DAR Project Reaches 19,000 Poor Households
By: Hazel Atienza
The Department of Agrarian Reform Micro Agri Loan Product (MALP) was an integrated credit delivery project for Agrarian Reform Beneficiaries (ARBs). The program aims to intensify and fast track the provision of microfinance services to target clients (ARBs/ARB households and rural women) to finance their agri-based enterprises through capable partner MFIs. Having access to formal financing was one of the major achievements of the project for the ARBs. By the end of the project, there is already a total of PhP356.2 million in loan portfolio from 18,987 ARBs, ARB households and rural women. This amounted to a total of PhP86.6 million in savings and share capital generation. Market Linking, access to crop insurance, and access to agri-extension services were the other important milestones of the project.
Social Enterprise Development Partnerships, Inc, (SEDPI), the chosen service provider for the project, extended capacity buildings services to 23 Microfinance Institutions (MFIs). Through the 23 MFIs, the ARBs were not only able to access formal financing which allowed them to no longer borrow capital from informal money lenders with very high interests; they also had an avenue where they could put their savings during peak income seasons.
SEDPI also incorporated market linking as an essential design of the product. In the course of the intervention, several partners of MALP expressed keen interest in the area of value chain financing as well as market linking. These organizations saw the importance of the system and planned to institutionalize it not only for MALP. In fact, a key insight during the conduct of MALP is the importance of market linking especially for organizations with strong existing micro-agri product.
One of the highlights of the entire MALP intervention in terms of market linking is the intervention with Alalay Sa Kaunlaran Inc. (ASKI). SEDPI linked ASKI with Organic Options Inc. (OOI), a marketing and trading company for agricultural products. ASKI developed a partnership with Organic Options where OOI will buy the produce of farmers under MALP. The agreement also includes provision of assistance for the farmers to transition from conventional farming to organic.
SEDPI was also able to link the MFIs to Philippine Crop Insurance Corporation (PCIC). Insurance is a critical financial product that must be accessed by farmers to protect them from risks incurred by unexpected circumstances. Through the MFIs, the crop insurance, including other insurance products from PCIC, was made more accessible to the ARBs and the farmers. Seventeen MFIs are now underwriters, with 2 MFIs processing their underwriter application. The rest opted to become agents. The remaining MFIs opted to explore other risk mitigating measures such as the Agricultural Guarantee Fund Pool (AGFP).
Agricultural extension services allow provision of knowledge and technical know-how on farming. Through the project, MFIs were linked to Municipal Agriculture office and key topics such as pest management and fertilizer application were the most requested in addition to knowledge on vegetable farming.
The project proved to provide a win-win situation both for the farmers and the MFIs. Farmers were empowered through the interventions mentioned hence the need for capital and more savings would also increase providing more business for the MFIs.