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Department of Agriculture Agricultural Credit Policy Council. Briefing for Sen. Francis N. Pangilinan Hampton Function Room, Astoria Plaza Ortigas Center, Pasig City September 3, 2010. Outline of Presentation Part 1:ACPC Thrusts and Programs

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Department of agriculture agricultural credit policy council

Department of Agriculture

Agricultural Credit Policy Council

Briefing for Sen. Francis N. PangilinanHampton Function Room, Astoria Plaza Ortigas Center, Pasig City September 3, 2010


Department of agriculture agricultural credit policy council

Outline of Presentation

Part 1:ACPC Thrusts and Programs

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


Department of agriculture agricultural credit policy council

Part 1: ACPC Thrusts and

Programs


Department of agriculture agricultural credit policy council

VISION

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.

MISSION

Develop and advocate agri-credit policies and

Orchestrate programs that promote farmers’ and fisherfolk’s access to sustained financial services.


Department of agriculture agricultural credit policy council

MANDATES

Executive Order 113 (1986)

  • 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


Department of agriculture agricultural credit policy council

MANDATES

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

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

  • Oversee the implementation of the AMCFP


Department of agriculture agricultural credit policy council

Current Policies in Agri-Credit

  • 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) –


Department of agriculture agricultural credit policy council

ACPC KEY RESULT AREAS

  • 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


Department of agriculture agricultural credit policy council

ACPC 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 programs

ACPC 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 as of 1 st semester 2010

Status of ACPC Programs As of 1st Semester 2010

A. AMCFP Programs


Status of acpc programs

Status of ACPC Programs

A. AMCFP Programs (Con’t..)


Status of acpc programs1

Status of ACPC Programs

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

B. Direct Market Linkage Development Program (DMLDP)

C. 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 funds into the amcfp

D. Status of Collection and Consolidation of DCP 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.

Status of ACPC Programs


E policy research planning monitoring and advocacy

E. 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)

Status of ACPC Programs


E policy research planning monitoring and advocacy con t

E. Policy Research, Planning, Monitoring and Advocacy (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

Status of ACPC Programs


E policy research planning monitoring and advocacy con t1

E. Policy Research, Planning, Monitoring and Advocacy (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)

Status of ACPC Programs


Part 2 a situationer on the agricultural credit guarantee and insurance cluster

Part 2: A Situationer on the Agricultural Credit, Guarantee and Insurance Cluster


Department of agriculture agricultural credit policy council

DA Special Order No. 143(August 2009)

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)


Composition of twc on credit

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 credit1

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

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

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.


Department of agriculture agricultural credit policy council

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’)


Department of agriculture agricultural credit policy council

Lead Agency

Areas of Concern

Strategies

Action Plan

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

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

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

Establish database needed to estimate credit requirements

ACPC

Determine credit, guarantee and insurance requirements

ACPC

Develop expanded guarantee program

Quedancor

Develop expanded insurance program

PCIC

Secure necessary government clearances and get appropriation

Quedancor PCIC

Implementation of the expanded insurance and guarantee programs

Quedancor PCIC


Department of agriculture agricultural credit policy council

Lead Agency

Areas of Concern

Strategies

Action Plan

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

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

1.1.3 Revive quedan receipts as collateral

Review the quedan system

ACPC

1.1.4 Strengthen farmers’ organizations

LBP, ACPC,

PCIC, Quedancor

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

Establish database needed to estimate credit requirements

1.2 Systemic risks arising from natural calamities, pests and diseases

ACPC

Determine credit, guarantee and insurance requirements

ACPC

Quedancor

Develop expanded guarantee program

Develop expanded insurance program

PCIC

PCIC, Quedancor

Secure necessary government clearances and get appropriation

PCIC, Quedancor

Implementation of programs


Department of agriculture agricultural credit policy council

Lead Agency

Areas of Concern

Strategies

Action Plan

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

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

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

Lobby for the release of appropriation

DA, PCIC

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

2.1 Inadequate guarantee funds

2.1.1 Increase government budget on guarantee programs

Lobby for increase in government appropriation for guarantee

DA,

Quedancor

2.2 Inadequate agriculture insurance funds

DA, PCIC

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

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

2.3.1 Allocate government funds for fisheries

insurance

Lobby for the appropriation of government funds for fisheries

insurance

DA, PCIC

2.3 Lack of

fisheries

insurance funds


Department of agriculture agricultural credit policy council

Lead Agency

Areas of Concern

Strategies

Action Plan

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

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

DA, ACPC, BSP, LBP

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

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

DA, ACPC, LBP, PCIC, Quedancor

Develop framework on end-borrower database

Provide funding for the database system

DA/AFMA, ACPC


Department of agriculture agricultural credit policy council

Lead Agency

Areas of Concern

Strategies

Action Plan

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

DA, ACPC, LBP, PCIC, Quedancor

Pilot-test with selected conduits/areas

3.2 High transactions cost

Develop data sharing system/ credit rating system

DA, ACPC, LBP, PCIC, Quedancor

3.2.2 Provide capacity building activities

Provide more funds for ICB

DA/AFMA, ACPC

Develop standard MIS system for member institutions

3.2.3 MIS for each microfinance program

DA, ACPC, LBP,, PCIC, Quedancor

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

3.3 Very strict classification of portfolio at risk in microfinance

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

DA, PCIC, LBP Quedancor


Department of agriculture agricultural credit policy council

Lead Agency

Areas of Concern

Strategies

Action Plan

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

ACPC, LBP

3.4 Lack of appropriate microfinance technology for agri-fisheries

3.4.1 Pilot more agri-microfinance schemes

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

Conduct study

3.4.2 Documentation of best practices

ACPC

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

Develop framework on end-borrower database

DA, ACPC, LBP, PCIC, Quedancor, PCFC

Provide funding for the database system

DA, ACPC


Department of agriculture agricultural credit policy council

Lead Agency

Areas of Concern

Strategies

Action Plan

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

DA, ACPC, LBP, PCIC, Quedancor

3.5 Inadequate information on agricultural borrowers

Pilot-test with selected conduits/areas

Develop data sharing system/credit rating system

DA, ACPC, LBP, PCIC, Quedancor

3.5.2 Conduct capacity building activities

Provide more funds for ICB

DA, ACPC


Department of agriculture agricultural credit policy council

Lead Agency

Areas of Concern

Strategies

Action Plan

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

4.1 Make value chain financing available under the AMCFP

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

DA, ACPC

4.2 Provide capacity building activities based on the needs of the players

Provide more funds for ICB

DA, ACPC

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

Conduct credit market-matching activities nationwide

DA, ACPC, LBP, PCIC, Quedancor


Department of agriculture agricultural credit policy council

Lead Agency

Areas of Concern

Strategies

Action Plan

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

4.4 Pilot test value chain financing schemes

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

DA, ACPC, LBP

4.5 Documentation of best practices

Conduct study

ACPC

4.6 Implement value chain financing program

Replicate value chain financing modality

ACPC, LBP


Department of agriculture agricultural credit policy council

Thank You!


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