MANILA – A ranking official of the Bangko Sentral ng Pilipinas (BSP) stressed the importance of encouraging banks to extend financing to the agricultural sector to bolster efforts aimed at alleviating poverty.
In her speech during the Agriculture Value Chain (AVC) Forum held at the BSP main office in Manila LAST Friday, Deputy Governor Chuchi Fonacier said AVCs will open new doors to farmers wishing to boost their livelihood.
She said the agriculture sector’s access to finance is “severely limited,” partly because of the popular perception that extending loans to the sector is rather risky.
Thus, the central bank has put in place measures such as improving cost efficiency in the delivery of financial services through the use of digital technology, greater cooperation among national government agencies to strengthen financing for agriculture-related infrastructure through legislation and constant exploration and introduction of innovative financing models.
Fonacier, however, stressed that the government cannot do this task alone and needs the help of the private sector to ensure inclusive growth.
She said “poverty incidence in the country remains highest among farmers and fisherfolk, and our poorest households continue to depend mainly on agricultural income.”
“We cannot claim to achieve, let alone pursue, inclusive growth if they are neglected and left out,” she said, citing that government policies and initiatives “can only work if key industry players and various stakeholders step in and do their part.”
To date, agriculture accounts for about nine percent of domestic output while its share in total employment is about 27 percent, with about 11 million engaged in agricultural labor.
The BSP official said banks’ compliance to the Agri-Agra law continues to remain below the requirement and this is not because of lack of loanable fund.
“Perhaps at the root of the matter is the knowledge gap. If we are to bridge the financing gap, we need to start by bridging the knowledge gap,” she said.
“Opening the gates to agricultural financing will do more than just boost businesses. If accorded equal priority and sufficient resources, AVCs can have a dramatic, transformative effect for our smallholder farmers – better access to credit, technologies and methods, production standards and efficiency, and bigger and ready markets – that amount to an improved quality of life for them and their communities,” she added. (PNA/PN)
