DA-ACPC turns over P40 M to Postbank
The crop insurance arm of the Department of Agriculture ( DA) has turned over P40 million to the Philippine Postal Savings Bank Inc (Postbank) to provide a credit line to small farmers who already have market tie ups with traders and end users of their products.
The DA- Agricultural Credit Policy Council (DA-ACPC) would be implementing the Value Chain Financing Program (VCFP) component of the Agriculture and Fisheries Financing Program (AFFP).
The VCFP is a financing program that lowers credit risk by ensuring that producers seeking financing are already active contributors to the operation of value chains in the agriculture sector.
The AFFP, in turn, is one of the programs under DA’s umbrella credit program for farm and fisheries, the AgroIndustry Modernization Credit and Financing Program (AMCFP).
The VCFP can be accessed by farmers participating in a value chain or those who already have linkages with traders.
“The value chain approach capitalizes on existing linkages between farmer-producers and buyers to lessen the credit risk. The value chain approach in agricultural financing is recognized globally as one of the financing schemes that have a potential for promoting inclusive growth in rural areas,” said the ACPC.
Postbank would provide counterpart funding to the initial P40 million from ACPC. Farmers listed in the Registry System for Basic Sectors in Agriculture and have market tieups with buyers can easily access financing.
“With improved credit access, the program hopes to enhance farmers’ production capacities, productivity and incomes. The program is also intended to contribute to the national government’s goal of promoting inclusive growth,” ACPC said.
Postbank was selected to be the program partner for the value chain financing program because it is already implementing a similar program for corn producers. It provides financing support to corn farmers engaged in production, processing, bulk handling and marketing.
The value chain financing program would initially be implemented in Bukidnon and Zamboanga del Norte. Other provinces may be covered subject to evaluation by the DA.
This would cover crops such as corn, cassava, rubber, banana and cacao.
Postbank is a government-owned thrift bank created to encourage savings and provide credit access to unbanked sectors of the country.