Principles of Agricultural Entrepreneurship & Marketing

ECO 01
PRINCIPLES OF AGRICULTURAL
ENTREPRENEURSHIP &
MARKETING
1st LECTURE
TOPIC OUTLINE
I. The Philippine Economy

II. Entrepreneurship and SMEs
The Philippine Economy
Overview of the Philippine
Economy
Overview of the Philippine Economy
 Philippine Economy Composition
a. Business Enterprises
b. Households
c. Government
 Major sectors of the economy
 Interdependent
 Government provides the leadership in improving the
economy
 Market Economy or Free Enterprise Economy
 There are economic freedoms (free competition; free
choice of investments; prices are determined by the
interaction between demand and supply)
 The Role of the Government
a. extending financial and technical assistance to business
enterprises
b. formulate policies that are conducive to economic
growth
 State of Philippine Economy
 Philippine economy has not improved much in terms of
the interests of the masses, because of its colonial and
primitive agricultural economy
 Foreigners control the Philippine economy from
production to marketing
 Agricultural outputs are not even sufficient to feed the
growing population of the country
 Grinding poverty remained and aggravated by
population explosion
 Lessons Learned
 In economic development, the bottom line is the quality
of the people of a given country
 Knowledge, skills and values are the main determinants
of economic growth
 Values constitute the key to economic success of any
nation
 Political will of government officials and economic
managers is also significant to attain economic success
Fundamental Economic
Problems
Fundamental Economic Problems
 Interconnected Economic Problems
a. Resources - money, materials and machines – are limited
while the needs of the Filipinos are unlimited
b. Unfair distributions of productive resources and population
explosion have rendered many Filipinos to become poor. They
are poor because they depend only on their labor resources.
The price of labor is very low. Thus, salaries and wages are
generally low – not sufficient to satisfy the basic human needs
c. Unemployment (the biggest economic problem of the
Philippines). It creates social problems such as housing,
health and sanitation, prostitution, robbery and other related
crimes
d. Poverty (the most serious problem of the country) - the grim
faces of poverty are all around the country
Role of Entrepreneurship and
SMEs in the Economic
Development of
the Philippines
Role of Entrepreneurship in the Economic
Development of the Philippines
 Introduction
 Addressing widespread poverty is the single most important
policy challenge facing the Philippines
 Not only is poverty high when benchmarked against countries
in Asia, but also the rate of poverty reduction has been slow
 Philippine economy has grown at an average of 6 % for the
last five consecutive years (since 2012), however, poverty
incidence remains above 20 % of the population
 The critical challenge is to spread the payback of this huge
economic turnaround among the people, especially the poorest
of the poor
 They should feel the benefits of the growing Philippine
economy
 Introduction
 Entrepreneurship can provide the solution by creating
wealth, jobs, and social empowerment
 If we are to address the issue of poverty with some
degree of success, history tells us we have no choice but
to actively encourage entrepreneurial ventures
 Entrepreneurship in the Philippines
 Entrepreneurship is viewed as important to
empowering the poor, enhancing production, and as an
impetus to innovation
 The 1987 Philippine Constitution recognizes
entrepreneurship as an engine of economic growth
 Article XII Section 1 highlights the role of private
enterprises in supporting equitable distribution of
income and wealth, sustaining production of goods and
services and expanding productivity, therefore raising
the quality of life.
 The Philippine Development Plan (PDP) further
reinforces the thrust on entrepreneurship through trade
and investment to achieve the government’s goal of
economic development and job creation
 It provide measures for macro-economic stability,
employment, trade and investment, agribusiness, power-
sector reforms, infrastructure, competition, science and
technology, and anti-corruption to strengthen
Philippines’s competitiveness and contribute to job
creation
 In 2017, there were approximately 830,000 business
enterprises in the Philippines
 Of these, 99.6 % are classified as micro, small, and
medium sized enterprises (MSME) which are
responsible for 38 % of total job growth
 Enterprise development and competitiveness
 Enterprise development in the context of competitiveness
not only entails the ability to produce products that can be
accepted globally but also the level of support given to
enterprises to help them produce, innovate, and gain market
access
 While relatively mature and free, enterprise development
in the Philippines is beset with the following critical
challenges:
a. Rule of law
b. Physical and social infrastructure
c. Domestic & global macro environment
d. Access to financing & skill development and knowledge
 If the challenges remain unresolved, gaps in enterprise
development have the potential to thwart the country’s
competitiveness and ability to effectively function
within global production networks
 Rule of law
 One of the more important dimensions in assessing
the competitiveness of Philippine enterprises
 Encompasses regulatory structures, policy environment,
and enforcement of regulations
 As noted and reported by Evangelista (undated) the
Philippines’ regulatory environment for enterprise
development is still weak and needs further reform,
harmonization and standardization
 Access to credit
 Another important dimension is access to financing
 While specific laws such as the MSME Magna Carta
and Barangay Micro Business Enterprises (BMBE)
development specifically mandate financing for
enterprises, obtaining said funds is a different story
 Most lending portfolios require collateral accompanied
by tedious documentation and other technical
requirements that are difficult for MSMEs to comply
with
 Internationalization and Global Production Networks
 The rapid integration of economies and globalization
of markets has influenced the evolution of
entrepreneurship over the years
 From the traditional business managers, they
welcome and embrace the idea of entrepreneurship
which transform themselves to be innovative
(opportunistic, idea generator, organizer of factors of
production and linkages, possess entrepreneurial skills)
to sustain their business activities through
internationalized value chains
 Liberalized trading environments is an emerging
challenge for Philippine enterprises - compounded by
the reality of limited opportunities for productivity and
innovation
 World Economic Forum (WEF) Global Competitiveness
Index identified infrastructure, labor market efficiency,
innovation, technological readiness, intellectual property
protection, R&D spending by private companies, and
availability of scientists as key areas in business and
enterprise development where the Philippines is lagging
 Enterprises need to be supported by strong social and
physical infrastructure (labor productivity,
laboratories, business incubators, business planning,
marketing and branding, and conformance to
international standards)
 All these should be linked to the supply chain while at
the same time economic clusters found in local
economies need to be developed to allow
specialization and product complementarity
 Role of Enterprise Networks
 To address the aforesaid challenges, there is a need to
rally behind national advocacy to push
entrepreneurship to the next level
 This means nurturing micro-entrepreneurs from purely
“survival” into “opportunity and innovation driven”
enterprise owners
 This puts a premium on the role of enterprise
organizations such as chambers of commerce,
industry associations and dedicated enterprise
networks
 Institutionalization of networks/social ties and supply
chains is a key driver of SME international
competitiveness (OECD, 2009)
 In the Philippines, apart from institutions like chambers
of commerce and industry clubs, entrepreneurship
advocacy is mainstreamed by the creation of
enterprise networks like the Philippine Center for
Entrepreneurship (PCE)
 PCE’s concrete goal is to spawn the creation of so-
called “Go Negosyo Communities” everywhere
 These are communities where the academic, business
and government sectors are drawn into a triangle of
almost seamless collaboration
 Every “Go Negosyo” community is distinguished by its
ability to produce a continuous stream of start-up
ventures
 PCE also seeks to embed strong entrepreneurship
lessons into the school curriculum
 If the goal is to develop a culture of enterprise and
cultivate tomorrow’s competitive entrepreneurs, they
must start at a young age
 Primary and secondary schools can teach the values and
develop the mindsets of an entrepreneur while at the
college level, enterprise networks are looking at how to
assist in the area of curriculum enhancement, providing
manuals, training the teachers, and involving real
entrepreneurs in the learning process
 Nurturing the Entrepreneurship Paradigm
 Entrepreneurship is more than just an economic term -
it is a way of thinking
 It create jobs, empower people, and give individuals
access to better lives for themselves and their children
 Today, it has become a dynamic, developing part of the
economy promoting inclusive growth
 Entrepreneurship is a way of inspiring creative
individuals to pursue opportunities despite its risks
Role of SMEs in the Economic
Development of the
Philippines
Role of SMEs in the Economic Development of
the Philippines
 Small & Medium Enterprises (SMEs)
 SMEs occupy an important and strategic place in
economic growth and equitable development in all
countries
 Constituting as high as 90% of enterprises in most
countries worldwide, SMEs are the driving force
behind a large number of innovations and contribute
to the growth of the national economy through
employment creation, investments and exports
 Their contribution to poverty reduction and wider
distribution of wealth in developing economies cannot
be underrated
the Philippines
 SMEs play a crucial role in the growth of the
Philippine economy
 The emergence and creation of more SMEs provide
more jobs for growing number of unemployed and
underemployed in the country
 But in spite of this development, more and more SMEs
were forced to stop and close their business due to
complex problems faced by them
the Philippines
 The most common were the following: lack of market,
financial losses and reorganization, downsizing or
redundancy
 As a result, more and more workers were displaced
from their jobs
 The sad news is that the SMEs that decided to end its
operation are those firms that employed 100 and more
workers
the Philippines
 Comprehending the scenario and understanding the
importance of SMEs in the country’s economic growth
and development, the government initiated and made a
comprehensive and integrated strategy for the
sustainable growth and development of SMEs in the
country
 The strategy encompasses all critical factors affecting
the performance and sustained existence of these firms
namely, technology, product development, finance,
training, marketing, and other related aspects
Development and Status of
Entrepreneurship and SMEs in
the Philippines
Development and Status of Entrepreneurship
and SMEs in the Philippines
 Background
 The SMEs (together with the entrepreneurs) serves as
the backbone of the Philippine economy
 Represent 99.6% of all businesses registered in the
country and employ 69.9% of the total labor force
 Also account for 32% of the country’s GDP
 SMEs and entrepreneurship help ensure a more
equitable distribution of income, disperse economic
activities to the countryside, and are a potent force in
the war against poverty
 Background
 Two major laws govern the promotion of SMEs:
 Republic Act (RA) 6977, or the Magna Carta for Small
Enterprises, as amended by RA 8289, and
 RA 9178, better known as the Barangay Micro Business
Enterprises (BMBEs) Act of 2002
 Background
 The SME Unified Lending Opportunities for
National Growth (SULONG) program was formulated
by the Arroyo Administration
 The program is geared towards expanding the
enterprise base by graduating SMEs to higher levels of
classification by providing them with more access to
government assistance
 “Sulong” is a Filipino word which means “move
forward”, and is an appropriate rallying call by the
Arroyo administration to make SMEs an even more
productive sector
 Background
 SMEs have been included by President Gloria
Macapagal-Arroyo in her 10-point national
development agenda – covers the creation of 6-10
million jobs in 6 years, through more opportunities
given to entrepreneurs, a tripling amount of loans
available to SMEs, and the development of 1-2 million
hectares of land for agri-business
 Background
 In compliance with President Arroyo’s directive, the
Department of Trade and Industry (DTI) convened
all the key players in SME development, including the
pertinent government departments and agencies, and
formulated the National SME Development Agenda
 Background
 The National SMEs Agenda covers the provisions for
greater communication and closer coordination
among key agencies mandated to support the SMEs,
resulting in less duplication of efforts and in more
complementarity of assistance offered by various
government agencies
 The agenda also mandate and call for the concerted
efforts of the key players in its various elements,
namely human resource development and
entrepreneurship training, market development, product
development and technology intervention, advocacy for
enabling environment, and financing
 Background
 The DTI has been able to assist thousands of SMEs
nationwide in their endeavor to take their enterprises to
a high level
 Targeted and collaborative interventions in financing,
marketing, training, product development/technology
intervention, and advocacy have resulted in higher
business performance for many of these companies, as
measured in their assets, employment, and sales
 Problems
 3 major trends that SMEs will have to contend with at
global level in the future:
a) the globalization of enterprises, with tariff and non-tariff
barriers being reduced by trading nations worldwide;
b) the considerable ease of the movement across borders of
capital goods, services and information technology; and
c) the reduction of the cost of goods and services brought
about by the rapid technological change, giving consumers
a wider choice for their hard earned income
 These trends if unchecked and regulated, it will
eventually result into major problems of the SMEs
competing in international or global level
 Problems
 At the local level, the major problems facings the
SMEs are the following:
a) poor managerial skills of entrepreneurs and in
adequate technical skills of the workers;
b) limited access to technology and lack of funds for R
& D;
c) low productivity;
d) limited access to financing; and
e) limited access to information (e.g. market
opportunities, government policies, etc.).
 Problems
 Closing of a number of firms due lack of market,
uncompetitive price of products, high cost of
production, financial losses,
reorganization/downsizing/redundancy, change in
management, lack of materials and intense competition
from abroad is another critical problem faced by the
SMEs sector, not to mention the greater number of
workforce displaced by the said closure
 Contribution
 SMEs play a crucial role in the growth of the
Philippine economy
 The SME sector comprises about 99.6% of all
registered firms in the country and employs 69.9% of
the total labor force
 In addition, they account for 32% of the country’s GDP
 SMEs ensure a more equitable distribution of income,
disperse jobs and economic activities to the
countryside, and are a potent or mobile force in the war
against poverty
Government Programs for
Small and Medium Enterprises
and Entrepreneurs
Government Programs for Small and Medium
Enterprises and Entrepreneurs.
 Supporting Groups
 DTI convened all the key players in the SME
development to create and formulate the Small and
Medium Enterprise Development (SMED) Council and
the National SME Development Agenda
 The SMED Council initiates and oversees all efforts in
SME promotion, growth, and development
 The council is Headed and Chaired by the Secretary
of DTI and composed of the Director General of the
NEDA and the Secretaries of Agriculture; Labor and
Employment; Science and Technology; and Tourism
 It also includes the Chairpersons of the Monetary
Board and the Small Business Guarantee and Finance
Corporation, three representatives from the private
sector, and a representative from the private banking
sector
 The program (National SME Development Agenda)
calls for the collective efforts of the key players in its
various elements, namely human resource development
and entrepreneurship training, market development,
product development and technology interventions,
advocacy for enabling environment, and financing
 Program Approach (Integration)
 The SMED Council members meet at least once a
month to discuss issues, evaluate activities, and map
out short-term to long-term plans for SME
development
 DTI created the SME Development Group composed
of DTI-attached agencies and bureaus mandated to
support SMEs
 The SME Development Group is tasked to implement,
coordinate, and monitor the various efforts that go
into SME development
THANK
YOU!

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ECO 01

I. The Philippine Economy

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