Friday, July 27, 2012

SEARCA Press Release


Stock photo. Source unknown.
Poor access to financing leaves corn farmers indebted

LOS BAÑOS, Laguna – Corn farmers are generally poor and in debt.

When they shouldn't be, said Dr. Ramon L. Clarete, Professor at the University of the Philippines School of Economics in a Professorial Chair Lecture at the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA).


With no access to grain storage facilities, de-husking, shelling and sun-drying the corn grains is manual, resulting in poor grain quality, he said, adding that with their corn output pledged to the trader-creditor, farmers remain poor and in debt.

Yellow corn farms are family-owned and small, on average less than 3 hectares. Manual postharvest operations average a postharvest loss of 15 percent.

Farmers sell to agents who are fielded in small barangays to assemble the corn; it is aggregated by traders in urban centers; corn on the cob goes to grain centers where traders may sit on the stock for three months on average. They eventually sell the grains to feed millers and livestock producers.

Meanwhile, small corn farmers are dependent on middlemen for credit that goes to fertilizer, seeds and pesticides. To access credit, the potential corn harvest is tied to trader-creditors, corn processing centers, feedmillers or livestock producers.

Corn farming is largely traditional, despite farmers' access to the best seed technology such as the genetically modified Bt yellow corn, Clarete said in his lecture at SEARCA, an international institute for research and graduate studies.

The SEARCA Professorial Chair is awarded to recognize academic expertise on agricultural competitiveness and natural resource management, including the social, marine, fishery and environmental sciences as well as economics and rural development.

“SEARCA recognizes the contribution of institutions and individuals who promote academic excellence in the fields of agriculture and related sciences,” said Dr. Gil C. Saguiguit, Jr., SEARCA Director. “A strong cadre of agriculture professionals will help SEARCA in its mandate to build institutional capacities in agricultural and rural development.”

Clarete said large and medium traders tend to advance cash or credit to secure grains. They have the capacity to store corn grains, speculate on the price and unload stocks for a profit.

They tend to have a network of buying stations in corn-growing areas. Operating their own logistics such as transportation and warehouses, they complete with corn grain centers.

Corn grain centers, on the other hand, procure corn on the cob, drying then shelling, then drying to recommended moisture levels; the cobs are used for drying the grains.

Post-harvest losses are reduced and good quality corn is produced. To effectively compete with traders, private grain centers likewise offer credit.

Feedmillers, which process and mixes feed ingredients, are relatively close to where the livestock farms are. Large integrators tend to use the latest technology to produce the feeds required by their livestock operation.

Because of seasonal price fluctuations, investments in corn farming are not encouraging. “And when the price is right, the corn is no longer with the farmers but with traders or creditors,” he said.

“Poor access to formal credit markets drive corn farmers to informal lenders and reduce their marketing options,” he said.

The lack of grain storage limits the rise of the corn value. Corn is stored an average of three months because the lack of adequate facilities results in the grain deteriorating to a point that losses are severe. Corn on the cob can be stored for up to one year as grain quality remains very good.

Nine processing centers have been set up by the private sector and the National Agribusiness Corporation. Only four are functional while the rest is idle because there is no money to procure corn on the cob. “This shows that you need credit to move corn to the supply chain,” Clarete said.