DTI links onion, rice farmers to institutional buyers; credit access

The Department of Trade and Industry (DTI) has introduced a program that would directly link onion farmers, and possibly rice farmers, to institutional buyers and loan assistance to farmers as one of measures to stabilize prices of basic goods in the country.

Dubbed  “Farmer Retail Market” (FRM) program, DTI Undersecretary Ruth B. Castelo said the program will enable a steady supply of local onions, especially during the lean months.

The FRM is a contract farming program that establishes a direct linkage between onion farmers and institutional buyers aimed to remove traders from the supply chain with the goal of ensuring adequate food supply for the country.

“If we succeed with onions and rice, we’ll venture into other agri products. Ultimately, our objective is to lower retail cost while providing a fair and reasonable profit for farmers,” said Castelo. She, however, clarified that the program will start with onion and rice is still just a target.

The DTI initiative aims to improve the distribution of agricultural commodities, particularly onions, in response to the challenges faced by farmers in accessing markets and achieving fair prices for their produce.

Already, various retailers and Hotel and Restaurants Association of the Philippines have expressed their willingness to participate in the program.

Once established, the DTI will apply the same strategy to other agricultural products such as rice, garlic, corn, and sugar.

Part of the initiative is to provide loan assistance to onion and rice farmers because access to loans has been the most cited concern of onion farmers. Based on interviews conducted by the DTI, farmers face several challenges when accessing loans and grants, including the lack of collaterals, limited financial literacy, limited access to formal financing institutions, high-interest rates, complex application processes, and limited availability of grants.

To address this challenge and in support of the FRM, the Small Business Corporation (DTI’s financing arm) will introduce a diminishing loan assistance (DLA) to farmers.

The DLA utilizes a diminishing loan method, or a method of calculating the interest due on a loan, where the interest is calculated on the decreasing outstanding principal balance.

With the diminishing loan method, the interest is calculated as a percentage of the outstanding principal balance at the beginning of each period. As the loan is repaid, the outstanding principal balance decreases, and the interest due for the next period is calculated on the lower balance. This means that the interest due decreases over time, which can make the loan more affordable for the borrower, especially in the later stages of the loan.

In crafting the program, the DTI noted that the Philippine Statistics Authority (PSA) reported that red onion prices in the National Capital Region (NCR) continued to decline since January. The same pattern was seen in other regions. According to the Department of Agriculture (DA), the prevailing retail prices for a kilo of local commercial rice are P55.00 (special), P46.00 (premium), P44.00 (well-milled), and P38.00 (regular milled).

Castelo said that the  Consumer Policy and Advocacy Bureau (CPAB) of the DTI is working closely with the  coordination with the Department of Agriculture (DA) and other relevant government agencies to address the rising onion prices, among others.

“The agricultural sector is a crucial component of our national economy, and the efficient distribution of agricultural products is critical to ensure food security and economic growth,” said Castelo.

The DTI team was tasked to conduct field visits to the onion producing provinces to assess the supply and demand for onions, identify potential sources of onions, and coordinate with relevant stakeholders to directly source onions from farmers.

Meantime, the National Price Coordinating Council (NPCC), which is chaired by the DTI, met on May 31 to assess the nationwide price and supply situation of basic necessities and prime commodities (BNPC) such as manufactured goods, agricultural products, medicines, fuels, LPG, among others.

According to the DTI, the monitored prices of BNPCs are within or below the Suggested Retail Price (SRP) as of 08 February 2023. In addition, the DTI continues to intensify its monitoring efforts to ensure the stability and availability of prices and supply of basic and prime goods. The Department also assists the DA in monitoring the prices of agricultural products such as sugar and onion.

“The DTI assures the public that the government is taking actions to protect their interests and ensure that basic and prime goods remain reasonably priced in the market,” DTI Consumer Protection Group Undersecretary, Atty. Ruth B. Castelo underscored.

For other commodities, the Sugar Regulatory Administration (SRA) reported that the monitored prevailing prices of retail sugar in groceries and supermarkets in the NCR as of May 2023 are PHP 87.00/kilo for raw and PHP 105.00/kilo for refined.

The Department of Energy (DOE) reported that as of 30 May 2023, there had been a cumulative drop of P4.85 for LPG, P5.05 for diesel, and P6.75 for kerosene.

The Department of Health (DOH) stated that prices for essential medicines remain stable due to the increased number of available generic brands on the market. Further, the DOH reported that it regularly issues SRP for COVID-19 medicines.
The Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) reported that the country will experience El Niño in the next couple of months up to the first quarter of 2024. According to PAGASA, 11-14 tropical cyclones are expected to develop in the Philippine Area of Responsibility from June – November of this year.
The Bangko Sentral ng Pilipinas (BSP) forecasts that the inflation rate is likely to hit 5.5 percent this year.

Castelo has encouraged to follow DTI’s Consumer Care official social media accounts for more information. For consumer-related concerns and queries, send an email to ConsumerCare@dti.gov.ph or call the One-DTI (1-384) Hotline. — Bernie Cahiles-Magkilat

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