QUEZON CITY, Sep. 22 — 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 implementation of the program was signaled by 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. Agriculture Secretary and ACPC Chair Proceso Alcala had likewise signed the implementing guidelines of the AFPP.
According to Secretary Alcala, the ACPC Governing Council’s approval of the AFFP-VCFP underscores the importance of putting in place a viable agricultural value chain financing model that can be adopted 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.
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.
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.
The Postbank was selected to be the program partner for the AFFP-VCFP as it is already implementing a corn value chain project with the ZDMC Grains, Inc. (ZGI) in Zamboanga del Norte. The production-processing-bulk handling-marketing project, which is aligned with the DA’s corn development roadmap, is implemented in Zamboanga del Norte and Bukidnon.
The AFFP is one of the programs under the Agro-Industry Modernization Credit and Financing Program (AMCFP), the umbrella credit program of the DA for agriculture and fisheries. The VCFP, on the other hand, is one of the credit facilities under the AFFP.
Other credit programs being implemented by the ACPC under the AFFP are the AFFP Sikat Saka II, Agrarian Production Credit Program (APCP), ACPC-PCFC AFFP Agri-Microfinance Program (AMP) II, Cooperative Banks Agri-Lending Program (CBAP) II and Climate Change Adaptation Financing Program (CCAFP). (DA)
