Warehouse Receipt Law seen to boost agriculture

MANILA, Philippines — Sen. Sherwin Gatchalian is pushing for the passage of a measure that will revitalize and overhaul the more than a century old warehouse receipt system of the Philippines to help boost farmers’ productivity over the long-term.

Gatchalian said the Philippine Warehouse Receipts Act of 2019 or Senate Bill 2171 is a “win-win for farmers and consumers” since it is expected to improve the country’s agricultural productivity and food security, while improving farmers’ margins in the long run.

SB 2171 provides for the creation of an online and uniform registry system where all electronic warehouse receipts can be registered and accessed. The Securities and Exchange Commission will be tasked to create and maintain the registry.

“The aim of the bill is to revitalize and overhaul the warehouse receipt system of the Philippines. Primarily, this will be done through the establishment of an online centralized registry of warehouse operators and warehouse receipts,” Gatchalian said.

“Put very simply, we will be giving farmers the financial tools they need to produce more crops at lower prices. This will eventually result in a greater stock of food at lower prices in markets across the Philippines,” he said.

The bill also establishes a warehousing accreditation council, which shall institutionalize and operationalize a system of accreditation for warehouses and warehouse operators.

A warehouse relief assurance fund will also be established to cover for losses involving warehouse receipts stemming from registry-based failures, including but not limited to the irretrievable destruction of the registry.

Gatchalian recalled that the Warehouse Receipts Law of 1912 was passed more than a century ago in order to help farmers and other agricultural workers to obtain credit by storing their goods in a warehouse in exchange for a warehouse receipt, which could then be traded.

The archaic provisions of the 107-year-old law, however, have hindered farmers from taking advantage of modern technological advances which could help leverage their warehouse receipts as more potent commercial and financial instruments.

He also lamented that despite being a central pillar of the Philippine economy, agriculture only accounts for less than one  percent of the  total credit.

Gatchalian said this was a clear indication that warehouse receipts issued to farmers were not collateralized to their full potential because of a lack of transparency and efficiency in the system, which resulted in a lack of confidence on the part of financial institutions in the viability of warehouse receipts as sound financial paper.

With SB 2171, Gatchalian expressed optimism that a more secure and transparent framework for the trading of warehouse receipts would   encourage banks to accept farmers’ warehouse receipts as collateral for loans.