Fin'l institution to manage P2-B ACEF fund

MANILA, Philippines - The government is considering to transfer the Agricultural Competitiveness Enhancement Fund's (ACEF) P2-billion balance to a competent financial institution that can efficiently manage it for valid small farmers' benefit.

A Technical Working Group (TWG) on ACEF has come up with a set of recommendations on how to efficiently release ACEF funds, and transferring it to an expert financing entity, such as a government financial institution (GFI) as Land Bank of the Philippines (LBP), is one of several options raised.

In a presentation before the Congressional Oversight Committee on Agriculture and Fisheries (COCAFM), Senen Bacani, TWG member and a former Department of Agriculture (DA) secretary, said the TWG has chosen rather to give the COCAFM several options on what to do with ACEF rather than give a definite recommendation.

The TWG suggested as an option that government may well choose to remove ACEF under DA's management since DA does not have a core competency on it. Besides, under the Agriculture and Fisheries Modernization Act (AFMA), loan funds previously under DA should be turned over to the Agro-Industry Modernization Credit and Financing Program (AMCFP).

If DA will continue to run the fund in another option, then ACEF guidelines may be changed such as imposing interest on borrowers and requiring a collateral.

However, since the fund is very small compared to the need of small farmers for which ACEF was created, Bacani, also banana exporter La Frutera chairman, said government may just focus loan release to a few targeted industries.

"I think you need to resolve the issue of equity and competitiveness. These must be mixed. You will pour a bigger amount of money for marginalized farmers and fisherfolks for them to really become competitive. Since it's a small amount compared to what the sector needs, focus on a few things and do them well," Bacani said.

He suggested that part of the fund may also be used for those that need a smaller amount to get some boosting. Perhaps this may involve food-producing small and medium enterprises (SME) that may perhaps be nearly capable of exporting. While originally designed for small farmers, ACEF was released to some companies already capable of obtaining commercial bank loans. It so far released P10 billion over 10 years. It still has a balance of P2 billion and expects to receive an additional P8 billion over the next four years until its mandate expires in 2015.

Francis N. Pangilinan, COCAFM chairman, said government may also seriously consider transforming ACEF simply into a grant fund as suggested by other COCAFM members. Perhaps making it a seed fund for microfinancing is another move. "I think the inclination so far is to veer away from lending and focus on grants. The other option is to go through the formal banking institution, but with a bias for microfinance. So microfinance is one other opportunity that we should look into," Pangilinan said in an interview.

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