‘High tariffs, price caps hamper investments’

MANILA, Philippines — Government policies such as high tariffs and price ceilings squeeze local agribusinesses’ profits, reducing their capacity to invest further in the sector and expand operations, an official of Bank of the Philippine Islands said.

BPI assistant vice president Noel Gideon Goco said policy risk is one of the challenges that agribusinesses face in the country, especially in terms of improving their operations.

“Government policies play a crucial role in shaping the competitiveness and growth of the agriculture industry,” said Goco in his speech during the Agribusiness Investment Forum organized by the University of Asia and the Pacific’s Center for Food and Agri Business recently.

“But certain regulatory measures intended to protect consumers and ensure safety can slow down expansion and reduce productivity,” Goco, who heads the BPI’s agribusiness division, added.

For one, tariffs on imported inputs and equipment increase the production costs of businesses, thus, limiting their innovation that could have improved their operational efficiencies, Goco said.

“Tariff reduction has been implemented to address food security but further reforms needed to support long-term industry competitiveness,” he said.

Furthermore, government policies like price ceilings, which are aimed at protecting consumers from skyrocketing prices, hamper investment plans of agribusinesses, Goco said.

“These ceilings can compress profit margins, reducing possible investments for expansions,” he added.

The other “critical” challenges that affect agribusiness investments and their long-term growth in the country are market volatilities, supply chain disruptions, worsening climatic conditions and low technology adoption among businesses.

“Technology adoption is the most pressing challenge in agriculture,” Goco said.

“Adoption remains low among small and medium producers which limits data-driven decision-making and operational efficiency,” he said.

Goco pointed out that the need for “strategic, accessible and responsible” financial solutions to address the agriculture sector’s problems “have never been greater.”

“BPI is proud to offer solutions designed to empower every player in the agribusiness value chain,” he said, adding that their credit line supports modernization of agriculture across its value chain.

“BPI remains committed to supporting producers through flexible and risk-aware financing,” he added.

BPI lent P192 billion to agribusinesses last year with 49 percent of it going to post-harvest-related operations, 29 percent to traders/wholesalers/retailers/distributors, 14 percent to poultry and livestock, six percent to crops and two percent to aquaculture, Goco said.

Some loans went to 106 broiler farmers with a cumulative production volume of 340 million birds, 62 layers farms with a total output of 2.3 billion table eggs and 67 swine farms that have an annual output of 3.5 million pigs.

“Recognizing the diverse needs across the agribusiness ecosystem, BPI offers customized financing solutions tailored to every segment of the value chain from farmers to integrators to feed suppliers,” Goco said.

“To effectively support the needs of the agribusiness sector, BPI offers a wide-range of banking products designed to address unique challenges. Our portfolio includes working capital loans to support, equipment financing, supply chain financing and cash management services,” Goco added.