October 23, 2017, 3:53 pm
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Access to credit to boost agri output

Policy makers said  a drastic change in the local agriculture sector must be undertaken  for the Philippines to be competitive with its Asean neighbors.

 “In the Philippines, despite agriculture being no more than 9 percent of its GDP, the sector accounts for 29 percent of all those employed with that figure jumping to about 70 percent in some provinces in Mindanao, and 30 percent in the Visayas. When we say we want growth and prosperity to be inclusive, this is the sector which we mean to include,” said Arthur Yap, House committee on economic affairs chair.

Yap said  among the issues that must be given attention are  population growth, climate change and the availability of credit and financing.

 “Credit and finance will not just flow to the sector without the correct eco-system in place.  In the Philippines, RA (Republic Act 10000 already mandates that 25 percent of all banks’ loanable funds be set aside for lending to the agriculture sector. Despite that, local banks pay more than $300 million annually in penalties for failing to lend to the farm sector.  In that alone is an analysis to be made why banks would rather pay the penalties than lend to farmers,” Yap said at the Asean Agriculture Summit in Pasay City.

The congressman said  the only way to facilitate more funds from banks and micro-finance institutions into the agricultural sector is by minimizing risks.

He said  bank penalties  also can be tapped to improve  local agriculture.

 “Part of those bank penalties mentioned are deposited with the Landbank of the Philippines into an Agriculture Guarantee Fund Pool, and used to support loans by small scale farmers through the rural bank network. This program which started in 2008 with just P2 billion  has grown into more than P7 billion today and guarantees as much as P16 billion worth of credits and loans,” Yap said.

He noted  the importance of enabling small farm owners leverage their personal assets, equipment, receivables, inventories and other movable properties under a secured transactions framework for farm financing.

 Meanwhile, agricultural think tank, Inang Lupa Movement said  the Philippines should not focus solely on a single crop in order to be at par with other countries’ agriculture sector.

 “The countries that lead in farm exports in Asean also do not rely on just two or three major crops, and this proves that diversification to high-value crops is among the keys to developing a country’s farming sector and agro-industries,” the group’s president, William Dar said in the summit.

Dar said diversification of  high-value crops and other commodities that have export potential  will greatly improve the country’s  productivity.

“USDA (US Department of Agriculture) data show that the total productivity factor of  the Philippine agriculture sector was 1.87 percent from 2001 to 2013, which is a big improvement over the 0.18 percent during the 1980s and 0.53 percent during the 1990s. However, during the 1990s, Malaysia’s total productivity factor was 3.01 percent, 1.88 in the 1990s, and 2.85 from 2001 to 2013. Vietnam’s was 1.17 in the 1980s, 2.33 percent in the 1990s and 2.53 percent from 2001 to 2013,” Dar said.

He said at present, the Philippines imports more food products than it exports which poses the challenge for the government to produce enough to supply the domestic market with more competitively-priced and quality farm products in both raw and processed form.
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