Investing in the Countryside

This issue covers a topic we rarely write about but which you will be seeing with more regularity in the pages of Philippine Business – agriculture. In our view, this is one of the most underinvested and ignored sectors in the country today. And yet, this is one of our most important sectors. Agriculture accounts for about a third of the Philippine workforce but produces less than 2 0 percent of total national output measured in terms of GDP. Moreover, over two-thirds of those living below the poverty line are also those who try to make a living out of farming.

With the total population growing at almost 2.4 percent per year, you would think there would be plenty of market opportunity for providing food for the table. In fact, there is great opportunity. For the last several years, Philippine economic growth has been fueled by private consumption and no other sector is larger than the food and beverage sector. Food spending accounts for almost 60 percent of the total spending of the typical Filipino household. The irony here is that while the market is large, farming remains a largely impoverished sector. And where we used to be an exporter of such products as rice and coffee, we are now importers of everything from rice and coffee to vegetables and fruits.
If we want to strengthen the foundations of future economic growth, then we should seriously look at how to invest more in the countryside and make farming profitable. That should result in stable food supply and prices and bring more social stability to the countryside. As poverty is reduced, perhaps we will see less motivation to migrate to urban centers or even emigrate abroad.

One major factor behind making agriculture profitable is making credit available to farmers and micro-entrepreneurs – the folks which traditional commercial banks are afraid to deal with. This issue features how banks like One Network Bank has broken ground (pun intended) in the promising field of agricultural credit and microfinance. Using a mix of traditional community organizing and modern technology and banking practice, these banks and others are literally creating new markets, opportunities, and wealth among people who have traditionally been left at the fringe of the economic mainstream. It is a path we hope more will follow.

GUILLERMO M. LUZ
Publisher & Editor-in-Chief