Innovating the supply chain, elevating PH agriculture and MSMEs

Without a doubt, micro, small and medium enterprises (MSMEs) are among the hardest hit by the pandemic. But thanks to technology, the supply chain has improved to mitigate losses and simplify operations. This is what UnionBank’s Supply Chain Finance is all about.

The bank’s improved supply chain solution is a platform that “contributes effectively to sales for cash management, deposits, SME loans, and business banking enrollment,” according to Mon Duarte, its EVP and Head of Transaction Banking and Platform Development. “With SCF, the bank is introduced to an effective wholesale lending strategy packaged with a retail account and online app banking enrollment.”

Agriculture is among the industries that are able to utilize the platform. It allowed a company like Pilmico, which is engaged in the farms business and animal feeds segment, to make collections conveniently and risk-free. They no longer needed to verify customer direct deposits and request for payment invoice application details. Its AVP for Credit Management Lilibeth Sisican even aims to convert all of their accounts “via [the] SCF purchasing power.”

New Hope, a business under the Animal Food Manufacturing Industry, also saw the platform as a way to mitigate further risks and grow their business during a difficult time. Linjun Xiao, New Hope’s General Manager in the Philippines, shared, “There was a faster transition from ordering of goods to payments, and quick expansion of business and better cash flow for both anchors and sellers. There was also the digitizing of the Agri-segment and catering to their needs.”

Duarte added that this digital revolution enabled Pilmico and New Hope to process invoices “in minutes” compared to manual processes that take up to months. “Now that the economy is opening up again, they need to quickly meet their operational needs while ensuring that their digital pivot remains fully optimized.”

While there are signs of recovery, the country’s agriculture sector remains to be embattled by the rising prices of commodities, following the Russia-Ukraine conflict. Thus, talks remain about the ratification of the Regional Comprehensive Economic Partnership (RCEP), a trade agreement between the Philippines and other countries including Australia, China, Japan, South Korea, New Zealand and members of the ASEAN.

The current agreement will see benefits to MSMEs across, but places agriculture at a disadvantage. As such, incoming President Bongbong Marcos and his economic team must review it further to ensure that proper safeguards are in place to guarantee the protection and safety of the sector and its stakeholders.

Senator Risa Hontiveros voiced out, “RCEP is predicted to worsen the Philippines’ trade balance which would cause job losses and $58 million per year in tariff revenue losses.”

The same sentiments are echoed by Federation of Free Farmers (FFF) National Manager Raul Q. Montemayor. In a statement, they said that the incoming administration should consult with agriculture stakeholders to make the RCEP more favorable for the sector. He shared that their opposition to the agreement was due to the alleged mishandling of the Department of Agriculture (DA).

“The DA never acknowledged RCEP’s threats to the sector, despite data showing that our farmers were unprepared and our trade deficits were increasing by billions of dollars every year,” said Montemaryor.

He also expressed that farmers and fisherfolk rely on the government’s protection to improve their situation. “They want to increase their yields and lower their production costs so that they can be profitable and competitive, even under trade agreements like RCEP. But they expect the government to be firmly behind them and not just stand idly by, or worse, work against them.”

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Chris Layugan