes, we will create localized marketplaces so our farmers can take advantage of over 400,000 sari-sari stores (micro stores) and 40,000 karinderias (eateries) within our ecosystem,” explained Winston Damarillo, a serial tech entrepreneur and Asenso’s founder and chief strategist.

Asenso, in short, takes a two-pronged approach in helping farmers go-to-market. It sells raw goods to stores, who sell the products individually, as well as to eateries, who combine the foodstuffs into higher value meals. Such diversification across multiple customer profiles accelerates Asenso’s rise as an all-inclusive platform and frees farmers away from the lock of middlemen.

Asenso’s model has already received acclaim — the company recently won the Asian Development Bank’s (ADB) Global AgriFin Innovation Challenge over 39 other entrants. In doing so, Asenso won a grand prize of $10,000, and, more importantly, a pilot roll-out in partnership with ADB. The pilot will undoubtedly help Asenso further refine how it can provide even more value in taking farmers to market.

How agritech products like Meicai and Asenso are bridging the gap between farmers and consumers and producing more value in the process should be an example to other industries traditionally full of middlemen. Examples include everything from artisan fields like woodworking to major industries like healthcare and public service.

Rethinking how value is created and delivered is the fastest path to innovation in fields long thought already on the cutting edge. For every middleman that we cut away, it’s more value we’re providing to consumers and producers, the most important part of the process because they together create supply and demand.

 

Diana Princess Yamashita is a journalism student at Colegio de San Juan de Letran-Manila, and working as an Executive Assistant for the chairman of an IT company in Manila, Philippines.