Gov’t has yet to discover its real secret weapon: The lowly co-ops

By Vincent Cabreza Inquirer Northern Luzon Most Read BAGUIO CITY—As strawberry wholesaler Asner Bautista describes it, farmers are slaving away in strawberry fields in nearby La Trinidad town in Benguet to harvest berries for tourists spending their Yuletide break here. Supplies are sufficient but are not enough to flood the local markets, Bautista said. Typhoon “Juan” last October had set back harvests again by a few weeks, so most of the supplies had been distributed to Manila retailers only since Dec. 1, according to Maritess Visaya, a vendor. Days before December 25, strawberries sold in La Trinidad still commanded prices of as high as P300 a kilo. Stories like these are not uncommon. Agriculture is still vulnerable to the weather, given the low-impact infrastructure of the sector. The government has tried to increase its investments in the food trade, but even its public-private initiatives have failed to start high-profile farm projects. Some believe, however, that the government may not be working at the right financiers of these projects. Since a new Cooperatives Code granted credit cooperatives tax breaks this year, they have begun to double their profits, and may now provide capital for high-profile farm projects themselves, said Coop-Natco Party-list Rep. Jose Ping-ay. Most of the 17,000 accredited cooperatives in the various regions serve as savings and loans facilities, while only a 10th serve farmers directly. “But every cooperative is either located in the farms or are already accessible to farmers,” Ping-ay said after meeting Cordillera cooperative leaders here. The Baguio-Benguet Market Plaza Cooperative Multipurpose Inc. (Bamapcom), for instance, is offering to finance farm projects that cost as much as P5 million, which represents 10 percent of its loan portfolio. The government is also encouraging credit cooperatives to avail themselves of an agricultural credit guarantee fund to shield cooperatives from bad loans taken out by the farm sector, Ping-ay said. He said advocates of the cooperative movement spent the last two years modernizing and correcting mechanisms that have been blamed for the poor performance of cooperatives over the last few decades. “It may take two more years just enforcing the corrections, before we can start diverting cooperatives to projects that would improve farming,” he said. The amended Philippine Cooperatives Code of 2009 (Republic Act 9520) incorporated major reforms. The new law’s most controversial provision frees credit cooperatives from paying taxes, specifically those due from savings deposited by members in the cooperatives’ accounts. The local banking industry “lobbied hard to prevent Congress from passing that provision because it grants cooperatives the same privileges as [banks and would make them the rivals of the finance trade],” Ping-ay said. Their fears may be real. Ping-ay said he was not at liberty to discuss how much cooperatives earned after 2009, but in one example, the Ilocos Sur based-Santa Cruz Savings and Development Cooperative doubled its revenues in 2009 due to an increase in members. The cooperative has projected a net profit of P150 million by year end. “I have asked the Cooperatives Development Authority to inventory all cooperatives to determine how the new law had impacted on their revenues since its passage,” Ping-ay said. He said that cooperatives, which serve as virtual banks, are good for the agriculture and food industries because these are the institutions farmers trust most. Government agencies and several private banks have offered to finance a reconstruction program to address the impact of two typhoons that affected Luzon farms in 2009, but few of these plans had been fulfilled as this year ends. A government post-disaster needs assessment program estimated that damage and losses from Tropical Storm Ondoy and Typhoon Pepeng amount to a total of P207.9 billion. The agriculture sector sustained damage of P3.8 billion and losses of P36.2 billion. The storms came at a time when the current crops were about to be harvested, so most of the production were lost, the report said.