Digital Reporter

What can a metropolitan millennial, with some disposable cash, do for the country’s farmers?

Crowdfunding startup Cropital, a social enterprise, pitches that anyone can grow their money while supporting Filipino farmers. The platform matches farmers with investors and lets them share in the profit, on top of the capital returned. Investors can get up to 25% return on investment, dependent on the terms agreed upon by the farm community and the level of risks involved.

Cropital is the brainchild of three millennials—Rachel de Villa, Ruel Amparo, and Lester Pile—who launched the platform in November 2015.

“We improve their productivity, and at the end of the day we bring back [what has been produced] in the farm to everybody who goes [to] the farm,“ Ms. de Villa, who now serves as the company’s chief technology officer, said during a forum organized by QBO Philippines on May 9 at QBO Innovation Hub, Makati City.

From a capital of only ₱20,000, Cropital has already raised $120,000 or ₱5.9 million for more than 600 farmers in four provinces in the country as of April, thanks to more than 500 investors worldwide.

“At first we thought we would only reach those in the Philippines, but we’re so happy that we’re able to reach also those from countries with very high OFW percentage. They know the problems of farmers in the Philippines that’s why they give their hard‑earned money to Cropital for us to manage our farmers.”

Art Samantha Gonzales

A detailed process is explained on the Cropital site. First, you create an account. Once you have your account, you can choose among the list of farms where you want to invest your money in. Cropital offers two types of investment: short’term (three‑to six‑month period until harvest) and long‑term (more than six years).

Investing through Cropital, which starts at ₱5,000, can be done through “directly invest” or “pledge.” Direct investing allows users to deposit their investment from a virtual wallet, which they can fill‑in through bank money transfer. Pledge, on the other hand, is for users who haven’t deposited money to their virtual wallets yet. Through this process, users are given three days to deposit the amount of money they opt to invest in their chosen farm. A memorandum of agreement will be sent to users once the farm they have selected completes its funding.

To minimize such risks on the changeable weather and pests, Cropital provides farmers with crop insurance through Philippine Crop Insurance Corp. They also have access to agriculturists for advice to effectively prevent or mitigate pests. High value crops—whose prices are volatile and may drop and spike depending on market supply and demand—are diversified, while different farmers are clustered together to further distribute the risks. Cropital also sets a cap on the amount.

Users are charged with a five‑percent service fee at the start of their investment.

Art Samantha Gonzales

From a series of interviews and visits to local farms across the country, Ms. de Villa said her team were able to determine two factors hindering Filipino farmers from having a good quality of life: lack of funds and low productivity. These factors, she said, “keep them in the cycle of debt,” a kin to tiempo muerto as the dead season is called in the Visayas.

“Where we lie is at the center of the agriculture financing industry, so see there’s a lot of financing institutions available to the farmers, but why are they still poor and in an oppressing system?” she said. “So we are positioning ourselves into the very high accessibility and very low interest rate.”

According to her, funding problem among Filipino farmers is caused by lack of financial sources.

“Do you know that our farmers today don’t like going to banks because they don’t want to change their normal clothes? Going to the bank means they have to wear formal clothes,” she said. This is the contrast to the scene in the metropolis where market vendors show up in the neighbourhood bank in their pambahay attire for their daily transactions. “They don’t want that and, of course, they don’t have the collateral that banks require them to provide.”

Consequently, she said local farmers resort to borrowing money from informal net lenders “who often charge very high interest rate.”

“Most of the time they don’t have the choice but to accept that interest rate and fall into the cycle of death once again.”

“We provide access to formal credit based on a set of unconventional criteria for a significant number of farmers who are qualified to receive funding while maintaining a high payment grade,” she said.

Aside from making farming a more profitable practice, Ms. de Villa said Cropital also aims to make farming appealing to the young generation.

“The average age of farmers today is already 57 years old and by making farming more profitable, we are creating a market that would attract younger generation, so it would no longer be a problem in the next two years,” she said.

More than a high investment return, she said Cropital seeks to involve its users in the company’s goal of creating a social impact.

“People who do not usually invest are now starting to invest even though they don’t know how to fund a farm because we do that for them. We just actually expanded the market of people who invest not only in the Philippines, but also in other countries, and it gives them high return on investment,” she said.

With the company’s overwhelming support from local and global sources, Cropital intends to develop its operation. Among Cropital’s plans is the establishment of a system that will allow the company to “select farmers in an instant using a specific number of factors that would compute their efficiency rate and their chances of success.”

“It would be a game changer since we can already partner with the banks that are often afraid to fund farmers ‘cause they don’t know how to do it,” she said. “And with this algorithm, we will be able to change how farmers spend and how we finance farmers.”