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ADB to Help Boost Farm Incomes in the Philippines with $400 Million Loan

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The loan will support reforms, including providing additional assistance to farmers making the transition towards higher value crops. Photo credit: Asian Development Bank

The Asian Development Bank (ADB) has approved a $400 million policy-based loan to support reforms by the Philippine government aimed at raising the productivity and competitiveness of the country’s agriculture sector and significantly reducing poverty in rural areas.

The Competitive and Inclusive Agriculture Development Program, Subprogram 1, will  help the government expand economic opportunities in the farm sector by implementing trade policy and regulatory reforms, enhancing public services and finance to the sector, and expanding social protection to rural families.

“The Philippines has made tremendous strides in reducing the national poverty rate, but rural poverty remains high because of low productivity and limited crop diversification,” said ADB Vice-President Ahmed M. Saeed. “This loan will support the government’s comprehensive suite of policy and regulatory reforms, resolving institutional weaknesses in land and water management, expanding agricultural financing to boost productivity, and extending the social safety net to unserved and underserved rural families.”

Sector challenges

The agriculture industry employs a quarter of the country’s labor force. But the sector lags behind counterparts in other Southeast Asian countries in productivity growth and competitiveness. Poverty rates in rural Philippines remains high, as do child malnutrition and stunting. The government has identified agriculture as a priority area for reform under its coronavirus disease (COVID-19) pandemic economic recovery program, as it seeks to ensure food security and reduce poverty in the country.

Among the government reforms under the Competitive and Inclusive Agriculture Development Program, Subprogram 1, is the passage of the 2019 Rice Tariffication Act and the various measures it provides. The new law removed quantitative restrictions on rice imports and replaced them with a pure tariff system. Using collected duties on imported rice, the government set up the Rice Competitiveness Enhancement Fund to strengthen the rice industry in line with the Philippine Rice Industry Roadmap. The government is also initiating additional reforms in land and water resources, including irrigation investments.

Other reforms supported by the loan include additional assistance to farmers making the transition towards higher value crops and those affected by the COVID-19 pandemic. These include unconditional cash grants and the Expanded Survival and Recovery Assistance Program for Rice Farmers to provide zero-interest loans to more than 160,000 small farmers. The program also expands the government’s pre-school feeding programs to families to reduce malnutrition and stunting.

The new loan will be complemented by upcoming investments to enhance flood risk management in major river basins, improve irrigation efficiency, and promote agro-enterprise development.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

This article was first published by the Asian Development Bank on 12 August 2020.