Rice-related issues may derail $75-M ADB loan

The $75-million investment component of a loan program for agriculture from the Asian Development Bank (ADB) is in jeopardy.

The amount forms part of the ADB’s Grains Sector Development Program (GSDP) worth $175-million. Of this amount, the Philippine government has withdrawn $100 million so far.

The balance of $75 million has not been released as several conditions set by the ADB have not been met by the Philippines. Some of these conditions are the abolition of the National Food Authority’s (NFA) buying support price for farmers and the lifting of quantitative restrictions on rice importation.

"Government believes they are in compliance with the conditions of the loan agreements, and we are waiting for their formal proposals," said Dr. Gunther Hecker, ADB director for Philippines affairs. "We still have to formally discuss with their representatives although we have received and listened to their views in an informal capacity."

Earlier, Agriculture Secretary Leonardo Montemayor was quoted as saying that one of the key provisions of the loan program could no longer be implemented due to prevailing conditions in the sector.

Montemayor said farmers need the support price for their produce and it would take separate pieces of legislation to implement the GSDP’s provisions.

"If these structural reforms for the Philippine grains sector are not to be pursued, we see no purpose for ADB to release the budgetary support funds," Hecker said.

ADB’s grains program is an integrated package of policy and institutional reforms and sector investments to improve agricultural policies, infrastructure and support services and institutional capacity at the national and local levels.

It also aims to restructure and eventually privatize the NFA, a concept arrived at in the previous administration.

The Agricultural Department is pushing for the delayed implementation of some loan provisions, which would impact on the country’s commitments to the World Trade Organization.

The Philippine government would pursue these structural reforms to improve the Philippine grains sector but at a slower pace since all the loan prerequisites need amendments to prevailing laws.