Agribusiness, re-invented | Bilyonaryo Business News
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Agribusiness, re-invented

In the ongoing pandemic, fresh produce can be ordered online, delivered to your doorstep, or grown in your own backyard 

By CORA LLAMAS 

Like all industries, the Philippine agriculture industry took a nosedive in 2020 when the COVID-19 pandemic paralyzed the economies of the known world. Unemployment and the closure of establishments were among the disturbing trends, which led to a curtailment of its overall growth. What did keep it going, and one advantage that it had over other sec- tors, was that its products—food—would always be in demand. That alone can lead to a cautiously optimistic forecast of a slight upturn by end of 2021. 

And again, like the other industries that survived, Philippine agriculturists and their organizations also had to pivot and re-in- vent themselves. Emerging trends included the increase of seedlings to encourage plant and crop growth; direct delivery of fruits, vegetables, and other produce to house- holds; and the digitalization of the farm-to- table supply chain. 

But first, just as a caveat: This article will tackle generally one main sub-sector— crops, which compose 54 percent of the industry, according to Philippine Statistics Authority (PSA), as cited in one report by the Center for Food and Agri Business. (CFA) The other three sub-sectors are live- stock (17 percent), fisheries (15 percent), and poultry (14 percent). 

As of 2020, the value of the entire agri-business or agricultural industry was set at US$35.4 billion. The crops sub-sec- tor was valued at US$19,027 million, with palay, banana, corn, and coconut as its main revenue generators. The CFA report breaks down the value of the other sub-sectors as follows: livestock at US$6,061 with hog leading; poultry at US$4,849 million; and fisheries at US$5,468 million, with milkfish, tilapia, and tiger prawns among its top sellers. 

From decline to recovery 

The entire industry had been experiencing a decline even way before the pandemic. The CFA chart shows that, after hitting a high of 4.2 percent in 2017, the numbers dropped to 1.1 percent in 2018 then went back up slightly to 1.2 percent in 2019. Then numbers dropped to a -0.2% during the year of COVID-19. CFA Executive Director Dr. Rolando T. Dy summarizes these findings: “There was a slight decline in commodities by December 2020. This year, I expect that the first quarter will be negative but for the whole year, I see slight recovery.” 

When the first lockdowns were implemented in March 2020, the entire value chain of the agricultural industry was disrupted, says Danny Fausto, president of the Philippine Chamber of Agriculture and Food, Inc. (PCAFI). The first problem was that a lot of the main buyers of farm food produce shut down unexpectedly, without preparation and a back-up plan, as the buy- ing public stayed home in fear of contracting the virus. 

Fausto describes the situation: “Hotels, restaurants, and their chains shut down. They represent 35 to 40 percent of our consumer food demand. The malls and the tinderas at the market sidewalks also shut down. The restaurants were not selling food—and this was where friends and families usually fellowship because they want to meet.” 

With a significant drop in customers, which affected their revenues, food producers had to reduce their production. With little revenue coming in, unemployment set in, and the usual number of workforce was replaced by a skeleton staff. 

The supply chain disruption also upset the transport of food from the farms to the people and organizations that needed them. During the early days of the quarantine, as all concerned were groping for a solution, “the trucks could not travel and needed quarantine clearance,” says Fausto. “Before the pandemic, the trucks would travel to places like La Trinidad and bring them to the different markets in Pampanga and the National Capital Region.” 

Arsenio “Toto” Barcelona, president of Harbest Agribusiness Corporation, concurs. “A dysfunction happened. We could not transport the produce at once because of the checkpoints and expensive domestic shipping. The supply of sources could not get into the market, which led to a market contraction.” 

As transport itself froze, the vegetables and fruits that had been harvested and placed in warehouses were neglected and left to spoil. At a time when people were demanding food and panic-buying the remaining stocks out of supermarket shelves, dozens of baskets containing inedible, rotting cabbages and tomatoes in provinces like the Cordilleras were being thrown away. 

Despite these challenges and the initial problem of transport, one thing that the agricultural industry had going for itself was that its products would always be in demand. At a time of crisis when people pinch pennies and hunker down for survival, luxuries would have to give way to essentials like food. 

Dy makes this observation: “Food spending makes up 45 percent of total household spending, and 8 percent of that includes eating out.” 

Then as the lockdowns started to ease with food trucks and other vehicles re- starting their entry into the cities, “People started looking for veggies, fruits, pork, eggs, the basics,” says Barcelona. “The increase in this demand went and will go to fresh produce. People who cook at home will need to have fresh ingredients. In this shift to fresh produce, 90 percent of them will come from the local farmers.” 

epends on the commodities. The demand for rice is stable and it is not perishable. Coconut oil and water are not affected by the pandemic, except in the punctuality of transport. However, perish- able crops like fruits and veggies are affect- ed. Then you have bright spots like new products such as coco powder and coco milk, which are helping the market. 

Trends and innovations 

“Every gray cloud has its silver lining. Since we belong to the food sector, our products are considered a necessity rather than an indulgence or a ‘want.’ So the demand and the opportunity to generate sales were there. But because of the lockdown, we had to be creative with finding ways to get our produce conveniently to our consumers.” 

That was the hard-earned lesson learned by Ramon Uy Jr., co-founder and president of Fresh Start Organic, Inc., which grows organic crops and vegetables in its own Negros Occidental-based farm. It has since been distributing them to places within
its area like Bacolod, Talisay, and Silay. It also accommodates out-of-town orders of non-perishables by shipping them through a cargo forwarder. Fresh Start has also partnered with online marketplaces like Shoppee and Lazada, which cover the whole country. To date, Fresh Start in the new normal is “looking for more distribution channels and outlets that are more suitable for these times, being convenient and accessible to more consumers.” 

Fresh Start too had suffered its fair share of blows during the pandemic, with revenues being reduced by the shutdown of its institutional customers, i.e., restaurants, and the slowdown of sales in supermarkets due to the limited transport discussed above. But COVID-19 also brought fresh appreciation of its offerings to “people who saw the need to eat healthy, nutritious food in order to boost their immune system to fight the virus. From workouts to diets, we all were looking to improve our lives in any way possible. Another thing that attracted customers was the convenience of having the fresh organic produce delivered right at their doorstep.” 

Fresh Start launched a Bugana Box, which was filled with fresh and organic produce. It started with one driver who was able to deliver an order within 1 to 2 days. As demand for the boxes increased, another driver was hired to shorten the delivery time. Soon after, a subscription service was implemented to keep up with the regularity of the customers’ orders. “The subscription also helps our local farmers by giving them assured buyers for their harvests,” says Uy. 

MAYANI, which has positioned itself as the “Philippines’ fastest-growing farm- to-table digital platform that connects rural smallholder farmers and consumers, whether retail or commercial,” has experienced a resurgence during the pandemic. It eliminated the middlemen that get in the way of the transaction between farm- er-seller and customer, while providing 

a broader alternative market for farmers who had suffered 40 percent of their pro- duce being unsold. The need to buy fresh organic produce from the producers them- selves caused MAYANI’s “volume hitting 20 times our usual up to the corresponding move to quadruple our warehouse and fleet size to be able to keep up with the demand,” says MAYANI co-founder and CEO J.T. Solis. 

He elaborates on this particular silver lining, “What the pandemic largely spurred is the acceleration of digital adoption, particularly for agri e-commerce solutions like ours. Ordering from the safety of one’s home was the way to go. On the other end, farmers had to look for downstream channels that will provide continuity to their distribution and logistics. This resulted in an unprecedented growth that MAYANI is experiencing right now.”

Solis maintains that partnerships with government organizations like the Department of Trade and Industry (DTI) have been crucial to its success, saying it was needed to “edge the agri-supply chain from this external shock and still be able to facilitate continuing and dependable movement of fresh produce from the rural provinces to the urban hubs. Partnership was key for us in getting past the transport restrictions by leveraging idle logistical assets like vans and trucks of the DA (Department of Agri- culture) and the DTI to move truckloads of harvest.” 

One part of Barcelona’s business has also experienced growth, partly due to this increasing demand for organic food, with the support of the DA. For more than 20 years, Harbest has been

selling equipment that empowered farmers to increase their yield and elevate the quality of their products, such as agri-plastics for soil and seedling health, climate-resilient green- house and irrigation systems, labor-efficient machines like tractors and drones, and many more. During the pandemic, it was his high-quality seeds of other veggies that garnered renewed attention. He explains the situation facing him: “One solution of DA is to encourage local government units (LGUs) to produce their own food. We experienced a surge in demand of the specialized and hybrid seeds, which the government is giving away. We are good when it comes to melons and papayas. Because of the government program to give seeds, specifically from the Bureau of Plant Industry, the farmers are going back to plant.” 

At the same time, Harbest has also been encouraging people in the city to do their own backyard gardening or urban farming, a message, which has resonated strongly during the crisis. “People have more time to do this now, and it is easier to plant vegetables,” he maintains. 

Moving forward 

A year after the lockdown, where does the Philippine crop sector of the agriculture industry go from here? 

Dy sees a potential in products like cacao, artisan chocolate, and coffee. He points out, “Our exports, which are worth US$6-7 billion, are still low compared to Indonesia, Thailand, and Vietnam worth $35 billion.” 

In Dy’s CFA report, the Cavendish banana is the country’s leading export, grown mainly from the Davao region and Bukid- non, and which brings over US$1.6 billion annually. The Philippines accounts for about 20 percent of global banana production and 90 percent of total exports to Asia. 

Investments in these products can be a step in the right direction to capitalize on the present and potential market. 

While Fresh Start wants to broaden its reach of customers, MAYANI intends to enroll “100,000 farmers and power the agri-supply chains across more regions in the country.” 

For Barcelona, one marked behavior in the Filipino is very welcome: “We realized that we had been very wasteful in food. We didn’t notice that we had a lot of food that we could not eat but had to throw away. Sometimes we just throw away fresh pro- duce with the slightest wrinkle in stock.” 

With food an indispensable commodity for survival, those days are over. Each seed, each piece of fruit and vegetable, and each grain of rice have become precious as Filipinos continue to battle and slog their way through the pandemic. 

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