High production cost. Inefficient food supply chain. Lack of funding support.
For the longest time, food processors and exporters have been hounded by these problems.
And with the flooding of cheap imported goods and the unstable foreign exchange rate, the profitability of the food and export industry has been greatly affected.
But for the members of the Philippine Food Processors and Exporters’ Organization (Philfoodex), the country’s biggest organization of food processors and exporters, these are not stumbling blocks but surmountable challenges.
As a proof of their resolve, the group recently staged the 7th Philippine Food Expo at the SM Megamall’s Megatrade Hall with Agriculture Secretary Arthur Yap as guest of honor and keynote speaker.
In his address, Yap cited the importance of strengthening the cooperation between the government and private sectors in building on the gains of the agriculture sector, which he said grew by 24 percent and brought 222 percent return on investments in 2007.
The agriculture chief also expressed optimism on the upward trend of the agriculture sector for 2008, which will benefit its allied industries, proof that there is light at the end of the tunnel.
“The Philippine Food Expo showcased the best Filipino food products to help local manufacturers and processors to make the food industry a key component in economic progress,” says Philfoodex president Roberto Amores.
He said that the expo, which had more than 250 exhibitors, had consultative workshops, business matching, product label analysis and evaluation, and other relevant sessions to boost the growth of the food sector.
Also in attendance were diplomats, heads of business chambers, and officials of government financing institutions.
The event provided the food sector the opportunity not only to sell, but also forge business partnerships between and among exhibitors and guests.
The expo had a co-located event, the First Regional Food Fair, which focused on the Department of Trade and Industry’s “One Town, One Product” program to strengthen the regions as a supply base of raw, semi-processed and processed materials for local supply and export.
Founded in 1987 when the country was rebuilding a good business climate, Philfoodex has been uniting players in the food industry to make Philippine products world-class and globally competitive.
Addressing capital needs
Now on its 21st year, Philfoodex had addressed the lack of financing for start-ups, with the forging of agreements with the Philippine Export Import Credit Agency (Philexim) to help small and medium enterprises (SMEs) secure loans from government agencies.
As a result, many SMEs were able to expand locally and penetrate the export market.
Last year, the group signed a landmark agreement with the Philexim extending a P25-million credit line to Philfoodex members. The credit facility includes check rediscounting, capital requirements and equipment purchase of beneficiaries, and is similar to a commercial bank’s omnibus credit line.
This year, Philexim is reprising the interest rates to enable more Philfoodex members avail of the loan. The Land Bank of the Philippines and the Development Bank of the Philippines will also be coming into the picture to expand the available capital and lend their expertise.
Partnership with the government
Philfoodex is also making representations with concerned government agencies in addressing concerns affecting the food production cycle.
Amores, who is also the country’s biggest exporter of fresh mangoes, said that in countries where the food sector is very progressive, the government plays a very active role, not only in providing financial support, but also by creating a conducive business atmosphere through good governance and responsive legislation.
“To make export products competitive in the world market, we must exempt from laboratory and inspection fees, improve cost environment and product mix, and have a stable foreign exchange rate,” he said.
An important move towards this he said is the signing of the memorandum of agreement with the Sugar Regulatory Administration (SRA) allowing Philfoodex members access to competitively-priced sugar, a key ingredient in processed food.
On top of this, the SRA also provided supplemental allocation for both food exporters and domestic processors to enable them to lower the cost of their finished goods.
Philfoodex has also called on the government’s financial administrators to stabilize the country’s foreign exchange in the midst of the peso appreciation versus the US dollar so exporters can plan in the long range.
“If the players in the food sector and the government can strengthen its partnership, I am confident we can put our best foot—and our best food—forward despite the stiff global competition,” Amores concludes.