Joint ventures, support for local farm machinery firms encouraged
LOCAL manufacturers of farm machineries should form joint ventures to upgrade their capabilities, while government should provide financial/ credit assistance to small and medium- scale firms in the industry, according to a policy study conducted by the Department of Agriculture- Philippine Center for Postharvest Development and Mechanization ( DA- PhilMech).
The groundbreaking study “The Role of the Machinery Manufacturers and Distributors in the Grains Postharvest Mechanization” analyzed the state of the local farm machinery assembly/ manufacturing industry and recommended policies that would improve the capabilities and output of the industry.
“This policy [ study] aimed to assess the facility manufacturing in the country and how these factors affect the role of the key industry players in the enhancement of the country’s grains postharvest mechanization,” it said.
At present, the Philippines is a net importer of farm machines while there are more than 400 local manufacturers of such equipment. However, smallscale industries dominate the local farm machinery fabrication industry, and most of them employ the “cut and weld” method of fabrication, which shows there is also a need to improve the manufacturing process of the companies.
To ramp up the local farm equipment manufacturing industry, the study recommended the forming of joint ventures among local firms that can result in complementation.
“Among local manufacturers, a joint venture arrangement should be established for the local manufacture of critical machines and machine parts and to encourage mutual support and complementation of manufacturing and after- sales service,” the study said.
“However, because of the bias of the program in favor of the large- scale manufacturers, selected few are able to participate because of the financial constraints of small and medium scale manufacturers. Hence, to eliminate this entry barrier and to uplift the manufacturing and distribution of postharvest facilities in the country, the government should improve the financial/ credit assistance to the small and medium manufacturers,” it added.
The study pointed out that local manufacture of farm machinery is still labor- intensive but its workforce lacks any real training. This has resulted in the local manufacture of farm equipment that is not of high quality.
The study also pointed out manufacturing firms should also include distribution in their activities, so they can generate higher sales and profit margins. As it is now, because of the “pessimism” among companies into farm machine fabrication, many are forced to undertake various measures just to survive.
“In general, the local postharvest machinery manufacturing and distribution can be characterized as a ‘ aging’ industry that needs to be revived,” the study further said.