How
Microfinance Transformed a Filipino Mountain Village
March
9th, 2013 by Roger Alford
“Three
years ago I could never have dreamed that we would be selling our tomatoes
directly to the restaurants in Manila,” said Johnny Rola. Just a few years ago
the poor farmers in this mountain village in northern Philippines had little
hope. They would grow a few staple crops and sell it at the local farmers
market. They were at the whim of the spot market prices set by the local
wholesalers at the village below the mountain, and were struggling to survive.
Three
years ago they were approached by a local microfinance institution, Gulf
Bank in Lingayen, about the possibility of selling their produce
directly to the Jollibee
restaurant chain in Manila, a major food outlet in the
Philippines. The major banks won’t lend to the local farmers who have no credit
history, collateral, or crop insurance. But microfinance institutions are now
filling the gap. In partnership with the National
Livelihood Development Corporation, a Philippine government entity,
many farmers today have access to microcredit. For someone like Johnny Rola,
this development is a godsend. “I’ve been a farmer for thirty years,” said
Rola, “and the past three years have been the best years of my life.”
In
2011 Rola joined with forty other local farmers to establish the Sitio Mapita
High Value Crop Growers Association as a farming collective. Gulf Bank now
loans Sitio Mapita money to buy seeds and fertilizer, and the farmers sell
their produce directly to Jollibee restaurants. At harvest time, the farmers
deliver the produce to the restaurant chain at a guaranteed price, and Jollibee
repays the Gulf Bank microloan and deposits the profits to Sitio Mapita’s
savings account.
Together
with Catholic Relief Services,
Gulf Bank is training the farmers of Sitio Mapita how to transform themselves
from poor farmers to budding entrepreneurs. These indigenous farmers have no
electricity and no running water. To communicate with the outside world they
walk thirty minutes up the mountain to get cell phone reception. So I was
amazed when I arrived at the village meeting hall to find spreadsheets with
handwritten monthly commodities prices, balance sheets, revenue projections,
and production targets posted on the walls on large brown sheets of paper.
These farmers have a business plan and big dreams.
“At
sunset we used to go to sleep,” said Margarita Rola. “Now we are planning for
the future.” They plan to use their profits to improve their lives in ways we
take for granted. They dream of electricity, better irrigation, refrigerated
trucks, even a high school for their children, who today must choose between
becoming farmers after sixth grade or, for the lucky ones, boarding at a high
school in a nearby town.
I’m in
the Philippines as part of Notre Dame’s award-winning business
school class entitled,Business
on the Front Lines. The class has around thirty business, law, and
peace studies students who focus for a semester on four specific case studies
of social entrepreneurship. After weeks of study, the students travel during
spring break to the countries and do field analysis. I’m here with six
students, and there are three other teams right now in Nicaragua, Rwanda, and
Sierra Leone. You can read about their exploits here.
We work with Catholic Relief Services, which is one of the largest relief
agencies in the world. The goal is not simply education. We are conducting due
diligence to recommend how millions in venture philanthropy can best be
utilized.
As we
toured the farms, one could feel the pride these farmers felt at what they had
accomplished in just three years. Graduate students from the United States were
coming to study what these poor farmers were doing to see if their business
model might be replicated elsewhere.
The
success of farming collectives like Sitio Mapita has garnered attention around
the Philippines. Other farmers want in on the action, relishing the idea of
microfinance providing a way to reach institutional buyers. Major corporations
are taking notice too. Next month Sitio Mapita will contract with Rocky Mountain Coffee to
begin growing coffee for sale throughout the Philippines. Coffee has a
four-year growing cycle and the start-up costs are large by their standards, so
it is a major development in their lives.
The
proudest moment of Johnny Rola’s life was when he went to Manila last year and
spoke to an audience of one hundred bankers, farmers, and politicians. “I even
shook hands with a senator,” he beamed. When I asked him if he went to a
Jollibee restaurant in Manila to try one of the hamburgers with his tomatoes in
it, he said with a big grin, “Yes! It was quite good.”
