Pangilinan: Allow farmers to use crops as loan collateral

MANILA – Senator Francis “Kiko” Pangilinan said farmers should be able to use their crops as loan collateral to help them sustain farm operations, especially amid the onslaught of imported rice brought about by the Rice Tariffication law.

Naniniwala ang ating mga magpapapalay na panibagong paghihirap ang dala nitong Rice Tariffication Law dahil dinelubyo sila ng imported rice na unti-unting pumapatay sa kanila at sa local rice industry (Our rice farmers believe that the Rice Tariffication Law brings new suffering because of the deluge of imported rice that is slowly killing them and the local rice industry),” Pangilinan said, citing the farmers’ comments at the September 3 Senate hearing.

“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,” said the former secretary on food security.

In filing Senate Bill 632 or the proposed Warehouse Receipts Act of 2019, Pangilinan said the 107-year-old Warehouse Receipts law will be updated to allow this.

A warehouse receipt, according to the bill’s explanatory note, is a commercial document evidencing ownership or possession of goods in a warehouse. It is covered under Act No. 2137, or the Warehouse Receipts Law, which was enacted on 5 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 Rice Tariffication Act where farm-gate prices of palay are at least 17% lower than its 2018 price.

According to the Philippine Statistics Authority, traders are buying palay from farmers at P17.78 per kilo while the Department of Agriculture cites P14.10 per kilo in certain provinces — 34% lower than 2018 prices.

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

SBN 632 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, the Secretary of Trade and Industry, the Secretary of Finance, and the Secretary of 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.

“While this measure will also benefit other industries, we certainly hope that it will further improve the agriculture sector. We hope that farmers will be given more financing options to help improve their yield or for other emergency purposes. We reiterate that progress in the agriculture sector must be measured in the improvement in the lives of farmers,” Pangilinan said.

“We must do everything within our power to empower the farmer,” he said.

Pangilinan recently filed a joint resolution calling for farmers to be directly given emergency cash assistance from the P13 billion collected tariffs and unprogrammed funds under the Rice Tariffication Act. He is also the author of the Sagip Saka Act of 2019 which aims to increase farmer’s incomes by giving farmers direct access to the market.