Beyond the chaos of urban Manila, agriculture remains the backbone of Philippine society.
One in three Filipinos is directly employed in agriculture, but agriculture only contributes to 9% of gross domestic product (GDP).
In the last few decades, rural communities have experienced cycles of poverty and indebtedness in which farmers find themselves trapped in cycles of loaning and insecurity. Vulnerable to the effects of climate change and stuck without crop insurance, many Filipino farmers perennially live in debt and at the mercy of traders. The Philippines is hit by an average of 20 deadly typhoons per year, which wipe out crops and perpetuate cycles of borrowing and debt. A farmer’s average income is around 2,000 Philippine Pesos (about $40) per month. The Philippines is an agricultural country, yet it is also one of the top rice importers in the world.
These problems and paradoxes have not been lost on urban millennials. Cropital, a crowdfunding platform for local farmers, was started by a group of Filipino college students in 2015 with a simple philosophy: doing good comes with great rewards. Low-cost, sustainable investments support farmers with the mission of improved productivity, reduced poverty, and food security. This is the first platform that allows individuals to finance Filipino farmers.
A bottom-up alternative
For 24-year-old co-founder Rachel de Villa, Cropital’s objective stems from watching her own family become trapped in a cycle of oppressive debt. Predatory lending forces farmers into a crippling cycle of debt passed down between generations. When her grandmother lost her pineapple farm, de Villa became aware of the systemic injustices that farmers face.
“We had to sell it because we lacked money. And thinking about it now, if only I had the skills back then, I would have created Cropital and helped my grandmother not sell her land,” de Villa says. She was listed in Forbes' 30 Under 30 Asia list in 2016. Cropital was awarded Philippine Social Enterprise of the Year at the Philippine Rice Bowl Startup Awards 2016. The company has financed more than 600 farmers so far in six provinces.
Cropital works by allowing people to choose from a list of approved farms to invest in. Cropital’s team manages the funds, helping farmers get access to crop insurance and capital to protect against weather and pest risks, and then investors receive returns once the farm has been fully funded. The minimum amount of investment is PHP$5,000 (about $100) up to a maximum of PHP$50,000 (or $1,000), and the rate of return for users ranges from 3% to 30% in less than six months. The farmers have 100% repayment rates so far.
Investors range from young professionals, older consumers, and overseas Filipino workers (OFWs).
All of Cropital’s campaigns have maxed out in mere minutes, and on the FAQ section of their website, the second question asks: “If all farms are already fully funded, when will you open the new cycle and how will I know?” Users can then await email notifications from Cropital to hear when new farms for funding are posted according to the cropping seasons.
Growing agriculture by growing money
Global trends show a shifting labor movement away from agriculture. Massive rural-urban migration coupled with erratic climate patterns have pushed Filipinos off their farms to seek opportunities elsewhere. Farmers are aging; the average age of a Filipino farmer is 57 years old. Cropital is tasked not only with maintaining farms, but also reviving interest in younger generations to grow food. The reality of Philippine agriculture must change to demonstrate there is a future in farming.
Innovations in financing and technology must reach beyond urban economies. De Villa explains that Cropital works by a simple formula: capital + resources for production = sustainable income for farmers. Cropital’s team is using the most powerful resource of this generation — technology — to revolutionize farmers’ access to resources, and thus empowering them.
Combining agriculture and technology is controversial in the Philippines. We still see the damaging repercussions of the Green Revolution on farmers in cycles of indebtedness and reliance on high-value inputs. Monsanto, golden rice, and GMO wars are large as life. The International Rice Research Institute (IRRI), located just outside Metro Manila, is financed by figures like Bill Gates. These resources always were controlled by giant companies and the government.
What we are seeing now with Cropital is a bottom-up, grassroots approach to implementing technology for agricultural change. Cropital is run as an open platform, where any vetted and approved farmer may list their farm and any individual may choose to finance. Besides providing resources to make farming more promising and viable, Cropital is building partnerships and redistributing economic power between citizens and food growers. Cropital hopes to educate people about farming, its opportunities, and its challenges: “Many young people are entrepreneurs, and maybe not all of them will go into farming but they can create tools and innovations that will help make farming more sustainable and attractive to younger generations,” de Villa said in a Forbes interview.
A regional platform
Crowdfunding schemes can happen anywhere, at any time. As Cropital aims to scale up its impact across an archipelago of 7,000 islands, the business model can be replicated and expanded throughout Southeast Asia. Financing and agricultural services and support offered by Cropital will improve food security in the ASEAN countries. Besides financing thousands more farmers in the next few years, Cropital’s future plans include supporting farmers by matching them with established contract buyers, providing weather resilience technology, and building efficient production systems.
There is rich potential for Cropital’s achievements to tie back into the United Nations’ Sustainable Development Goals of no poverty, zero hunger, and reduced inequalities. Stakeholders at the upcoming Responsible Business on Food and Agriculture in Jakarta on March 26-28, may sit up and take note of Cropital’s work and potential in the region. Cropital provides an avenue to tie us back into the roots of our food system, reminding us that our farmers are our food growers. We must support agriculture and fulfill our basic needs to achieve equitable, inclusive progress in food security.