Wednesday, March 30, 2016

Startup Hopes to Open Up Agricultural Investments

The Philippines is a rich, fertile country with long winding rivers and multiple lakes. With these topographical characteristics, it would be easy to think that the country's agricultural sector is a major economic driving force. But unfortunately, that is not the case.

The Philippine agricultural sector has lagged behind its neighboring competition. With a whole host of issues like corruption, as exemplified by the Coco Levy Fund, infrastructure problems like irrigation and farm-to-market-road problems and lack of capital, the agricultural sector can be considered one of the most inefficient sectors of our economy. According to a paper by the Philippine Institute for Development Studies (link), 57% of families whose head works in agriculture live in poverty. A good chunk of the workers in the sector don't have access to electricity and potable water which are essential in productivity. Current conditions and a lack of effective leadership has hindered in the development of one of the sector.

With the realities that are plaguing the sector, a startup company by the name of Cropital (link) has sprouted to help farmers gain capital as well as to give potential investors a medium to the sector.

Cropital is a company headed by three young entrepreneurs looking to provide a new market to potential investors. The capital is drawn from people who invest through the website. Each investor is free to choose the specific farm they wish to invest in. Cropital keeps 10% of the farms' profits, investors keep 20%. and the farmers keep 70%. These are desirable numbers for the farmers if you compare it to loan sharks who charge upwards of 40% interest even if the farmers don't turn a profit. It is also a decent alternative to placing their land on collateral. Ultimately, the farmers win because they are given another option to take their business to another level.

Browsing through their website, we will see a focus on high value crops and an absence of rice farms. The long-term crop currently available is napier which is used for renewable energy while short-term crops include beans, bitter melon (ampalaya), tomatoes, cabbages and pechay. As of writing, all farms are fully funded. But liking their Facebook page (link) would keep you up-to-date with more farms in need of funding.

As with other investments, there are risks to be considered. This has prompted the company to find ways to mitigate them. The company has partners with the local governments to help in interviewing and ultimately determining suitable farming partners. Aside from that, the capital to be raised also includes crop insurance from the Philippine Crop Insurance Corporation. Pests are also mitigated as farmers are aided by agriculturists. It seems the main risk investors are to look out for is the market. Because even though the company has their own buyers and even if they cluster up the farms to improve market strength, the market is still a volatile entity. But at the same time, all forms of investment have to deal with market volatility from time to time.

I don't usually publish somewhat promotional posts for my blog. But in this case, I'm not simply promoting a company. I am promoting an approach to farming that should be considered.

Our farms have usually been operated by single proprietors who have to find ways to gain capital to be efficient or, at the very least, operational. With the level of bank-ability of the small farmers that comprise a significant amount of the sector, we have struggled to produce globally competitive goods from the sector. Mar Roxas once alluded to the problem and called for consolidation to improve productivity through economies of scale. But this may ultimately be disastrous to the farmers who are, more likely than not, ill-educated. Hopefully, with a system similar to that of Cropital, farms would have the resources to get with the times and be efficient and self-sustaining. Consolidation or the hacienda system may prove productive with certain crops. But with the help of a profit-driven entity willing to accept the limitations of the farmers/partners' resources, a shift to different methods or even higher value crops prompted by an informed company should lead to productivity as well.

Capital is a major problem for small farmers. And start-ups like Cropital should help with that aspect of the industry.

With the private sector slowly finding effective ways to fund the industry, it's time for the government to put down effective capital outlays to help our farmers. They continue to call for irrigation and farm-to-market roads. Such requirements may only be fulfilled effectively and efficiently by an accountable bureaucracy.

Tuesday, March 22, 2016

Reaction to 2nd Philippine Presidential Debate in Cebu

After a long delay, the anticipated 2nd Presidential Debate featuring the four leading contenders for the nation's highest post got underway. It definitely got off to a rocky start. But it played in my favor because I just got home when it started.

There are definitely plenty of things to talk about. But here are a few things that piqued my interest:

- Why is the Comelec not allowing notes? What's wrong with notes? What's wrong with a presidential aspirant collecting himself and gathering information that would help him convey his plans better? I know people have this high regard for leaders who can talk without scripts. But I'd rather have one who actually spent resources planning instead of just shooting from the hip. Extemporaneous speakers are impressive in their own right. But presidents are afforded multiple staff members with their own respective expertise, a multitude of data sources and limited attention. By preventing our candidates from tapping into their own resources to answer questions, Comelec is doing a disservice because they are preventing the candidates from laying out their plans the best way they could thus preventing the electorate from properly formulating a strong opinion of their potential leaders. Binay wanting to use prepared documents and "kodigos" should not be held against him.

Hopefully the Comelec revisits this rule. Rules are not meant to be followed. Rules are meant to be justified or otherwise abolished. And this rule they have during these debates needs to be canned.

- Binay's attack on the government's underspending and his explanation of his plan to exempt the poor from income tax lacks depth. His attack on underspending lacked its cause. The main reason for the large surplus we have in our budget is the agencies' inability to map out and implement plans and projects. This may be attributed to a more stringent process in releasing budget as well as gross incompetence on the part of our bureaucrats. Instead of slinging mud to the wall and hoping it sticks, Binay could have provided a clear argument for the failure the ruling party.

As for his plan to exempt the poor from taxes, his explanation just opened up more questions. He mentioned our inability to implement our import/export taxation. He cited this as an example on how we can balance out the lost revenue his tax policy would incur. But it just opens up the question on how he plans to improve tariff collection.What does he think of the port booking system that truckers, brokers and freight forwarders are rallying about? Aside from improving freight flow, it would definitely help in accounting for every truck and cargo that leaves the port. But is it worth the supposedly exorbitant fees? How about smugglers that use random beaches? How do we get them to pay tariff? Who is he assigning as BOC chief? 

He mentions that the increased purchasing power of the exemption would result in higher VAT collection. But of the poor, how many are patrons of businesses that pay the right amount of taxes? It also opens up new questions. This time it's in sales tax acquisition.

I liken Binay's call to exempt the poor from income taxes to a wrestler mentioning the town in which he is performing in a good light. He's merely trying to get a positive reaction. The sad thing is most of us bit and cheered for him even though it's so easy to see right through him.

- I hereby declare, on oath, that I absolutely and entirely renounce and abjure all allegiance and fidelity to any foreign prince, potentate, state, or sovereignty, of whom or which I have heretofore been a subject or citizen; that I will support and defend the Constitution and laws of the United States of America against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I will bear arms on behalf of the United States when required by the law; that I will perform noncombatant service in the Armed Forces of the United States when required by the law; that I will perform work of national importance under civilian direction when required by the law; and that I take this obligation freely, without any mental reservation or purpose of evasion; so help me God.”

How can we trust someone who took the above oath to be the commander-in-chief of our military? The fact that Grace Poe was allowed to run by the Supreme Court doesn't change the fact that she consciously made an effort to give herself an option to side with the US in the event of a war between our nations. To me, there's nothing wrong for an ordinary, private individual to go for that option. But I can't stand to have a president that deliberately sold her loyalty to another state for her personal comfort.

When I first read the oath in Ireneo Salazar's blog post (link) and saw it word per word on a U.S. government's website (link) , I said to myself "Grace Poe can't win". Binay had the opportunity to hammer in my sentiments. But he disappointed me, as usual.

- Duterte had a point during on the question of climate change and environmentalism. Adhering to the desires of hardcore environmentalists of banning coal plants is not in the best interest of our country. Think of it this way, by going for full renewable energy, the effect on the environment would be minuscule compared to the cost we would incur. According to WESM(link), Coal and Natural Gas power plants are our main power producers. These two are also the types of plants that pollute the most. By taking away these plants, the cost of electricity would skyrocket since by simply looking at WESM, we can see the spot prices in the electricity market of solar and wind power are considerably higher than electricity made by coal and natural gas. 

Let's say we actually sacrifice our economy to switch to renewable energy. Is it worth it? Would the improvement in climate offset the economic sacrifice we would incur? But hey, maybe jobs created by renewable power industries would help our economy. But the problem is that other countries posses the comparative advantage in that industry. Japan and the U.S. have the technology. What we have is the manpower. But that industry is capital-intensive. This means that the main beneficiaries of focusing on renewable energy would be the owners of the capital i.e. foreign investors or the people like the Levistes of Solar Philippines.

I'm not belittling the issue of climate change or anything. But it's not our issue to handle hands-on even though we are one of the most affected. We can make a difference as a nation by implementing sound strategies like protecting our forests and stopping "pagkakaingins". We can make sure that power plants adhere to cleaner versions of themselves like clean coal technologies. But crafting back-breaking policies solely because of the environment - like converting jeepneys so they conform to Euro 4 - is ridiculous.  

 - During the talk regarding renewable energy and climate change, Duterte caught my attention when he mentioned monopolies as the reason for the high power rates. The question of monopolies is not restricted to the power industry. Monopolies are also springing up more frequently especially with the administration's go-to-move when it comes to infrastructure development - PPP's.

The word monopoly has this negative connotation. But it is needed in technological advancements in market-driven economies. Pharmaceutical advancements are fostered thanks to the incentive of guaranteed monopolies. It is a major incentive for the private sector. But in certain industries, monopolies are just deterrents to economic advancement.

Take for example the power industry. The competition in the spot market ensures at least some semblance of efficiency since different power plants strive to produce power in the most efficient way so they can beat their competition. But in distribution, no such incentive to improve efficiency exists because Meralco or other coops have monopolies. There's no need to improve wires or whatever they use. There's no reason to improve personnel management. They have no competitions to push them.

Back to PPP's, the administration that Mar Roxas loves so much allows monopolies to exist freely. From expressways to railways to utilities to hospitals, this Mar Roxas-endorsed style of governance lets go of responsibilities because it itself cannot fulfill them due to ineffectiveness, inefficiency, lack of accountability and lack of political will to fix itself. Mar Roxas' beloved administration's economics leaves crucial services and industries to the private sector to handle. Sure, the private sector may seem efficient to a lot of people. But its irreverence to positive externalities of their operation and their profit-driven management inflates costs which makes the economy inefficient. 

PPP's are not always bad. Assuming the government officials are clean and not complete idiots, building the infrastructure goes through a bidding system which provides competition. This should result in a cost-effective build. Privatizing the SSS, GSIS and Pag-Ibig may not be such bad ideas since financial institutions' main goal is profit regardless of who handles them. But once we allow the private sector to take hold of other government responsibilities like when they operate transportation or healthcare, we unknowingly get screwed.

When the second part of Marichu Villanueva's question was deliberately ignored by Roxas, it just got me asking how much he really believes in his party's administration and how much of its style he would adopt. I wonder what he thinks of the new IRR on the BOT law.

- Miriam needs to quit. She's not performing well in the surveys thanks to her illness. If she really believes she knows what's best for the country, she should pass the information to someone in her party who can win and who would take her as a consultant. Because as of the moment, the supposedly brilliant ideas she has in her mind is going to waste because of her inability to campaign and share her plans.

- I've attacked Duterte in my last post (link). And with how he adjusted into what seemed like a more compassionate version of himself who actually gave a bit of crap, it showed what some of us already knew: he's just like the usual trapo spouting out any generic BS he can spout to gain the votes of anyone who cared to listen.

Duterte is not the genuine, no-nonsense guy he and his supporters are selling. But does that matter? If you genuinely believe in Federalism, increased police wages, special courts to speed up the justice system, the death penalty or bilateral talks with China, then I guess he's the man for you. But to vote for him based solely on his promise he can end crime in 6 months is misguided. A benevolent dictator can end criminality in 6 months. A ruthless depot can do the same. Even an effective republic like the one in Iceland (link) can do it. Sometimes how you will do things is more important than what you will do. And his desire to get killed if he doesn't deliver doesn't cushion the blow of any potential failings his administration would have. Because to be frank, his life is not worth 6 months of this nation's time.

- Let's legalize divorce. If it's such a sin, let the church handle it. Priests, pastors, imams and other religious leaders spend a considerable amount of time studying their holy books. I'm sure they can handle their flock.

My reasoning for supporting a divorce bill is similar to my support of same sex marriage (link).  There's no point in having the government dictate what's a sin and what's not.

For the people saying that the family is the basic foundation of society, come on. Do you really want the national government to micro-manage everything and mess with your family life. Sobrang spoon-feeding naman yun.

- Grace Poe is not ready to be president. Duterte threw a screwball at her with that question in the individual Q&A round. When she failed to mention talking with the US in her answer when asked what she would do in the event of a Chinese attack, it should have brought her down. She wasted around twenty seconds in saying she would wake up or some other trivial stuff. As I've mentioned before she shouldn't be our president. That one question, as well as several things she tends to forget like the fact she is the vice-chair of the agricultural committee that handled the Coco Levy Fund, proved she can't be our president.

- Grace Poe had a point when she said the big fish of the Liberal Party seem to be exempted from accountability.Aside from that, other people close to the president seem to be exempted as well. There's Abaya who she cited, Jericho Petilla who almost caused a Luzon-wide power crisis during his term as DOE head, Butch Abad who devised the PDAF/DAP fiasco, Francis Tolentino whose incompetence led to the surrender of some of the MMDA's powers to the Highway Patrol Group, MIAA GM Honrado who oversaw the airport during both the laglag bala scam as well as the worst airport in the world year and a whole host of other people I may be forgetting.

- TV5 really did a better job than I expected. The questions were hard-hitting and whenever Ms. Valdez felt like the discussion was not answering the question, she didn't hesitate in dictating the tempo of the debate. The commercials were also reasonable. And the fact that they sold their coverage to other broadcast groups really put them in a positive light for me because information that would affect how the electorate would vote should not be monopolized. The mudslinging was prevalent. But it did not lower the standard of discussion as expected. The only thing I can really say as a major booboo for them is their misunderstanding with Binay's camp. But compared to GMA, their coverage was so much better.


Now, if you ask me who won the debate, I'd answer Roxas. He made sure to highlight his party's strengths and avoided acknowledging their particular weakness. He made sure to remind his party is not perfect and he effectively staved off attacks sent his way... well... at least compared to Binay and Poe. Duterte is a close second because I felt he was disengaged towards the candidates not named Roxas. But in any case, nobody really stood out for me.

Now, if you ask me who I'd vote for, I'd answer say... does it really matter?


Sunday, March 13, 2016

Quick Reaction to Rodrigo Duterte's Debacle in UPLB Q&A

The following is a quick reaction straight from my Facebook Profile. Please excuse the usage of Filipino as I feel English won't be able to capture the emotion of the post.

Kahit sino pang kandidato yan, didikdikin yan. Mas madali pa nga madalas tinatanong sa mga kandidatong yan kesa sa mga nagdedebate sa klase e. At hindi ito ginagawa ng mga estudyante para mag mayabang at ipakitang matalino sila. Ginagawa ito para mas mapalalim ang usapan. Sinasabi galit daw tayo sa trapong pasayaw-sayaw lang pag kampanya. O ayan na... ginigisa. Sabay sasabihin walang modo?

Hindi ko sinasabing may point yung nagtanong kay Duterte. Pero oras na magbulag-bulagan tayo sa kahibangan ng mga kandidato at magpokus sa kumukutya sa kanya... damn.

Yung tinanong kay Duterte e parang tungkol sa implementation ng kanyang anti-criminal shits. Malabo ang pagkakatanong. Pero hindi naman humngi ng clarification si Duterte e. Hinayaan ni Duterte na hindi sila magkaintindihan. Ang sagot niya "bomba na lang" na parang ulyaning gusto na lang tapusin ang usapan. Yung nagtanong nakalimutan na ang normal ethics na ineexpect ng lipunan kasi mabigat yung issue sa kanya e. Parang tanga ang pagkakatanong. Pero just like anybody else, he deserves more than a dismissive "bomba na lang" as an answer.

Duterte's running for a position that has the most authority to affect the lives of everyone in our state. Kung merong walang modo dito, si Duterte yun. He's belittling the importance of this election by making it seem like he's not even trying.

It's not who you vote for that determines if you voted wisely. It's how you came to the conclusion that that person is who's best for our nation that counts. Nakakarumi na yung mga taong kulang na lang e gawing Diyos ang mga kandidato nila at mag-alay ng birhen. E kung mag-inom na lang tayo sa halip sa sumamba diyan edi sana matamis.