Cantilan Bank Focusing on Value Chains to Expand Micro Agri Lending

The Mindanao Fruit and Vegetable Summit on October 20-22, 2011 held in Davao City proved to be an opportunity for Cantilan Bank to meet with value chain players in the sector and strike partnerships that promise to be beneficial to both the farmers and the bank.  The summit brought together farmers, buyers and business leaders in a bid to address challenges faced by farmers and agriculture-based companies along the fruits and vegetable commodity value chains. Aside from discussions on benchmarking, best practices, and global marketing, the event featured business matching for producers, buyers, and bankers. The summit was also a venue for aspiring agri-entrepreneurs to learn how to start and grow a farming business.

Emiterio Sanson Jr. of the United States Agency for International Development (USAID)-supported Rural Bankers Association of the Philippines-Microenterprise Access to Banking Services (RBAP-MABS) program brought together Cantilan Bank and Kennemer Foods International, a leading exporter of quality cocoa beans, to work on the expansion of cocoa production in Mindanao. In partnership with farmers, Kennemer plans to plant and maintain at least 10 million productive cocoa trees over the next 3-5 years. As a major player in the value chain, the company works on grouping and training farmers, provides planting materials and farm inputs, handles post harvest requirements, and buys the cocoa. Cantilan Bank will help address the financing requirements of cocoa producers and enhance its existing micro-agri loan product to match their cash-flow needs.

Mr. Simon Bakker (left), Cantilan Bank’s General Manager Raul Urbiztondo, and Eric Mendiola, Head of Credit Unit (partly hidden)Initial collaboration between Kennemer Foods and Cantilan Bank Tagum Branch is expected to take off in San Isidro, Laak, Davao del Norte, where more than 2000 small farmers tending an estimated 5500 hectares planted to cocoa are presently introducing modern techniques and rehabilitation methods. Kennemer Foods also maintains two other community models in Davao del Sur and in Calinan, Davao City, where the company has plant nurseries, field technicians and postharvest facilities.

Cantilan Bank is also poised to start a partnership with the Davao Provinces Rural Development Institute Inc. (DPRDI), based in Tagum Davao del Norte, for financing farmers engaged in organic farming. Carrying the brand “Healthy Grains Organic”, DPRDI works with several farmers organizations composed of 1000 rice farmers in the municipalities of Banay-Banay and Lupon, the rice granary of Davao Oriental. Under the program, farmers receive training on organic farming and other technical services of DPRDI that help increase the farmers’ markets as well as overall income and reduce risks.

Partnerships and networking with organizations that are major players in the commodity value chain offer banks the chance to expand their lending to agriculture and reach more farmers while mitigating the risks of lending. Cantilan Bank, a participating bank of the USAID-supported RBAP-MABS program, which has been offering its micro-agri loan product to small farmers using the MABS Approach, is now one of the banks leading this effort in Mindanao.