Presidential Adviser on Agricultural Modernization Angelito M. Sarmiento said the scheme calls for the NFA to issue trust receipts that the Land Bank of the Philippines (LBP) previously agreed to accept as collateral.
"NFA plans to issue trust receipt to farmers who might want to sell their unhusked rice or palay to NFA during this wet season harvest," Sarmiento said.
He said that with an expected record harvest this fourth quarter, the NFA has budgeted P3.5 billion for buying 340,000 metric tons of palay from farmers. At an estimated cost of P9 per kilo, the quarter’s inventory costs more than P400 million.
Sarmiento explained the trust receipt will function like the quedan in the sugar industry issued by sugar millers. The quedan is convertible to cash when presented as collateral to banks since they represent an inventory held in government’s warehouses.
"The trust receipt has the NFA guarantee because NFA is keeping the stocks. The integrity of the trust receipt is backed up by NFA," Sarmiento said.
Aside from Landbank, Sarmiento said the Development Bank of the Philippines (DBP) also agreed to accept trust receipt as a negotiable instrument.
The scheme, according to Sarmiento, will curb farmers’ losses who are usually left with little choice but to sell their stocks to traders because they do not have the storage facilities that can store palay over a longer period.
The scheme allows farmers to store rice stocks in NFA warehouses nationwide for free during the first six months and will only be asked to pay storage fee beginning the seventh month. – Rocel Felix