By Manny Piñol
The Department of Agriculture (DA) will start shifting its agriculture and fisheries support program from the corruption-prone subsidies to a more efficient and easily accessible low-interest financing program starting next year.
This move follows the approval by President Rody Duterte of my recommendation that the DA should start abandoning its seeds, fertilizer and farm machinery and equipment subsidies program which has been marked with issues of corruption and slow implementation over the years.
The most prominent of these subsidy anomalies was the Fertilizer Scam where under the pretext of buying fertilizers for farmers billions of pesos were released to the different Congressional Districts and Local Government Units, including those in Metro Manila.
My recommendation was based on the following observations and validations I made during the two years that I served as Agriculture Secretary:
1. Government procurement process for seeds, fertilizers, farm machinery and equipment and post-harvest facilities for the fisheries sector is slow and prone to corruption.
2. Due to the tedious and long bidding process, seeds are often delivered when the planting season is over and the germination percentage has gone down.
3. The Lowest-Bidder rule in government procurement also prevents agriculture stakeholders from choosing the best seeds or equipment for them. This process also results in the procurement of low-quality equipment.
4. The Subsidy Program is vulnerable to interference by local political leaders who more often than not would make sure that seeds, fertilizers and equipment are given to their political supporters while their political enemies are left with nothing.
5. Seeds, fertilizers, equipment and machinery given out as subsidies by government often end up being sold by the beneficiaries because of they do not have a stake in the grants.
6. The yearly grants and subsidies to support farmers and fisherfolk bleed the government dry with billions of pesos allocated every year which could not be recovered anymore.
On the other hand, a low-interest, easy access financing program to be implemented by the DA through its financing arm, the Agriculture Credit Policy Council (ACPC) is expected to have the following benefits:
1. Efficient and fast procurement by farmers of whatever they need for their production, including the freedom to choose whatever variety of seeds, brand of fertilizer and kind of equipment they need in their farms;
2. It will reduce political interference and corruption in the bidding and procurement process;
3. It will instil in the farmers and fisherfolk and loan beneficiaries the sense of ownership, thus reducing the risk of the seeds, fertilizers and equipment from being sold;
4. It will allow government to recover whatever it allocates for the loaning program every year thus saving billions of pesos which could be pumped back into the program;
5. This program would give the beneficiaries the sense of pride because they will no longer have to line up and beg for support from government every time the planting season comes.
Finally, I firmly believe that the Subsidy Program is not sustainable because Subsidies are mainly the result of political decisions.
The Easy Access Financing Program, on the other hand, levels the playing field.
The initial reports of success of the Easy Access Financing Program of ACPC through the Program for Unified Lending in Agriculture (PUNLA) and the Production Loan Easy Access (PLEA) with repayment rates of 100% by vegetable farmers of Cordillera and 96% nationwide convince me that Easy Access Financing is the way to go.
A new credit program, the Farm Machinery and Equipment Loaning Program, has already been approved by the ACPC Executive Committee two months ago.
This new loan window will allow Associations and Cooperatives to borrow huge amounts without collateral for the purchase of tractors, harvesters, ice plants and cold storage at 2% interest per year payable in eight years.
This approach will surely increase productivity in agriculture and fisheries and reduce poverty in the countryside.
Next week, a Committee in the DA will convene to conduct a thorough study and draft the policies and guidelines for the shift from Subsidy to Easy Access Financing.
(All photos attached in this article were downloaded from public websites.)
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