By Manny Piñol
The Department of Agriculture has proposed a Bond Floatation Program to finance an ambitious 13,000-kilometer Farm to Market Road Construction Project and farm and fisheries mechanization to promote efficiency and greater productivity, including reduction of post-harvest losses.
The proposal has been welcomed by Finance Secretary Carlos G. Dominguez and Central Bank Governor Nestor Espenilla, who both said that the measure would utilize the vast resources of private and commercial banks who are required by law to lend 25% of their loan funds to the agriculture and fisheries sector.
A technical team of the Agriculture Department is now preparing the documents to be presented to the National Treasury for the Bond Floatation.
In the proposal which I shared with Sec. Dominguez and Gov. Espenilla, it is recommended that the government will float bonds to be sold to private and commercial banks to finance the construction and completion of an estimated 13,000 kilometers of critical farm to market roads which would connect food and agricultural production areas to the national highways and later railway loading depots en route to the market.
About P140-B is needed over the next four years to finance the massive farm to market road network construction which would not only promote greater productivity and lower the cost of food commodities in the market but also create employment in the countryside where the poverty incidence is considerably high.
Another P60-B in bonds will be floated to finance the mechanization program which will involve the acquisition of farm machinery and equipment, including post harvest facilities in agriculture and fisheries.
The country loses 16% of its grains harvest because of the lack of post-harvest facilities while 40% of the fishermen’s catch is spoiled because of the absence of ice-making plants and cold storage.
Under the Mechanization Program, proceeds from the Bond Floatation will be used in a mechanization loaning program to farmers and fishermen’s associations to be managed by the Agricultural Credit Policy Council (ACPC) of the Agriculture Department.
This program has already been started with a P400-M initial loan fund for farm mechanization and fisheries modernization which offers loans to farmers and fishermen’s groups at 6% interest per year without collaterals and a repayment period of 5 to 8 years.
Under the Agri-Agra Law, private and commercial banks are required to earmark 25% of their loan funds for projects in the agriculture and fisheries sector.
Over the years, however, banks have opted to pay the hefty fines for their failure to comply with the law rather than lend to the agriculture and fisheries sector which they consider as “high risk” borrowers.
The DA-ACPC initiated Production Loan Easy Access (PLEA) program, however, has showed a 96% repayment rate among its initial borrowers who have already availed of almost P1-B in production loans since its launching last year.
The Bond Floatation Program is expected to be presented to the National Treasurer soon and implemented within the year.
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