Presentation is loading. Please wait.

Presentation is loading. Please wait.

PAICOR A CORPORATIVE OF RICE FARMERS The Pro-Active Role of One Network Rural Bank in Southern Philippines in Empowering Small Farmers to Invest In Processing.

Similar presentations


Presentation on theme: "PAICOR A CORPORATIVE OF RICE FARMERS The Pro-Active Role of One Network Rural Bank in Southern Philippines in Empowering Small Farmers to Invest In Processing."— Presentation transcript:

1 PAICOR A CORPORATIVE OF RICE FARMERS The Pro-Active Role of One Network Rural Bank in Southern Philippines in Empowering Small Farmers to Invest In Processing Infrastructure presented by: Alex V. Buenaventura “ FINANCING THE AGRICULTURAL VALUE CHAIN “ CONFERENCE Organized by: UNCTAD, FAO, MCX India, State Bank of India Grand Hyatt Hotel, Mumbai, March, 2007

2 PRESENTATION OUTLINE I. WHAT IS A CORPORATIVE ? II. CHALLENGES FOR SUSTAINABILITY III. FARMERS PRODUCTIVITY: A NEGLECTED INGREDIENT FOR SUSTAINABILITY IV. INTEGRATED AGRI-FINANCE STRATEGY V. ONE RICE PROGRAM VI. ONE BANANA PROGRAM VII. ONE SUGAR PROGRAM VIII. HOW TO REPLICATE INTEGRATED AGRI-FINANCE SCHEMES IX. REPLICATIONS UNDERGOING NEGOTIATIONS

3 WHAT IS A CORPORATIVE ? A CORPORATIVE IS A PRIVATE STOCK FOR-PROFIT CORPORATION ORGANIZED AND CONTROLLED BY A CREDITOR BANK/INSTITUTION IN PARTNERSHIP WITH ITS SMALL BORROWERS/PRODUCERS FOR NEEDED BUT CAPITAL INTENSIVE SUPPORT FACILITIES LIKE A VENTURE CAPITALIST, THE CREDITOR BANK THROUGH TIME DILUTES OR DIVESTS MAJORITY CONTROL IN FAVOR OF ITS PARTNER BORROWERS AND ULTIMATELY, THE CORPORATION IS CONVERTED INTO A COOPERATIVE

4 PAICOR: The 1 st CORPORATIVE PANABO AGRO-INDUSTRIAL CORPORATION, INC. PRINCIPAL PURPOSE: RICE TRADING/MILLING REGISTERED ON FEBRUARY 1986 INITIAL CAPITAL STRUCTURE: SUBSCRIBED PAID-UP 1 BANK (RBP*) 40 % $ 7,143 $ 7, BANK OWNERS 15 % $ 2,679 $ RICE FARMERS 45 % $ 8,036 $ 357 TOTAL 100 % $17,858 $ 8,214** * RURAL BANK OF PANABO (now consolidated with One Network Bank) **EXCHANGE RATE: PhP 56 : US$ 1 BECAME PAICOP, A COOP, ON APRIL 22, 1992

5 PAICOR BENEFITS FOR FARMERS “INSTANT” RICE MILLING COMPLEX PROFESSIONAL MANAGEMENT (BANK) TIMELY/ADEQUATE LOANS ASSURED MARKET LOWER COST OF INPUTS YEAR END DIVIDENDS ASSURED OWNERSHIP INCREASE

6 PAICOR BENEFITS FOR THE BANK MORE PRODUCTION LOANS MORE FIXED ASSET LOANS MORE WORKING CAPITAL LOANS COLLECTION-IN-KIND CAPABILITY YEAR END DIVIDENDS

7 CORPO FOUNDATION CORPORATIVE SYSTEMS FOUNDATION,INC. A NON-STOCK, NON-PROFIT CORPORATION Registered in January 7, 2000 ORGANIZED BY ONE NETWORK BANK ( a consolidation of 3 banks: Rural Bank of Panabo, Network Rural Bank & ProBank TO REPLICATE PAICOR CORPO soon created DASURAICOR

8 DASURAICOR: The 2nd PAICOR DAVAO DEL SUR AGRO-INDUSTRIAL CORPORATION, INC. Registered on March 8, 2000 INITIAL CAPITAL STRUCTURE: SUBSCRIBED PAID-UP 1 BANK (ONB*) 59 % $ 211,340 $ 211,340 1 LAND BANK** 40 % $ 142,857 $ 142, RICE FARMERS 1 % $ 2,946 $ 2,946 TOTAL 100 % $ 357,143 $ 357,143 * One Network Bank ** LAND BANK “ACCESS “ PROGRAM (a special venture capital facility ) CORPORATE BY LAWS PROVIDE FOR AUTO DIVESTMENT OF COMMON EQUITY SHARES INITIALLY BY LAND BANK AND THEN BY ONB IN FAVOR OF FARMERS TO DATE, DASURAICOR HAS NOT BEEN CONVERTED TO A COOP YET SINCE FARMERS EQUITY IS STILL MINORITY

9 CHALLENGES FOR SUSTAINABILITY ACTUAL # # NET INCOME PERFORMANCE FARMERS HECTARES AFTER TAX PAICOR: ( $ 49 ) AVE: $ 2, ( $ 4,379 ) PAICOP: $ 4, $ 4,988 AVE: $18,034 AVE: ( $21,223 )* $ 4, ( $19,089 )* ** $ 9,294 DASURAICOR: $15, $ ( $28,515 )* ( $19,956 )* ( $12,375 )* *** ( $15,882 )* *NET LOSSES IN OPERATIONS OF BOTH PAICOP AND DASURAICOR **71 % DROP IN PAICOP FARMERS’ RICE PLANTED HECTARAGE ***76 % INCREASE IN DASURAICOR FARMERS’ RICE PLANTED HECTARAGE

10 SOLUTIONS TO NET LOSSES IN OPERATIONS LOSSES DUE TO PADDY SPOILAGE ( ) IS NOW SOLVED BY SHIFTING AWAY FROM “SOLAR PAVEMENT” TO “ RICE HULL FED MECHANICAL “ DRYERS LOSSES DUE TO DEPRESSED MARKET PRICES ( ) IS NOW MINIMAL WITH THE DROP IN REPORTED SMUGGLING OF RICE

11 WHY 71 % DROP IN NUMBER OF PAICOP FARMERS’ HECTARAGE ? BECAUSE OF UNPROFITABILITY OF RICE FARMING CAUSED BY PERENIAL CROP FAILURES & LOW PRODUCTIVITY!!! AS A CONSEQUENCE THERE IS MIGRATION TO A MORE PROFITABLE CROP (CAVENDISH BANANA)

12 FARMERS PRODUCTIVITY:A NEGLECTED INGREDIENT FOR SUSTAINABILITY INSPITE OF FULL FINANCING SUPPORT FROM THE BANK INSPITE OF MARKETING SUPPORT FROM THE CORPORATIVE RICE MILLS PARTNER FARMERS REMAINED POOR BECAUSE THEIR PRODUCTION LEVELS REMAINED LOW !!! THE SOLUTION: ONE RICE PROGRAM or “ORP” --- A SUPERVISED PRODUCTION- CUM-CREDIT SYSTEM WHERE FARMERS ARE UNDER GROWERS CONTRACT TO ADOPT BEST PRACTICES AS PRECRIBED BY BANK AGRI TECHNICIANS AND TO PRODUCE A MINIMUM OF 6 TONS PER HECTARE EACH HARVEST OTHERWISE BE EXPELLED FROM ORP

13 WHY 76 % INCREASE IN NUMBER OF DASURAICOR FARMERS’ HECTARAGE? BECAUSE RICE FARMING IS NOW MADE PROFITABLE BY THE ONE RICE PROGRAM—A SUPERVISED PRODUCTION TECHNOLOGY THAT IS: RISK FREE ( STEMBORER PROBLEM IS ELIMINATED BY TIMING PANICLE EMERGENCE DURING THE LAST QUARTER MOON WHEN THE NIGHT IS TOO DARK AND THE NOCTURNAL STEMBORERS CANNOT MATE AND MULTIPLY); AND HIGH-YIELD (CURRENT AVERAGE IS 7.2 TONS PER HECTARE PER HARVEST VS. PREVIOUS AVERAGE OF ONLY 4.4 TONS; TARGET IS 8.3 TONS); AND LOW COST ( HARDLY ANY USE OF PESTICIDES )

14 INTEGRATED AGRI-FINANCE STRATEGY ONB WILL PROVIDE CREDIT TO SMALL FARMERS EVEN WITHOUT SOLID COLLATERALS PROVIDED THEIR PROFITABILITY IS ASSURED BY THE FOLLOWING CRITICAL VALUE CHAIN FACTORS: PRODUCTION TECHNOLOGY IS RISK FREE AND GLOBALLY COMPETITIVE IN TERMS OF YIELD PRODUCT HAS AN ASSURED LONG-TERM BUYER PROCESSING INFRASTRUCTURE IF NEEDED, IS PUT UP AND CO-OWNED BY THE FINANCED FARMERS THE “CORPORATIVE” WAY

15 One Rice Program PRODUCTION -STANDARD: 8 TONS PER HARVEST/HECTARE -TECHNOLOGY: ORP TECHNOLOGY DEVELOPED BY CORPO FOUNDATION LONG-TERM BUYER: DASURAICOR C PREVAILING MARKET PRICES QUADTRI-PARTITE CONTRACT: FARMER-CORPO FOUNDATION- DASURAICOR-ONB COLLECTION SYSTEM: DASURAICOR PAYS FARMERS TRU ONB FARMER’S NET INCOME/YR: $ 1,894* PER HECTARE ( $ 947/HA/HARVEST X 2/YR ) *at actual ave yield of 6.9 tons/ha/harvest $ 2,434**PER HECTARE ( 1,217/HA/HARVEST X 2/YR ) **targetted yield of 8.3 tons/ha/harvest

16 ONE BANANA PROGRAM PRODUCTION -STANDARD: 5,000 CLASS-A BOXES(13.5 KGS/BOX) PER HA/YR -TECHNOLOGY: MATURED CAVENDISH BANANA GROWING TECHNOLOGY DEVELOPED BY ONB-ACCREDITED MULTINATIONAL BUYERS/EXPORTERS LONG-TERM BUYERS: ONB-ACCREDITED BUYERS: STANFILCO/DOLE GLOBAL FRUITS CORP US$ 2.40 PER BOX (FIXED FOR YEARS) TRI-PARTITE AGREEMENT: FARMER – BUYER – ONB (MOA + Banana Production & Purchase Agreement) COLLECTION SYSTEM: BUYER PAYS FARMERS THROUGH ONB FARMER’S NET INCOME/YR: $ 3,600 ACTUAL AVE PER HECTARE ( MONTHLY NET INCOME RANGES FROM $ 150 TO $ 500 PER HA)

17 One Sugar Program UNDER PILOT TEST PRODUCTION -STANDARD: 100 TONS CANE PER HA/YR (MIN LSTC= 2) -TECHNOLOGY: DEEP-PLOWING TECHNOLOGY ( VERSUS OLD SHALLOW-PLOWING PRACTICE THAT YIELDS ONLY 60 TONS CANE PER HA/YR) DEVELOPED BY ONB-ACCREDITTED SUGAR MILL/BUYER LONG-TERM BUYER: COTABATO SUGAR CENTRAL PREVAILING MARKET PRICES TRI-PARTITE AGREEMENT: FARMER - BUYER – ONB (MOA+Milling Contract) COLLECTION SYSTEM: BUYER PAYS FARMERS THROUGH ONB FARMER’S NET INCOME: $1,370 PER HECTARE PER YEAR

18 HOW TO REPLICATE INTEGRATED AGRI-FINANCE SCHEMES LOOK FOR A LONG-TERM BUYER VALIDATE IF PRODUCTION TECHNOLOGY IS MATURE & RISK-FREE ESTABLISH WITH LONG-TERM BUYER WHAT PRODUCTION VOLUME STANDARD SHOULD BE COMPUTE IF FARMERS WILL MAKE GOOD MONEY ORGANIZE FARMERS & CREATE A CORPORATIVE PROCESSING FOR THEM IF NEEDED BANK DEPLOYS A LOAN OFFICER WHO IS AN AGRI TECHNICIAN MAINLY RESPONSIBLE FOR FARMERS ACHIEVING PRODUCTION VOLUME STANDARDS RATHER THAN PURELY SCREENING & PROCESSING LOANS MAKE A WELL CRAFTED MULTI-PARTITE AGREEMENT BETWEEN FARMER, BUYER, CORPORATIVE PROCESSOR & BANK

19 UNDER NEGOTIATION ONE PINEAPPLE PROGRAM LONG-TERM BUYER : DOLE PHILIPPINES MATURE & RISK-FREE TECHNOLOGY PRODUCTION & INCOME STANDARD/HA: 90 M. TONS & $ 1,800/HA-PLANT CROP 65 M. TONS & $ 1,240/HA-RATOON CROP

20 UNDER NEGOTIATION ONE CASSAVA PROGRAM LONG-TERM BUYER : SAN MIGUEL FOODS, INC. MATURE & RISK-FREE TECHNOLOGY PRODUCTION STANDARD/HA/YR: 51 M. TONS  NET INCOME/HA/YR: $ 1,080

21 END OF PRESENTATION


Download ppt "PAICOR A CORPORATIVE OF RICE FARMERS The Pro-Active Role of One Network Rural Bank in Southern Philippines in Empowering Small Farmers to Invest In Processing."

Similar presentations


Ads by Google