Briefing for Sen. Francis N. Pangilinan Hampton Function Room, Astoria Plaza Ortigas Center, Pasig City September 3, 2010 Department of Agriculture Agricultural.

Briefing for Briefing for Sen. Francis N. PangilinanSen. Francis N. Pangilinan

Hampton Function Room, Astoria Plaza Hampton Function Room, Astoria Plaza Ortigas Center, Pasig City Ortigas Center, Pasig City

September 3, 2010September 3, 2010

Department of Department of AgricultureAgriculture

Agricultural Credit Policy Agricultural Credit Policy CouncilCouncil

Outline of PresentationOutline of Presentation

Part 1Part 1 :: ACPC Thrusts and ProgramsACPC Thrusts and Programs

Part 2 : Part 2 : Situationer on the Agricultural Situationer on the Agricultural Credit, Credit, Guarantee and Guarantee and

Insurance Insurance Cluster Cluster

Part 1: Part 1: ACPC Thrusts and ACPC Thrusts and

ProgramsPrograms

The ACPC is the institution on agri-credit policy and program development that promote a sustainable and effective delivery of financial services to the countryside.

Develop and advocate agri-credit policies and

Orchestrate programs that promote farmers’ and fisherfolk’s access

to sustained financial services.

VISIONVISION

MISSIONMISSION

• Synchronize all credit policies and programs in support of the DA’s priority programs

• Review and evaluate the economic soundness of all ongoing and proposed agricultural credit programs

• Approve all proposed agricultural credit programs prior to submission to the approving or funding agency, whether domestic or foreign

• Undertake measures of increasing its funds base and of adopting other liquidity interest stabilization and risk cover mechanisms for its various financing programs

Executive Order 113 (1986)

MANDATESMANDATES

• Develop special projects to promote innovative financing schemes for small farmers

• Conduct institutional capacity building programs

• Advocate rural and agricultural finance policies and programs

Republic Act 7607, the Magna Carta for Small Farmers (1992)

MANDATESMANDATES

Republic Act 8435 - Agriculture and Fisheries Modernization Act (AFMA of 1997)

• Oversee the implementation of the AMCFP

Active participation of Government Financial Institutions (GFIs) in the delivery of credit services and non-involvement of government non-financial institutions (NGFIs) in credit decision making

Greater role of the private sector including rural banks, cooperative rural banks, cooperatives and NGOs in the provision of financial services

Provision of critical support and capacity building services that would facilitate increased participation of the private sector in the delivery of credit

Adoption of market-oriented interest rates

– As provided under RA 8435 (AFMA) –

Current Policies in Agri-CreditCurrent Policies in Agri-Credit

• Agro-Industry Modernization Credit and Financing Program (AMCFP)

• Innovative Financing Schemes (IFS)

• Management of government credit funds for agriculture and fisheries

• Institutional capacity building programs for countryside financial institutions

• Rural and agricultural finance policy research, planning, monitoring and advocacy

ACPC KEY RESULT AREASACPC KEY RESULT AREAS

ACPC CURRENT PROGRAMSACPC CURRENT PROGRAMS

I. The Agro-Industry Modernization Credit and Financing Program (AMCFP) - Innovative Financing Schemes (IFS)• Agri-Fishery Microfinance Program (AFMP)• Fisheries Financing Program (FFP)• Cooperative Banks Agri-Lending Program (CBAP)• Agri-Fishery Microfinance Program with PCFC• AMCFP for Tobacco Farmers• AMCFP for Tomato Growers

II. Direct Market Linkage Development (DMLD) Program

ACPC CURRENT PROGRAMSACPC CURRENT PROGRAMS

III. Institutional Capacity Building (ICB) Program

IV. Collection/Consolidation of DCP Funds into the AMCFP

V. Policy Research, Planning, Monitoring & Advocacy Services

Status of ACPC Programs Status of ACPC Programs As of 1As of 1stst Semester 2010 Semester 2010

Program Amount Released (PhP Million)

No. of Farmer Beneficiaries

1. Agri-Fishery Microfinance Program (AFMP)

22.0 2,416

2. Agri-Microfinance Program (AMP) for Small Farmers and Fisherfolk thru PCFC

129.0 12,056

3. Fisheries Financing Program (FFP)

3.5 222

4. Cooperative Bank Agri-Lending Program (CBAP)

2,048.4 32,393

A. AMCFP ProgramsA. AMCFP Programs

Status of ACPC ProgramsStatus of ACPC Programs

Program Amount Released (PhP Million)

No. of Farmer Beneficiaries

5. AMCFP for Tobacco Farmers 53.6 5,920

6. AMCFP for Tomato Growers 103.1 5,702

Total 2,359.6 58,709

A. AMCFP Programs (Con’t..)A. AMCFP Programs (Con’t..)


B. Direct Market Linkage Development Program (DMLDP)B. Direct Market Linkage Development Program (DMLDP)

As of end of August 2010, a total of P32.8 million has been released under the DMLD Program. These were used to finance marketing activities of 6 farmer organizations, individual farmers and traders in barangay food terminals and bagsakan centers

C. Institutional Capacity Building ActivitiesC. Institutional Capacity Building Activities

Since 2001, about 4,705 farmer cooperatives and organizations with 47,379 officers and members took part in 1,180 capacity building programs and activities (.e.g. training, coaching, technical assistance, business development and management) undertaken by ACPC, jointly with partner training institutions

D. Status of Collection and Consolidation of DCP D. Status of Collection and Consolidation of DCP Funds into the AMCFP Funds into the AMCFP

To sustain funding for AMCFP projects, the ACPC collects payments for past due loans released under more than 40 phased-out directed credit programs (DCPs) of various agencies of the DA whose funds had been consolidated into the AMCFP.

As of August 2010, almost P1.3 billion out of a total P6.5 billion loans granted by DCPs have been collected and deposited into the AMCFP Fund.

From AMCFP on-going programs, on the other hand, P908.6 million have been collected as of August 2010.


E. Policy Research, Planning, Monitoring and AdvocacyE. Policy Research, Planning, Monitoring and Advocacy

Since 1987, ACPC completed nearly 100 research studies on rural finance and agricultural credit

Advocacy of credit policy reforms in the Agriculture and Fisheries Modernization Act (AFMA) or RA 8435

Formulation of the AMCFP design and guidelines Preparation of the guidelines on the transfer of government

agri-credit funds into the AMCFP (DA-DOF-DBM Joint Circular No. 1, Series of 2003)

Crafting of guidelines on the extension of loan grace periods for long-gestating agriculture and fisheries projects (BSP Circular 217)


E. Policy Research, Planning, Monitoring and Advocacy E. Policy Research, Planning, Monitoring and Advocacy (Con’t…)(Con’t…)

Participation in the crafting of various proposed legislations relevant to rural finance, i.e. proposed legislation to make agricultural lands acceptable as loan collateral; proposed amendments to the Agri-Agra Law, etc.

Establishment of a Credit, Insurance, Guarantee and Investment (CIGI) Cluster in the Department of Agriculture

Small Farmer and Fisherfolk Credit Access Survey

Monitoring Reports on Bank Lending to Agriculture and Compliance to Agri-Agra Law


E. Policy Research, Planning, Monitoring and Advocacy E. Policy Research, Planning, Monitoring and Advocacy (Con’t…)(Con’t…)

Recent Activities

Participation in the crafting of the IRR of the Agri-Agra Credit Reform Act of 2009 or RA 10000

Formulation of activities and strategies for the National Agri-Fishery Council TWC on Credit, Guarantee and Insurance in view of the extension of AFMA until 2015

Profiling and Estimation of the Credit Demand of Small Farmers and Fisherfolk

Credit in the Supply and Value Chain of Priority Agriculture and Fishery Commodities

Review of ACPC Programs (on-going)


Part 2: Part 2: A Situationer on the Agricultural Credit,

Guarantee and Insurance Cluster

Creation of the National Agriculture and Fishery (NAF) Council Technical Working Committees (TWC), one of which is the TWC on Credit, Guarantee and Insurance (or the TWC on Credit)

DA Special Order No. 143 (August 2009)

Composition of TWC on Credit

Government Agencies

1. Agricultural Credit Policy Council (ACPC) – ED Jovita M. Corpuz, Chair

2. Land Bank of the Philippines (LBP) – EVP Wilfredo C. Maldia, Co-chair

3. Philippine Crop Insurance Corporation (PCIC) - Atty. Jovy C. Bernabe

4. Quedan and Rural Credit Guarantee Corporation (Quedancor) – Pres. Federico A. Espiritu

5. National Credit Council (NCC) – Dir. Joselito S. Almario

6. Development Bank of the Philippines (DBP) – Pres. Reynaldo David

7. Bangko Sentral ng Pilipinas (BSP) – Asst. Gov. Corazon Guerrero

Composition of TWC on Credit

Private Sector

1. Regional Agriculture and Fishery Council (RAFC) – Mr. Jesus Simon, Vice Chair

2. Rural Bankers Association of the Philippines (RBAP) – Mr. Omar O. Andaya

3. Cooperative Union of the Philippines (CUP) – Mr. Felix Borja

4. National Steering Committee on Agri-Farm Mechanization (NSC-AFMech) – Mr. George Canapi

Functions of the TWC on Credit

• Identify /prioritize critical problems, issues and concerns to be acted upon by the NAF Council;

• Identify and evaluate options available and recommend the best option to the NAF Council and Steering Committee; and

• Review and participate in the formulation of the Agriculture and Fisheries Modernization Plan (AFMP) 2010-2015.

Technical Working Group (TWG) on Credit,

Guarantee and Insurance• composed of one representative each from the member institutions of the TWC

Functions: • Assist in the formulation of the strategic plan on

credit, insurance and guarantee;

• Formulate the AFMA operational plan and budget for credit, insurance and guarantee; and

• Perform other functions assigned by the TWC.

PRIORITY CONCERNS OF THE CLUSTER

1. Limited loan exposure of banks to the agriculture and fisheries sector

2. Inadequate risk-mitigating instruments, i.e., guarantee and insurance

3. Limited participation of banks and other type of FIs in the use of microfinance technology for agriculture and fisheries

4. Inadequate value chain financing (production, post-production, marketing, distribution – ‘production to consumption’)

1. Limited loan exposure of banks to the agriculture and fisheries sector

Quedancor PCIC Implementation of the expanded insurance and guarantee programs

Quedancor PCIC Secure necessary government clearances and get appropriation

PCICDevelop expanded insurance program

QuedancorDevelop expanded guarantee program

ACPCDetermine credit, guarantee and insurance requirements

ACPCEstablish database needed to estimate credit requirements

1.1.1 Credit guarantee program covering 85% of all risks, except fraud

1.1.2 Expansion of crop insurance coverage to include all agri-fishery commodities

1.1 Lack of acceptable collateral esp. of small farmers and fisherfolk

Lead AgencyAction PlanStrategiesAreas of Concern

1. Limited loan exposure of banks to agriculture and fisheries sector

LBP, ACPC,PCIC, Quedancor

1.1.4 Strengthen farmers’ organizations

ACPCReview the quedan system1.1.3 Revive quedan receipts as collateral

1.1 Lack of acceptable collateral esp. of small farmers and fisherfolk


Implementation of programs

PCIC, QuedancorSecure necessary government clearances and get appropriation

PCICDevelop expanded insurance program

QuedancorDevelop expanded guarantee program

ACPCDetermine credit, guarantee and insurance requirements

ACPCEstablish database needed to estimate credit requirements

1.2.1 Credit guarantee program covering 85% of all risks, except fraud

1.2.2 Expansion of crop insurance coverage to include all agri-fishery commodities

1.2 Systemic risks arising from natural calamities, pests and diseases

PCIC, Quedancor

1. Limited loan exposure of banks to agriculture and fisheries sector

DA, PCICLobby for the release of appropriation

1.2.3 Increase government subsidy on premiums for the expansion of insurance coverage to include all agri-fishery commodities

1.2 Systemic risks arising from natural calamities, and pests and diseases

2. Inadequate risk-mitigating instruments, i.e., guarantee and insurance

DA, PCIC Lobby for the appropriation of government funds for fisheries insurance

2.3.1 Allocate government funds for fisheries insurance

2.3 Lack of fisheries insurance funds

DA, PCIC Lobby for the release of government’s share in the premium subsidy and increase the amount of subsidy

2.2.1 Increase government subsidy on premiums to expand insurance coverage to include all agri-fishery commodities

2.2 Inadequate agriculture insurance funds

DA, Quedancor

Lobby for increase in government appropriation for guarantee

2.1.1 Increase government budget on guarantee programs

2.1 Inadequate guarantee funds


3.2.1 Establish database on profile of end-borrowers of AMCFP, LBP, PCIC, Quedancor (similar to an agri-credit bureau)

3.2 High transactions cost


DA/AFMA, ACPCProvide funding for the database system

DA, ACPC, LBP, PCIC, Quedancor

Develop framework on end-borrower database

DA, ACPC, BSP, LBP

Conduct seminars, info campaign thru multi-media, market matching, road shows

3.1.1 Intensify conduct of information dissemination activities on agri-microfinance technologies

3.1 Inadequate information dissemination on existing agri-microfinance technologies



3.2 High transactions cost

DA, PCIC, LBP Quedancor

Encourage MFIs and other conduits to join the insurance and guarantee programs

3.3.1 Provide insurance protection and/or guarantee coverage for agri-microfinance

3.3 Very strict classification of portfolio at risk in microfinance

DA, ACPC, LBP,, PCIC, Quedancor

Develop standard MIS system for member institutions

3.2.3 MIS for each microfinance program

DA/AFMA, ACPCProvide more funds for ICB 3.2.2 Provide capacity building activities


Develop data sharing system/ credit rating system

DA, ACPC, LBP, PCIC, QuedancorPilot-test with selected

conduits/areas



DA, ACPCProvide funding for the database system

DA, ACPC, LBP, PCIC, Quedancor, PCFC

Develop framework on end-borrower database

3.5.1 Establish database on profile of end-borrowers of AMCFP, LBP, PCIC, Quedancor (similar to an agri-credit bureau)

3.5 Inadequate information on agricultural borrowers

ACPCConduct study3.4.2 Documentation of best practices

ACPC, LBPDevelop and pilot-test agri-microfinance schemes to showcase the viability of microfinance activities with insurance and guarantee components

3.4.1 Pilot more agri-microfinance schemes

3.4 Lack of appropriate microfinance technology for agri-fisheries



DA, ACPCProvide more funds for ICB 3.5.2 Conduct capacity building activities


Develop data sharing system/credit rating system

DA, ACPC, LBP, PCIC, QuedancorPilot-test with selected

conduits/areas3.5 Inadequate information on agricultural borrowers




Conduct credit market-matching activities nationwide

4.3 Continue credit market matching of FIs and farmers, and producers and buyers

DA, ACPCProvide more funds for ICB 4.2 Provide capacity building activities based on the needs of the players

DA, ACPCFunding support from DA and from the proceeds of 25% compliance with RA 10000

4.1 Make value chain financing available under the AMCFP



ACPC, LBPReplicate value chain financing modality4.6 Implement value chain financing program

ACPCConduct study4.5 Documentation of best practices

DA, ACPC, LBP

Develop and pilot-test agri-microfinance schemes to showcase the viability of microfinance activities with insurance & guarantee components. Linkage with other DA agencies

4.4 Pilot test value chain financing schemes


Thank You!Thank You!

Briefing for Sen. Francis N. Pangilinan Hampton Function Room, Astoria Plaza Ortigas Center, Pasig City September 3, 2010 Department of Agriculture Agricultural.

Documents

amcfp programs

amcfp slide

agricredit slide

acpc current programs

amcfp ongoing programs

programs republic

agricredit policy

program development