How Microfinance Transformed a Filipino Mountain Village

“Three years ago I could never have dreamed that we would be selling our tomatoes directly to the restaurants in Manila,” said Johnny Rola. Just a few years ago the poor farmers in this mountain village in northern Philippines had little hope. They would grow a few staple crops and sell it at the local farmers market. They were at the whim of the spot market prices set by the local wholesalers at the village below the mountain, and were struggling to survive.

Three years ago they were approached by a local microfinance institution, Gulf Bank in Lingayen, about the possibility of selling their produce directly to the Jollibee restaurant chain in Manila, a major food outlet in the Philippines. The major banks won’t lend to the local farmers who have no credit history, collateral, or crop insurance. But microfinance institutions are now filling the gap. In partnership with the National Livelihood Development Corporation, a Philippine government entity, many farmers today have access to microcredit. For someone like Johnny Rola, this development is a godsend. “I’ve been a farmer for thirty years,” said Rola, “and the past three years have been the best years of my life.”

In 2011 Rola joined with forty other local farmers to establish the Sitio Mapita High Value Crop Growers Association as a farming collective. Gulf Bank now loans Sitio Mapita money to buy seeds and fertilizer, and the farmers sell their produce directly to Jollibee restaurants. At harvest time, the farmers deliver the produce to the restaurant chain at a guaranteed price, and Jollibee repays the Gulf Bank microloan and deposits the profits to Sitio Mapita’s savings account.

Together with Catholic Relief Services, Gulf Bank is training the farmers of Sitio Mapita how to transform themselves from poor farmers to budding entrepreneurs. These indigenous farmers have no electricity and no running water. To communicate with the outside world they walk thirty minutes up the mountain to get cell phone reception. So I was amazed when I arrived at the village meeting hall to find spreadsheets with handwritten monthly commodities prices, balance sheets, revenue projections, and production targets posted on the walls on large brown sheets of paper. These farmers have a business plan and big dreams.

“At sunset we used to go to sleep,” said Margarita Rola. “Now we are planning for the future.” They plan to use their profits to improve their lives in ways we take for granted. They dream of electricity, better irrigation, refrigerated trucks, even a high school for their children, who today must choose between becoming farmers after sixth grade or, for the lucky ones, boarding at a high school in a nearby town.

I’m in the Philippines as part of Notre Dame’s award-winning business school class entitled, Business on the Front Lines. The class has around thirty business, law, and peace studies students who focus for a semester on four specific case studies of social entrepreneurship. After weeks of study, the students travel during spring break to the countries and do field analysis. I’m here with six students, and there are three other teams right now in Nicaragua, Rwanda, and Sierra Leone. You can read about their exploits here. We work with Catholic Relief Services, which is one of the largest relief agencies in the world. The goal is not simply education. We are conducting due diligence to recommend how millions in venture philanthropy can best be utilized.

As we toured the farms, one could feel the pride these farmers felt at what they had accomplished in just three years. Graduate students from the United States were coming to study what these poor farmers were doing to see if their business model might be replicated elsewhere.

The success of farming collectives like Sitio Mapita has garnered attention around the Philippines. Other farmers want in on the action, relishing the idea of microfinance providing a way to reach institutional buyers. Major corporations are taking notice too. Next month Sitio Mapita will contract with Rocky Mountain Coffee to begin growing coffee for sale throughout the Philippines. Coffee has a four-year growing cycle and the start-up costs are large by their standards, so it is a major development in their lives.

The proudest moment of Johnny Rola’s life was when he went to Manila last year and spoke to an audience of one hundred bankers, farmers, and politicians. “I even shook hands with a senator,” he beamed. When I asked him if he went to a Jollibee restaurant in Manila to try one of the hamburgers with his tomatoes in it, he said with a big grin, “Yes! It was quite good.”