Structural reforms needed for agricultural sector

MANILA, Philippines — Structural reforms are needed to help raise the bar for the country’s agricultural labor productivity and gross value added growth amid the COVID-19 pandemic, according to a private sector representative in the policy-making body of the Bangko Sentral ng Pilipinas (BSP).

Monetary Board member Bruce Tolentino said the reforms would help remedy the plight of farmers and fishers as poverty remains the highest among basic sectors.

“What we need are structural reforms. What we need are not short-term solutions. What we need are major solutions for these issues,” Tolentino said.

During the National Food Security Summit 2021, Tolentino stressed the need to raise the investment in public goods, which increases agri-fishery productivity, and implement key policy reforms to eradicate anti-agriculture bias of appropriations, over-regulation and monopolies in order to enable more farmers to maximize their profits.

He said a higher investment in public goods —which raises agri-fishery productivity, including science and technology—effective extension, efficient irrigation, and marketing infrastructure, not only raise the yield of farmers, but also allow them to sell their products at a low marketing cost.

Tolentino, former undersecretary at the Department of Agriculture, also pushed the proposed amendments to Republic Act 10000 or the Agri-Agra Reform Credit Act of 2009 to encourage the banking sector to finance agriculture by improving the creditworthiness of farmers and viability of agricultural projects.

He said the Monetary Board is proposing the broadening of eligible activities for agricultural financing, adjusting the credit requirement by removing the distinction between the 15 percent agri and 10 percent agra reform credit, providing a sunset provision of 10 years from the approval, and providing a five-year grace period for non- or under-compliance of newly established banks.

Tolentino also proposed the creation of a special fund to finance activities devoted to improving capacity of rural agri cooperatives and organizations, and an oversight council to manage the fund.

According to Tolentino, amendments have been made to the implementing rules and regulations, including the deletion of accreditation requirement for debt securities, allowing shares of stock in companies engaged in agri activities, and expanding modes of compliance to cover financing to members of an agrarian reform beneficiary (ARB) household while the amendments to the law have yet to be completed.

He also mentioned financing activities that benefit agrarian reform communities and emphasizing special lending arrangements for agribusiness enterprises with qualified agricultural borrowers, agricultural value chain financing (VCF), and palay housing and farming homestead.

Tolentino also said that the financial sector must be made more resilient, especially in the context of this pandemic.