Dairy cow investment vehicle

by WILLIAM IMPERIAL and ARIANNE APOSTOL
www.ofwjournalism.net

QUEZON CITY– DESPITE the soured deal between the National Dairy Authority and the Economic Resource Center for Overseas Filipinos, executives of both group bank on the dairy industry for migrant Filipino workers’ investment.

“Even without the MOA, [the NDA] will be there to assist them in starting their own dairy business,” NDA chief Sally Bulatao told the OFW Journalism Consortium.

“They [Ercof and other investors] are very much welcome,” she added. Bulatao was referring to a memorandum of agreement that the NDA entered into with Ercof January this year that would allow migrant Filipinos to invest on livestock, specifically cows.

However, the NDA terminated the deal last March upon Ercof’s withdrawal of its P100,000-advance payment.

“The only reason why we initiated the deposit was to have a priority in the cow purchase from NDA, given the scarce supply and the NDA being the main source,” Ercof president Ildefonso Bagasao told the OFW Journalism Consortium.

The deal was supposed to give Ercof the privilege of selecting and buying the cows ahead of other potential buyers.

Dairy industry trader Danilo Fausto who represented Ercof in the NDA deal said he advised pulling out the money since he found another source of cows at lower prices.

“If we can get a better animal at a better price why not? The reason why we have withdrawn the money is because we found a better livestock,” said Fausto, the recently elected Chairman of the Philippine Dairy Confederation, which is the biggest umbrella organization of dairy cooperatives and federations in the country.

Fausto said that, at the time of the MOA, the NDA offered cows at a price of P68,000 per head. But, the DVF Dairy Farms Inc. president and chief executive said: “We were able to buy a good one at P35,000.”

In a recent letter, Bagasao said that Ercof has forged a partnership with DVF Dairy Farms to promote ownership of dairy cows as a savings and investment mechanism for OFs and help in growing the Philippine dairy industry.

Where before we have always spoken about microfinance and local government bonds, this program is different,” Bagasao’s letter read.

Round up

BULATAO doesn’t take the decision against Ercof. The NDA would be able to produce the cows only by late April, Bulatao said who also expressed relief Ercof withdrew since it could have created a misconception the Department of Agriculture unit would manage OFW money and the business.

“The OFWs might think that we will be the ones who will hold their money. What if nalugi iyung investment nila, baka kami pa ang masisi. ”We don’t want to encounter any problems particularly on the financial side [of it],” Bulatao said in an interview.

Bulatao explained that money as payment for the cows will only be accepted once the NDA produced the cows.

Bagasao, for his part, said the termination of the MOA was better for both NDA and possible investors in the long run.

According to him, both the NDA and Ercof entered into the agreement out of sincerity in floating an investment option for OFWs. But we didn’t foresee the deal would have meant more paperwork, accounting, and fiduciary issues, he said.

The agreement cited that Ercof would deposit funds to the NDA as advance payments for the dairy animals owned and sold by NDA to Ercof. On the other hand, the NDA as seller would give technical assistance.

The MOA prompted the NDA to issue a monthly report on the status of the funds received from Ercof.

According to a copy of the MOA which the OFW Journalism Consortium acquired, Ercof was supposed to be responsible for evaluating and transporting the animals. It also gave Ercof the option to insure the livestock.

With the dissolution of the MOA, “investors would (now) have flexibility in finding sources as well as making use of the money, e.g., putting it in interest-earning time deposits, while waiting for the cows [to be bought],” he added.

Bulatao said despite the deal’s termination, OFWs should still look into investing money in the dairy industry and go to the NDA for help. We are here to help them start their business, she said, adding that the deal’s termination doesn’t preclude Ercof from tapping technical assistance that the NDA offers.

Bulatao cited this assistance fall under their “Save the Herd” and “Palit-Baka” programs.

Mooing along

BAGASAO concurs with Bulatao’s views since Ercof has been advocating for migrant Filipinos to maximize the power of their remittances in fuelling long-term development.

“When they left the country, they sold their cows. Now, what they should do is to return the cows by purchasing them out of their earnings abroad,” Fausto said.

“If you buy a cow, it gives birth and reproduces; it multiplies. You’ll have the milk and cash flow from it. After six years of owning a cow you’ll be having 14 of them already,” he added.

In his book titled Dare to Dream, Fausto explained that cows give birth after nine months and produces four to seven liters of milk a day.

Since a calf could only consume between two to five liters of the milk, the excess could be sold by farmers. A mother cow can be milked for 300 days after giving birth, even at its 15th to 20th year of age.

Milk production also increases as a cow gives birth. Calves, which need approximately 150 liters of it’s mother’s milk in the first four months, can be weaned from its mother after four months and impregnated 18 months from birth.

A new-born calf is currently sold at P7,000; a year-old at P15,000; at two years old for P25,000; and at three years old for P35,000.

So far, Fausto said he has already bought 11 cows for Ercof’s OFW investors while non-OFWs who availed of the same program of investment bought 22 cattle heads.

As of February, six cows bought by OFWs from Geneva, Luxembourg, and Singapore already gave birth while five are already pregnant.

The dozen OFWs in Singapore put in $100 each as members of a savings group called Global Pinoy. The group’s fund is lent to a member so she could buy a cow. The group shares the income earned from the cows bought by the group.

Bagasao said that so far, eight persons have invested a total of about P400,000 (US$7,547.20 at US$1=P53) in dairy cows, which are now dispersed among different dairy farmers in Talavera, Nueva Ecija.

“These are covered by contracts between the investors, the farmers and the DVF Dairy Farms on care of animals, sharing of profits and off-springs, and of course the automatic deposit of milk proceeds by DVF, which buys all the milk and deposits investors’ share in his/her bank account.”

Dairy life

ANONG Taruc, one of the dairy farmers of the Talavera Dairy Cooperative in Nueva Ecija, credits his earnings from investing in cows for his home improvement.

He said he has also bought a car for his family and ensures his children continue going to school.

Bagasao, who bought three pregnant cows in August last year through the NDA, is already thinking of retirement and going back to playing music or reviving his rock and roll band.

His cows just recently gave birth to two male calves and a female calf. He also augmented his stocks with two more cows. He now has eight cows with the first three producing milk. “This means we have started to make money from the proceeds,” he said.

Though Bagasao does not have the figures of how much he earns with his investment, he said everything is all accounted for through an accounting system of DVF Farms Inc., a firm owned and managed by Fausto. Proceeds are automatically deposited to his bank account, the same goes for other cow investors, he said.

In that investment program, cows purchased will be dispersed among dairy farmers who are Talavera Cooperative members. The farmers take care of cows based on a partnership and profit sharing agreement between them and the investor.

“OFWs who get rich spend money on a lot of things” but not for long-term investment,” Fausto said.

Fausto admitted that investment through cows is a new business opportunity but is more or less stable: “Of course there are risks because we are dealing with live animals.”

Fausto said the country’s dairy business is a P65-billion market with local investors credited only with a P100-million share. He estimates that the Philippines milk imports hit US$60 million annually.

The country’s largest input when it comes to liquid milk supply is only 20 percent, compared to foreign brands, with only about 3,000 milking animals as local source, Fausto said. The rest of the industry are owned and run by foreign companies.

According to Bagasao, Ercof plans to offer three layers of investment for OFs as individual investor, a cluster of at least five investors, and, a Farmers’ Trust Fund.
Having these investment layers affords the investor various investment options, depending on capacity and needs.

“One need not look further if seeking to find a concrete example of linking migration, remittances, poverty reduction and development,” Bagasao said.

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OFW Journalism Consortium Inc. in partnership with the Ateneo de Manila University-Economic Policy Reform and Advocacy (EPRA) consortium