Pangilinan wants crops as collateral for rice farmers

MANILA, Philippines — Sen. Francis Pangilinan said that farmers should be able to use their crops as loan collateral to help them sustain farm operations amid the deluge of cheap imported rice following the opening up of the industry.

Pangilinan said rice farmers believe that the Rice Tariffication Law has brought new problems because of the deluge of imported rice that is slowly killing them and the local rice industry.

“They need all the help they can get, such as subsidies and loans, so that they will keep on planting and harvesting and cultivating the country’s farm lands,” he said.

Pangilinan has filed Senate Bill 632 or the proposed Warehouse Receipts Act of 2019 to update the existing 107-year-old Warehouse Receipts Law.

A warehouse receipt is a commercial document evidencing ownership or possession of goods in a warehouse. It is covered by the Warehouse Receipts Law enacted in February 1912.

“The law, as it stands, does not allow farmers to use their crops as collaterals for taking a loan because banks are not able to verify the quantity and quality of crops by virtue of the existing warehouse receipts. This, among other modern and technological advances for transparency and efficiency, needs to be accounted for. Hence, we are pushing for this measure,” Pangilinan said.

Farmers are reeling from the effects of the liberalization where farmgate prices of palay are at least 17 percent lower than the 2018 price.

On average, traders are buying palay from farmers at P17.78 per kilogram, while the Department of Agriculture cites P14.10 per kilo in certain provinces.

Some farmers, however, said the price of palay has gone down to as low as P7 per kilo.

The proposed law seeks to modernize the warehouse receipts framework as reliable commercial and financial instruments to help boost trade, business and farm productivity.

An online warehouse receipts registry will be established, containing relevant information on warehouse receipts, warehouse operators, and warehouses.

Only registered and accredited warehouse operators operating registered and accredited warehouses will be able to input in the registry.

“This will be an instrument of transparency that will allow the public, banks, and other financial institutions to access relevant data for validation. Warehouse receipts can serve as evidence and farmers will now have a way to credibly prove their harvest thereby allowing them to secure loans,” Pangilinan said.

The bill also seeks to establish a Warehouse Accreditation Council and a warehouse receipts assurance fund as safeguards to the warehouse receipts framework.

The Warehouse Accreditation Council shall be composed of four permanent members including the chairperson of the Security and Exchange Commission and the secretaries of trade and industry, finance, and agriculture.

The remaining three members should be warehousing experts to be appointed by at least a majority of the permanent members. The council will be in charge of instituting and operationalizing a system of accreditation and registration for warehouse operators and warehouses, among others.

The proposed warehouse receipts assurance fund will cover losses involving warehouse receipts caused by registry-based failures.