One of the interesting comments made in this page yesterday was by somebody whose Facebook name is Miang De Dios Picar who asked: “Sa dinami dami ng mggandang ginawa nu patungkol sa farming sa mercado sobrang mahal pa rin ng bilihin ng bigas,karne ,gulay at prutas?”
(For all of the good things you’ve done on farming, why are rice, meat, vegetables and fruits very expensive in the market?)
My reply to her was: “Sobrang dami kasi na mga layers ng traders and middlemen ang dinadaanan ng ating mga farm products. Sila ang mas kumikita at dehado ang farmers at consumers. This is an age-old problem that we are addressing right now by directly linking our farmers and agricultural producers to the market. Sorry but this cannot be done overnight. you will have to be patient.”
The Philippines, just like many other countries in Asia and Africa, has a unique farm-to-market supply chain which traders and middlemen virtually control.
In contrast, in the U.S. and other more advanced countries, the farmers themselves bring their products to the market and they set the price for their produce.
In the Philippines and other poor countries in Asia and Africa, it is the trader who tells the farmer and the fisherman how much their products would be bought and he also sets the price of the food items in the market.
As Secretary of Agriculture and a farmer myself, I have diagnosed this problem and I came up with these findings which explain why the traders and middlemen control the food-to-market supply chain.
1. Lack of easy access credit is the first problem. Most farmers and fishermen rely on neighbourhood middlemen and traders for almost everything that they need, including loans for the payment of the tuition fees of their children and emergency medical needs.
There is this false sense of gratitude which allows the trader to monopolise the purchase of the farmers’ or fishermen’s produce at a price he dictates.
2. Lack of post-harvest facilities not only causes huge losses on the part of the farmers and fishermen, estimated to be 16% of their production, but also deprives them of the power to be able to negotiate for a better price because they have to immediately sell their products right after harvest or suffer massive losses due to spoilage.
This is especially true for highly-perishable products like fish, vegetables, fruits and meat.
This is where traders and middlemen make a killing. Rice traders who have drying and storage facilities and fish dealers who have access to ice and have fish cars to transport the fish to the market virtually control the pricing.
3. Lack of value-adding facilities to generate more earnings, like fishermen, fruit and vegetable farmers and hog and poultry raisers who have to sell their produce fresh or live simply because there are no processing centres.
A slaughterhouse, a blast-freezing and packing facility or even a canning and processing center would actually add value to the farmers’ and fishermen’s produce, unfortunately government intervention in these areas have been slow in coming.
4. Poorly organised farmers and fishermen are vitally shut out of market access by traders and middlemen who are better connected to the market.
The lack of a cohesive organisation also prevents farmers and fishermen from consolidating their production requirements. A perfect example of this would be the inability of hog and poultry raisers to establish their own feed production facility using local resources and thus effectively lowering the cost of production.
In South Korea, farmers and fishermen have organised themselves into a federation of cooperatives, NongHyup, which now provides almost everything that its members need, including banks to finance its members and supermarkets where its members products are sold.
These problems actually result in a very low margin of profit on the part of the farmers and fishermen and high cost of food supply for the consumers.
Take the case of the hog raisers.
Even at the current Live Weight Buying Price of P115 per kilo, a hog raiser would only earn about P25,000 from 10 heads of hogs weight an average of 100 kilos or a profit of P2,500 for every head.
The middlemen who slaughter with an estimated carcass recovery of 75% and sell the meat in the market at P240 generate a gross earning of P65,000 from the 750 kilos that they recovered from 10 heads of hogs.
In the case of the rice farmers, for every hectare which produces 4.15 metric tons, he would make a net income of P26,700 if the trader buys his produce at P18 per kilo.
The traders and middlemen, on the other hand, will generate a gross profit of P33,200 if the rice is sold at P42 per kilo in the market.
Given these problems, what steps are being taken by the government of President Rody Duterte?
For Easy Access Credit, the Dept. of Agriculture and Fisheries (DAF) is proposing a P50-B loaning facility for accredited farmers and fishermen with a maximum loan amount of P50,000 per household without any collateral, 6% interest per year and the loan maturity based on the gestation period of the commodity the farmer or fisherman is involved with.
For Post-Harvest Facilities, the DAF is proposing a huge budget for 2018 which would provide farmers with more drying and storage faciities, livestock growers with modern slaughterhouses and blast-freezing facilities and fishermen with fish landing, cold storage, ice-making and blast-freezing facilities.
For Value-Adding, the DAF now focuses on providing financing and equipment support to farmers and fishermen so enable them to sell processed or packed products, instead of raw materials.
For Greater Market Access, the DAF is now strengthening farmers and fishermen’s organisations and linking them up with the market.
This has been done with the Onion Farmers of Central Luzon with great success and a direct selling scheme called the KISS at Iba Pa Para sa Masa or Karne, Isda Supply at Iba Pa Para sa Masa are being designed.
Dismantling the age-old Multi-Layered Wall of traders and middlemen which stands between the farmers and fishermen and the consumers will not come easy or fast.
There will be resistance, especially from the Rice Cartel which has controlled the Rice Industry for generations.
Those who have benefitted and enriched themselves through the operation of this system for ages will not let go without a fight.
Moneyed as they are, they will exert every effort to thwart government’s efforts to reform the system and allow the farmers earn more from his labor and sacrifices while enabling consumers access to affordable food.
President Duterte, however, is determined to change the farm-to-market food supply landscape.
“I will order the arrest of anybody who stands in the way of these reforms,” he assured me last night as he committed his support to the programs of the Department of Agriculture and Fisheries.
In the meantime, farmers, fishermen and consumers have to brace themselves for the pains and difficulties expected in the implementation of Change.
(Photo of President Duterte and DAF Sec. Piñol taken in Lamitan City, Basilan while all other photos were downloaded from public websites.)
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