Filipino Corn Farmers to have Easier Access to Credit

The Department of Agriculture is set to implement a financing model that further improves credit access for small farmers participating in the agribusiness value chain.

The turnover of P40-million worth of funds by the DA’s Agricultural Credit Policy Council (ACPC) to the Philippine Postal Savings Bank, Inc. (Postbank) on September 18, 2015 served as the indicator. Agriculture Secretary and ACPC Chair Proceso Alcala has already signed the implementing guidelines of the AFPP.

Secretary Alcala disclosed that the ACPC Governing Council’s approval of the AFFP-VCFP signifies the importance of putting in place a viable agricultural value chain financing model that can be utilized by mainstream financing institutions.

“With improved credit access, the program hopes to enhance farmers’ production capacities, productivity, and incomes. It also intends to contribute to the national government’s goal of promoting inclusive growth,” Alcala said.

Financing scheme for inclusive growth

The value chain approach capitalizes on existing business linkages between farmer-producers and traders or processors to lessen credit risk.  This approach in agricultural financing is recognized globally as one of the schemes that have potential in promoting inclusive growth in rural areas.

Under the AFFP-VCFP, the initial funding of P40 million from ACPC will be used to support the implementation of a value chain financing facility for individual farmers or farmer groups registered in the Registry System for Basic Sectors in Agriculture (RSBSA) and market tie-up with established buyers. The Postbank will also match the loan fund with its own counterpart fund equivalent to at least the amount of loans availed of under the program.

The additional funding support from the ACPC will enable Postbank to sustain its value chain financing activities for small corn farmers in Zamboanga del Norte and Bukidnon. This will ensure that the productivity of corn farmers, hence providing the supply of corn grains needed by the ZGI.

The Program will be implemented in the DA’s priority areas, initially in the provinces of Bukidnon and Zamboanga del Norte. Other provinces may be covered subject to criteria to be set by the DA.

Also on the horizon, Secretary Alcala also wants other commodities such as cassava, rubber, banana, and cacao to later be considered for inclusion under the program, which will be implemented within a one-year period.