DA moves to replace subsidies with financing
Published Apr 23, 2018 12:00 am
By Madelaine B. Miraflor
Agriculture Secretary Emmanuel Piñol wants the Department of Agriculture (DA) to do away with subsidies — because it "bleed the government dry" — and focus more on financing, a move that will be formalized by policies that the food agency will start working on this week.
Piñol said that this week, a committee in the DA will convene to conduct a thorough study as they draft the policies and guidelines that will facilitate the shifting of the agency's agriculture and fisheries support program from subsidy to easy access financing.
Emmanuel Piñol
This, so that by next year, the DA will no longer have to grant subsidies and would instead continue with its low-interest financing program.
"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," Piñol said.
"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," he added.
The DA chief explained that this move follows the approval by President Rodrigo Duterte of his 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.
Piñol was referring to anomalies such as the Fertilizer Scam, which was a controversy involving accusations that Agriculture Undersecretary Jocelyn Bolante diverted P728 million in fertilizer funds to the 2004 election campaign of President Gloria Macapagal-Arroyo.
"Government procurement process for seeds, fertilizers, farm machinery and equipment and post-harvest facilities for the fisheries sector is slow and prone to corruption," Piñol said.
The subsidy program, according to him, 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".
It was as early as March when Piñol began lobbying to Duterte to exempt the government's procurement of seeds from the Procurement Law so it longer has to undergo public bidding.
He then argued that 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.
The 'lowest bidder rule' in government procurement, which results in the procurement of low-quality equipment, also prevents agriculture stakeholders from choosing the best seeds or equipment for them, he said.
A low-interest, easy access financing program, on the other hand, will pave the way for 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.
The financing will be implemented by the DA through its financing arm, the Agriculture Credit Policy Council (ACPC).
" will reduce political interference and corruption in the bidding and procurement process; It will instill 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; 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," Piñol further said.
Initial reports from ACPC, through the Program for Unified Lending in Agriculture (PUNLA) and the Production Loan Easy Access (PLEA), showed repayment rates of 100 percent by vegetable farmers of Cordillera and 96 percent nationwide.
Meanwhile, 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 farm associations and cooperatives to borrow huge amounts without collateral for the purchase of tractors, harvesters, ice plants and cold storage at 2 percent interest per year payable in eight years.
Emmanuel Piñol
This, so that by next year, the DA will no longer have to grant subsidies and would instead continue with its low-interest financing program.
"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," Piñol said.
"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," he added.
The DA chief explained that this move follows the approval by President Rodrigo Duterte of his 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.
Piñol was referring to anomalies such as the Fertilizer Scam, which was a controversy involving accusations that Agriculture Undersecretary Jocelyn Bolante diverted P728 million in fertilizer funds to the 2004 election campaign of President Gloria Macapagal-Arroyo.
"Government procurement process for seeds, fertilizers, farm machinery and equipment and post-harvest facilities for the fisheries sector is slow and prone to corruption," Piñol said.
The subsidy program, according to him, 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".
It was as early as March when Piñol began lobbying to Duterte to exempt the government's procurement of seeds from the Procurement Law so it longer has to undergo public bidding.
He then argued that 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.
The 'lowest bidder rule' in government procurement, which results in the procurement of low-quality equipment, also prevents agriculture stakeholders from choosing the best seeds or equipment for them, he said.
A low-interest, easy access financing program, on the other hand, will pave the way for 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.
The financing will be implemented by the DA through its financing arm, the Agriculture Credit Policy Council (ACPC).
" will reduce political interference and corruption in the bidding and procurement process; It will instill 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; 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," Piñol further said.
Initial reports from ACPC, through the Program for Unified Lending in Agriculture (PUNLA) and the Production Loan Easy Access (PLEA), showed repayment rates of 100 percent by vegetable farmers of Cordillera and 96 percent nationwide.
Meanwhile, 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 farm associations and cooperatives to borrow huge amounts without collateral for the purchase of tractors, harvesters, ice plants and cold storage at 2 percent interest per year payable in eight years.