During the first day of the Department of Agriculture’s National Food Security Summit held on May 18, 2021, ACPC Vice-Chair and Bangko Sentral ng Pilipinas Monetary Board Member Dr. Bruce J. Tolentino presented his insights on the financial and credit policies in the agriculture and fisheries sector, giving emphasis on the need to boost investments in the sector and to implement the proposed amendments to the Agri Agra Law or RA 10000.
In his presentation, Dr. Tolentino acknowledged that poverty among farmers and fishers remain the highest among basic sectors, and that both the agricultural labor productivity and agricultural gross value added (GVA) growth in the Philippines is lower than its neighboring countries and fellow developing countries. Dr. Tolentino explained that in order to remedy the plight of our farmers and fishers, structural reforms are needed.
“What we need are not politics. What we need are structural reforms. What we need are not short-term solutions. What we need are major solutions for these issues,” said Dr. Tolentino.
Dr. Tolentino laid out three main policy recommendations to increase the growth of the sector:
1) Increase investment in public goods that increase agri-fishery productivity, including science & technology, effective extension, efficient irrigation, and marketing infrastructure which will not only increase the yield of farmers, but allow them to sell their products at a low marketing cost.
2) Implement key policy reforms to eradicate anti-agriculture bias of appropriations, over-regulation and monopolies in order to enable more farmers to maximize their profits.
While these policy reforms are taking place, Dr. Tolentino said that it is appropriate to organize short-term programs and activities which provide support to farmers and fishers. He discussed the current agri-fishery credit, guarantee, and insurance programs of the government, including those of the DA, ACPC, Land Bank of the Philippines (LBP), Development Bank of the Philippines (DBP), Department of Agrarian Reform (DAR), Philippine Crop Insurance Corporation (PCIC), and the Philippine Guarantee Corporation (PhilGuarantee).
3) Implement the proposed amendments to the Agri-Agra Law or RA 10000 to encourage the banking sector to finance agriculture by improving the creditworthiness of farmers and viability of agricultural projects.
These proposed amendments include: (a) the broadening of eligible activities for agricultural financing; (b) adjusting the credit requirement by removing the distinction between the 15% agri and 10% agra reform credit, providing a sunset provision of 10 years from the approval of the Act, and providing a 5-year grace period for non- or under-compliance of newly established banks; and (c) creating a Special Fund to finance activities devoted to improving capacity of rural agri cooperatives/organizations and an oversight Council to manage the Special Fund.
Dr. Tolentino also discussed that while the amendments to the law have yet to be completed, amendments have been made to the IRR of the law, including: (a) the deletion of accreditation requirement for debt securities; (b) allowing shares of stock in companies engaged in agri activities; (c) expanding modes of compliance to cover financing to members of an ARB household, and financing activities that benefit agrarian reform communities; and (d) emphasizing special lending arrangements for agribusiness enterprises with qualified agricultural borrowers, agricultural value chain financing (VCF), and palay housing and farming homestead.
He added that the financial sector must be made more resilient, especially in the context of this pandemic. In line with this, digital finance is being made more accessible to Filipinos, and Dr. Tolentino explained that the National ID system or PhilSys will also incorporate the list of farmers under the Registry System of Basic Sectors in Agriculture (RSBSA), which can be used to streamline their availment of financial support thru government programs.
Dr. Tolentino is a leading economic development expert with decades of experience in both the public and nonprofit sector locally and abroad, including serving as the Director of the International Rice Research Institute (IRRI), Deputy Minister of Policy, Planning, and International Trade of the Philippine Ministry of Agriculture, and the ACPC’s first Executive Director.