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FarmOn Updates on Covid-19 Impact: Investments and Withdrawals Status

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Nobody wanted any of this to happen, but here we are dealing with the Covid-19 pandemic, and trying to cope (and survive) as best as we can. Individuals and businesses alike are very much affected, albeit in varying degrees. And although FarmOn may be considered an essential business (hence allowed to operate even under ECQ) since it is involved in agriculture, it was not spared from difficulties and delays, at least based from their updates.

Once again, caveat, we are not in anyway related to FarmOn, this is not a sponsored article, and they do not pay us anything. Instead, we just have a small investment with them, and through the months we have decided to decrease our exposure with them because we have re-allocated the funds to other businesses and  investment alternatives with higher ROI. Right now, we’re just waiting for the harvest of our last pending investment with them placed on Oct2019. See here for the historical ROIs we have received from FarmOn.

To clarify, our decreased exposure lately is not because we knew Covid-19 was coming (of course we didn’t know!) or because we were smelling something fishy (we don’t either) as some would say on Facebook. To be fair to FarmOn, our experience with them has been within expectations. There were some delays here and there given that they were a start-up many years back, but for us, it is understandable especially as FarmOn became too popular with many investors eventually (and their customer service will need to catch up). They also survived their issues with SEC as crowdfunding was very new back then (but they were asked to evolve and improve, hence the 3.0 now).

FarmOn has evolved through the years since we started, now, I think they are calling themselves FarmOn 3.0 as they have more offerings to their investors on top of funding farms that plant vegetables or raise livestock (as how FarmOn 1.0 used to be). Now investors can also fund (1) paddy rice production, (2) post-harvest and rice processing facilities, (3) palay procurement project, in addition to the usual plantation projects.

FarmOn Updates on Covid-19 Impact: Investments and Withdrawals Status

COVID-19 Updates

As follows are the salient points and quotes from FarmOn’s update on Covid-19 impact to their operations.

We don’t want to point fingers and we would like to take full responsibility of what happened, but just to give you an idea on the circumstances that [sic] is stopping or slowing us, we will cite the more important ones.

 

Right after launching, we started working on the projects. For FarmOners Agriculture Cooperative, we visited three (3) different sites for the farm. We hired new employees and designed new sub projects like […] 1. Plant breeding … 2. Chicken Raising … 3. Goat and Rabbit Raising … These promising projects were all temporarily put on hold because of the pandemic. While it is true that travel of materials specially those that are farm-related should be unhampered, the sources are close[d] for a number of reasons. A) No shipment of materials; B) The workers/employees are under home quarantine either because they are afraid to work or they were not allowed to pass through the checkpoints; C) LGUs have imposed Extreme Enhanced Community Quarantine (EECQ) and establishments were asked to close temporarily.

 

Our movement is either slowed, limited or stopped … Our problem is before the trucks are loaded, we need manpower first. To wit: our palay procurement team cannot freely go out to purchase palay because they are not allowed to pass. As a matter of fact, there are palays ready to be shipped from Cagayan province but our team wasn’t able to go there since the lockdown due to the measures being implemented by the LGU. To make matters worse, the relief operations done by all LGU units nationwide created an artificial surge of prices. Harvest is not done simultaneously nationwide. Different regions have different farming cycles but the LGUs purchased rice almost the same time. It created an unprecedented surge of demand which the supply can’t match, hence, the price of palay went up.

 

The first phase of the state-of-the-art post harvest facility is ninety five percent (95%). After spending millions on the project, we were forced to stop because we can’t buy materials to finish it and workers (since they are construction workers and are not considered essential) are not allowed to pass through checkpoints … These are just but some of the real issues and concerns that we have encountered. We would like to tell you that we still acknowledge our shortcomings, we do not blame the government nor any other agency. This pandemic is something that we are not prepared for and the only thing we can do is exert all effort and hope that it will work for all of us.

 

While we sustained losses, that doesn’t necessarily mean that the investors also lost their money. FarmOn still recognizes all investments and has no plan of dissolving them. We just need time to recover from our loses and we will surely bounce back bigger and better.

 

To make this happen, we are forced to do the following measures:

  • Skeletal workforce and the survival operations will continue until the end of the pandemic. Operational cost was already cut down to almost the barest .
  • Focus on the projects that give us income. Two (2) supermarket chains have given their trust in us (SRS and Robinsons Supermarket).
  • All open projects: squash, water melon, banana, mango and other plantation products as well as livestock products are still in place. Only that there were adjustments made as to the actual start of the project, and the phasing. The adjustments were done due to the limited manpower and the controlled movement of needed materials and products.
  • We will also be forced to close investment and withdrawals for the next six (6) to nine (9) months. Please understand that this is the last thing that we wanted to do but we have suffered so much that this is the only way that we can move out of this predicament. During this period, the stimulus fund will be used to recover the losses and with it no investment will be lost.
  • We understand that our stakeholders also need money during this trying time and so we came up with a program where monthly profit from the limited operations will be deposited to FarmOners account on Queue basis.

We are very sorry for the inconveniences that this pandemic has caused all of us. We know that no amount of apology will make you feel better. We at FarmOn are also very much disappointed with the turnout of events. ALL CONTRIBUTIONS REMAIN AS IT IS AND STILL (JUST LIKE IN THE PAST) THERE IS AND WILL BE NO REDUCTION WHATSOEVER. The return of fund will just be moved [to a latter date] but it will certainly not disappear.

FarmOn Agri-Community Corp.
www.farmon.ph
(+63) 906 495 1856
(+63) 939 357 4209
#577 Batal, Santiago City, Isabela, Philippines 3311

Click here for the full text of their email: FarmOn update amidst the COVID Press Release

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Our Thoughts

I think our investments are safe, but as they mentioned, returns and withdrawals will be delayed.

I don’t think FarmOn will waste all their progress thus far (and popularity among retail investors) just to run away and hide with the investors money. They have a good thing going here that should not go to waste. With that said, from a business standpoint, FarmOn needs time and liquidity. I think most business owners will understand this. While FarmOn (and businesses in general) were profitably operating pre-ECQ, the sudden stoppage brought by the ECQ also froze the cash flow of the business. And it is not in the nature of a business to hoard lots and lots of cash because cash flow is the lifeblood of any business — it has to circulate, it has to keep coming in and out.

If everybody knew that Covid-19 was coming, I think all businesses would have stockpiled on their cash. Chances are most of FarmOn’s operating cash have already been used to purchase equipment, build facilities etc. as they were preparing for FarmOn 3.0. Then Covid-19 happened, the revenue they were expecting to receive in the coming months did not materialize. Even with the ECQ, they still need to operate for functions allowed under ECQ to just get some revenue coming in, there are still overhead expenses (even if minimized) that should be addressed. And I think, similar to a bank having liquidity issues, mass withdrawals from investors will cause FarmOn more significant harm than good (if any, as mass withdrawals of investments is like losing the remaining drops of blood it has), which can lead to unnecessary bankruptcy.

Then again, if you want to withdraw your money and remove your exposure, if you really need it now, you have the right to get in touch with them. The crops are insured once planted, in case of acts of Nature, but I don’t think the investor money is insured and guaranteed in a formal way with an insurer, just like PDIC insures deposits up to P500K. We only have FarmOn’s word that it is in place, albeit harvests and returns will be delayed. Again, caveat emptor. Risk only the money you can afford to lose. Hopefully not! I don’t think so in this case, as long as FarmOn is careful during this ECQ.

I appreciate the update they have given even though for some investors, FarmOn has been unresponsive on their emails. I’m sure they are swamped with inquiries and withdrawal requests, and chances are they have less capacity now than in BAU since they are operating under skeletal forces.

It’s normal for us to worry about our money, but I do hope FarmOn comes out of ECQ alive and kicking, for the farmers sake, for the FarmOn employees’ sake, for our invested money’s sake. As an entrepreneur, I don’t want to hear of companies closing for good due to Covid-19 and ECQ due to lack of business and cash flow. It’s a sad reality that I would not wish for anybody.

Lesson learned as well for all companies and businesses, big or small. I think more and more businesses now will be more careful in spending cash moving forward (they expect the economy to slow down anyway), and that they might intentionally save for a bigger emergency fund than they used to. Lastly, Cagayan, Isabela, Quirino and Nueva Vizcaya provinces are all under GCQ now. So there should be less checkpoints and restrictions. I hope this opens up more of FarmOn’s businesses and projects sooner than later, and I hope the gradual re-opening of these provinces expedites FarmOn’s recovery.

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Images from FarmOn website.

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