Finance Secretary Carlos Dominguez III has called on the rural banking sector to play a proactive role in transforming Philippine agriculture into a modern, high-growth sector that will help provide the economy with a strong base to launch a quick recovery from the impact of the COVID-19 pandemic.

Dominguez said a robust rural banking system is necessary to provide financing support to investments in farm and logistical systems and other initiatives that will modernize Philippine agriculture.

Fast-tracking the modernization of the agriculture sector will enhance the food and nutrition security of Filipinos, boost rural incomes, and help power the recovery of the economy from the COVID-19 crisis, Dominguez said.

“We need to invest in our farm and logistical systems as quickly as possible. Demand for food is inelastic. By building a modern agriculture, we can expand market access for food producers while keeping food supply available and prices affordable,” said Dominguez in his pre-recorded video message to participants at the virtual symposium organized by the Rural Bankers’ Association of the Philippines (RBAP) to mark its 63rd charter anniversary.

“All these will require financing support that our rural bankers are best poised to deliver. I ask our rural bankers to play a proactive role in this area,” he added.

Having overseen the rehabilitation of rural banks in the past, Dominguez said he is certain that the rural banking sector “is capable of remarkable turnarounds.”

Dominguez, who had served as agriculture secretary during the administration of the late President Corazon Aquino, commended rural banks for performing their tasks in keeping the agriculture sector afloat during the coronavirus-induced crisis.

He said programs have been set in place under the Bayanihan To Recover As One Act (Bayanihan 2) to encourage investments in the agriculture sector and expand the capacity of rural banks to extend credit to more borrowers, Dominguez said.

These include increasing the capital of government financial institutions (GFIs) to enable them to serve as wholesale banks and rediscounting agents for small and medium-sized banks and microfinance institutions, which rural banks can tap to increase their lending capacity.

Dominguez said President Duterte has also certified the Financial Institutions Strategic Transfer Act (FIST) bill as an urgent measure to allow banks to dispose of non-performing loans and assets through asset management companies so that they can provide more credit to more sectors in need.

“With a robust rural banking system, we can transform Philippine agriculture into a dynamic, high-growth sector. Together, we can build a stronger, more resilient and inclusive national economy,” Dominguez said.

He noted that when the rest of the economy contracted as a result of the lockdowns imposed by the national and local governments last summer to save lives and protect communities from the pandemic, the agriculture sector even grew in the second quarter.

Data from the Philippine Statistics Authority (PSA) show that among the major economic sectors, only agriculture registered growth in the second quarter at 1.6 percent. Industry and services shrank by 22.9 percent and 15.8 percent, respectively.

Dominguez said agriculture’s growth amid the pandemic was not accidental, given that over the past four years, the Duterte administration has introduced game-changing reforms that boosted productivity and enhanced this sector’s resiliency.

The passage and implementation of the Rice Tariffication Law (RTL), for one, enabled the government to establish the Rice Competitiveness Enhancement Fund (RCEF) that aims to improve the efficiency of ricelands and encourage agriculture-related manufacturing to flourish, he said.

Under Republic Act (RA) No. 11203 or the RTL, the P10 billion earmarked yearly for the RCEF is sourced from the collection of tariffs on rice imports by private traders.

The RCEF is used to finance programs that will sharpen the competitiveness of palay growers by way of providing them access to farm machinery and equipment, high-yield seeds, cheap credit and skills training programs on farm mechanization and modern farming techniques.

The annual tariff revenues in excess of P10 billion shall be earmarked by the Congress–and included in the national budget of the following year–for financial assistance to palay farmers, titling of agricultural lands, an expanded crop insurance program on rice, and crop diversification.

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