MBA Fellowship Field Report: Supporting Sustainable Smallholder Farming in the Philippines

Daniel Diaz is an MBA student at University of California, Berkeley, Haas School of Business. Here, he reflects on his internship at Endeavor Entrepreneur company Kennemer Foods in Mindanao, Philippines, through the Endeavor MBA Fellowship Program. 

I spent my summer in Mindanao, the southernmost and second largest island of the Philippines.  Despite recent growth, at a GDP per capita of ~$3100, Filipino income is still roughly a quarter of the world average (World Bank 2018).  Mindanao in particular is challenged by poverty, with ~30% of families unable to meet basic food and housing needs — areas in Western Mindanao above 50% (Philippines Statistics Authority 2018).  Agriculture is the economic foundation of the island. And “without progress in this region” “to raise agricultural productivity and improve farm-to-market connectivity,” the World Bank finds it “hard to see how the country can achieve sustained and inclusive growth (Philippines Economic Update October 2017).”

 In that pressing context, Kennemer Foods was established to  provide end-to-end support to smallholder farmers, including critical access to seedlings, agronomic assistance, a guaranteed market, and long term agri-financing.  Starting with 200 farmers in 2012, Kennemer has now engaged more than 17,000 farmers and planted over 19 million cacao trees. The for-profit social enterprise focuses on sustainable smallholder support, enabling high yield, high quality production that provides meaningful incremental income. 

 I was honored to work with a team with so much vision and humility.  I spent the bulk of my time in Davao, the largest city in Mindanao, supporting the senior management team, collaborating with our local team, and engaging our many smallholder farmer partners.  I had two main projects. The first involved researching and developing a strategic plan for cashless payment and financial inclusion. In the Philippines, 60% of payments are still made using cash (BSP Financial Inclusion Survey 2017).  The physical transport and management of this cash is incredibly costly, driving accounting inconsistencies and serious risk of fraud, corruption, and theft. In my research, I engaged officials from the central bank, managers at large commercial banks and telecom companies, as well as founders offering innovative digital wallets and mobile point of sale solutions.  This allowed us to map the payments landscape, and consider partnerships that could mitigate the risk in our payments to farmers and improve their access to financial services. Discussions are still in the works, but we are exploring a partnership with a large commercial bank, a vendor of mini-ATM terminals, and the agricultural development bank to support our largest cacao farmers in serving as local “cash agents” authorized to handle financial services in areas long considered unviable.

 The last half of my summer was spent building a financial model for a new business seeking to revitalize banana production.  “The banana…makes up some 25% of the daily caloric intake of some communities in the Philippines (UN FAO).” But climate change, soil degradation, and spread of disease are threatening its availability.  With this in mind, Kennemer is looking at innovative production methods and local varieties that can support more environmentally sustainable supply. My work focused on building a full financial model that assessed the return on investment for new forms of managed farming.  The company is continuing to explore development here.

 But I did more than work:1) I ate loads of raw cacao and banana.  2) I weaved dangerously thru traffic on my daily commute via scooter 3) I managed to get worse at surfing in Siargao. 4) I visited the recently re-opened Boracay for plenty of healthy, sustainable fun.  And 5) I developed a fantastic set of smart, empathetic colleagues and mentors that have only further piqued my passion for poverty alleviation and environmental sustainability. I am thankful to Kennemer Foods, Endeavor, and all my classmates for making such an impactful experience available to me and hopefully, the farmers of Mindanao!