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Mr. Millionaire goes to a bank to bankroll an expansion plan. He is
met by fawning bank employees and is escorted, without much ado,
into the office of the bank manager, who likewise curtsies as he
greets Mr. Millionaire. He is served freshly-brewed coffee.
Mr. Millionaire states the amount he wants to
borrow. All papers are prepared for his signature. He is given a
lower-than-market rate, the lowest that the bank can give.
Millionaires are preferred clients at banks. The collateral
requirement is almost an afterthought.
Farmer Juan goes to a bank to borrow a pittance:
to buy two 50-kilo sacks of hybrid seeds from a local producer plus
an extra for a sack of Urea fertilizer and another sack of the
Triple 14 brand. The guard eyes him like he was an ex-con. He waits
for hours to get the attention of the lowliest bank employee from
the loans department. Finally, he is rudely asked by an imperious
bank clerk to state his case.
For the P10,000 that he wants to borrow, he is
asked to back the loan with collateral double the amount of what he
intends to borrow. After that, he is made to sign papers that he
could barely read.
The interest charge on the P10,000
highly-collateralized loan? Over 20 percent a year with compounding
charges.
It is different in Thailand, which is now
selling the bulk of the rice moving across Asia and the other
rice-short countries. (Spot prices have surged to an unheard-of
price of $1,000 per metric ton.)
For their production expenses, Thai rice farmers
are charged a premium rate, which in banking parlance means the
softest rate, anywhere from 6 to 12 percent per annum with no
add-on.
Plus, they get all the support they need from
the state: adequate irrigation, technical and extension support,
marketing assistance, etc. They are treated as decent citizens, not
like lepers or ex-convicts. Thaksin treated them as heroes.
I presented the contrasting treatment because
the failure of our country to produce the 18 million or so metric
tons needed yearly to feed our people (and the dumbos in government
cannot get it) is rooted on two things and two things only:
government neglect and the anti-farm bias of the banking sector.
Under the Agri-Agra Law, the banking sector is
mandated to lend out 25 percent of its total loan portfolio to
agriculture and agrarian reform beneficiaries. At present, the 25
percent loan portfolio is worth P400 billion a year. That amount is
more than enough to flood-the-zone with countryside credit. And
stimulate several sub-sectors of agriculture, from crops to hogs, to
poultry, to livestock to aquaculture.
The problem is the Marcos-era Agri-Agra Law has
a rider on alternative compliance. The banks, instead of lending to
the wretched farmers, can buy government securities or invest in
mass housing projects to comply with the law. They have been doing
just that. This is the reason only the crumbs go into real
agricultural lending.
Without credit, you might as well kill
Philippine agriculture, especially the rice farmers.
The bigger story, of course, is government
neglect. While the richest and most powerful countries in the world
heavily subsidize their farmers with tons of perks and incentives
(the yearly subsidy of the OECD countries to their farmers is
roughly $300 billion), Filipino farmers get nothing from the
government.
Cheap credit is zero. The irrigation systems
have broken down. Agricultural extension support, which used to be
one of the best in the world, has deteriorated immensely. There is
no single bright spot in agriculture except for the giant profits of
the agri-business giants that are subsidiaries of the business
empires in the country.
Our research and development work is still
globally competitive but of what use are improved genetic stocks if
they are not nurtured by fertilizer, tender loving care from farmers
and irrigation?
The present rice shortage, as Ka Nellie Chavez
has aptly put it, is a wake-up call. The government and the private
sector should support the farmers and a supervised food production
program just like the Masagana 99 should be put in place.
All those academic and economic discussions are
all bulls..t. Support the farmers now and in 120 days, there will be
a reversal of the rice shortage, says Ka Nellie, the Butil
party-list representative in the House.
There is only one solution to the rice supply
crisis—the political will to reverse decades of government neglect
and the anti-farm bias of the banking sector.
mlatimes@gmail.com
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