Building a Reliable Local Agriculture Supply Chain
The Philippine Statistics Authority (PSA) reported that farmers and fishermen still count among the sectors with the highest poverty incidence in 2015. Farmers posted a 34.3% poverty incidence while fishermen posted 34.0%. These numbers are higher than the national average of 21.6%. Several initiatives have been conceived to address this and improve the income and well-being of these sectors, but they remain to be at the bottom of the country’s poverty incidence for the past years.
One initiative crafted to improve the plight of the agriculture sector is Republic Act 10000. Also known as the “The Agri-Agra Reform Credit Act of 2009” (“Agri-Agra Credit Act”), it provides that “(a)ll banking institutions, whether government or private, shall set aside at least twenty-five percent (25%) of their total loanable funds for agriculture and fisheries credit in general, of which at least ten percent (10%) of the loanable funds shall be made available for agrarian reform beneficiaries”. Getting access to credit should be able to help farmers.
There are some 10 million farmers in the country to date, all of whom should be embedded into a value chain where they will be linked to retailers and financial institutions. They can be issued purchase orders (POs) that banks can now honor as collaterals.
Furthermore, they can be more strategic on what crops they produce, when to plant and harvest them, how much to plant, and how much to sell. Farmers, financial institutions, and technology companies can be better able to determine the amount to be lent, the mechanism of lending, and what equipment and inputs to buy or borrow. This would create a more robust agricultural system where farmers are able to readily access financing, increase productivity and income, and reduce food wastage.
Supermarket chains and retailers will be encouraged to have preferential option for smallholder farmers. This will generate purchase orders between farmers and retailers. Farmers will then be linked to financial institutions that may provide them with credit.
Organizations will be engaged to capacitate, help certify farmers, and create market studies that will inform farmers on the type, amount, and quality of marketable crops.
Portion of the penalty collected from noncompliant and under compliant banks FBF will fund capacity building activities for farmers and will provide a seed capital for the first cropping cycle.
Compensation for Ecosystem Services Value Improvement (CESVI) Policy
Ecosystems provide communities and businesses a broad range of essential natural capital for the survival and continuation of human life and the continuity of businesses. These ecosystem services include provision of freshwater, food, fuel, and timber; protection from landslides and storm surges; absorbing greenhouse gases and pollutants; as well as supporting culture and recreation.
These are but a few examples of the value that ecosystems provide. However, despite their inherent worth, ecosystems have been overexploited and degraded, poorly treated as a public good and inevitably subjected to the tragedy of the commons. In response, both public and private organizations have taken steps to protect, preserve, and even enhance ecosystems and the services that they have. Non-traditional market-based instruments such as Payment for Ecosystem Services (PES) which follows the “beneficiary pays principle” have also been adopted.
To continuously strive for environmental sustainability in the Philippines, the proposed solution to improve PES models and increase private sector participation in ecosystem conservation and restoration is a results-based, fund-pooling and mixed-financing mechanism involving private companies, national government agencies (NGAs), local government units (LGUs), as well as multilateral development organizations.
Private companies benefitting from ecosystem services are required to pay a fee (based on “beneficiary pays” principle). Other institutions can donate or allot funds to the funding pool, instead of using them for individual projects which have small-scale impact. Only companies that show proof of improvement of the ecosystem service value will be compensated.
Policy Amendment to Agri-Agra IRR
R.A. 10000, known as the “The Agri-Agra Reform Credit Act of 2009,” provides that “(a)ll banking institutions, whether government or private, shall set aside at least twenty-five percent (25%) of their total loanable funds for agriculture and fisheries credit in general, of which at least ten percent (10%) of the loanable funds shall be made available for agrarian reform beneficiaries."
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