The Market Monitor Minding the Nation's Business
The Bangko Sentral ng Pilipinas (BSP) has approved the establishment of the agricultural value-chain financing framework to uplift the agriculture and fisheries sector.
The central bank’s policy-making Monetary Board approved the adoption of the framework during its meeting on Feb. 24.
Citing the 10-percent contribution of the agriculture sector on the domestic economy’s annual output and the employment of about 11.2 million Filipinos, the BSP said the framework will address the issue of lack of financing access among farmers and fisherfolk.
“In general, the sector is considered a high-risk market, due to its inherent susceptibility to weather conditions, flooding, pest infestations, and man-made calamities, among others,” the central bank said.
With the framework, farmers and fisherfolk will now have easy access to financing through the whole value chain, which includes all the participants when the products are still on its raw stage, until these are brought to the consumers.
“Participation in the value chain allows farmers to leverage on effective farming technologies and methods, access to formal financing, and sustainable market demand,” the BSP said.
It also said the framework has minimum prudential expectations, which include the need for adequate policies and procedures on the analysis of the value chain, availability of appropriate products, utilization of innovative disbursement schemes, and adoption of an anchor-firm triggered loan release.
The circular released by the BSP also allows banks to set up a disaster contingency mechanism that requires the adoption of risk mitigants to lessen losses and provide relief for recovery among borrowers.
Incentives will be given to banks that will heed the regulatory expectations, the BSP said.
“The BSP hopes that the issuance will provide the necessary guidance for banks to be able to serve the needs of the agriculture and fisheries sector, specifically the small holders, in a manner that is viable and sustainable,” it added.