FROM THE MARGINS
I have a deeper appreciation of agricultural microfinance after my recent visit to Bacolod, where I met with sugar farm workers and beneficiaries of the Comprehensive Agrarian Reform Program (CARP). I also had the opportunity to commune with officers of the Negros Women for Tomorrow Foundation (NWTF), a microfinance institution (MFI) renowned for helping Negros’ poorest communities since the 1980s. Their Executive Director Suzzette Gaston and Operations Director Gomby Maramba (also the chairperson of the Microfinance Council of the Philippines), shared how their micro-agri-loan products are changing the lives of agrarian reform beneficiaries (ARBs). This positive development was confirmed by ARB-clients of other MFIs. Microfinance is helping ARBs not just in making their small farm holdings productive; it gives them alternative livelihoods, allowing them to send their children to school and live better lives.
These encounters show that CARP could break inter-generational poverty, if ARBs are given access to finance and other support services.
ARBs as microfinance clients
Over the past three decades, agricultural land ownership in the Philippines underwent a transformation through CARP, designed to give farmworkers a piece of the land they are tilling. The program has redistributed farmlands (maximum three-hectares per ARB), making its effectiveness at combating poverty debatable because economies of scale are not possible in small farms and agricultural inputs, equipment and labor are expensive. ARBs may have been given land, but without adequate funding, agricultural training, irrigation, infrastructure and support services, it is difficult to sustain small-farm operations.
Many ARBs are still facing difficulties. Not surprisingly, there are several MFIs operating in Negros. I attended a center meeting in Bgy. Matab-ang, Talisay City. This center has 65 members, mostly farmworkers in a nearby hacienda. The meeting was well-attended and the members had an almost-perfect repayment rate. There were 26 ARBs in the community; 16 of them are MFI members. Awarded about one-hectare of land each, they were one in saying that agrarian reform, combined with microfinance, is transforming their lives.
Micro-crop, agricultural loans
MFIs offer agricultural loans despite the inherent risk. ARBs require higher loans than traditional microfinance clients because they need funds to buy agricultural inputs at the beginning of the growing season and could only pay back the loan after harvest time. The Micro-Crop Program, for instance, which NWTF started in 2005, is a boon to the ARBs of Negros. It provided them with funds for farm inputs and other requirements. The arrangement supported diversification, which benefited both the ARBs and
NWTF, as the alternative source of income ensured higher loan repayment.
Gomby says their Micro-Crop Program has evolved into the Micro-Agri Loan that the Dungganon Microfinance Rural Bank (now headed by Corazon Henares), offers not only to ARBs but other NWTF members engaged in agriculture. As of Nov. 2022, NWTF’s Dungganon covers 20 provinces with 516,014 active clients and a loan portfolio worth more than ₱4.7 billion.
I met 61 year-old Presentacion Gruyal at another MFI’s center meeting but she has been a Dungganon client for the last 15 years. Dungganon has supported her farming and other enterprises, like piggery and poultry. She continues to be a member of Dungganon but she joined another MFI to help defray expenses for her one-hectare farm and livestock-raising.
MFIs provide ARBs with funds to support their farm operations and microenterprises, allowing them alternative livelihood as they wait for their harvest. Presentacion said the two MFIs helped send her children to school and ensured that they ate three meals a day (unlike before, when they were living in extreme poverty).
Emily Tormis, 49 years old, shared a similar sentiment. She said the one-hectare land they received from CARP gives them an income of about P50,000 a year. During their first planting of the land with sugarcane, Emily borrowed P10,000 from a moneylender to buy farm inputs and pay for labor (patabas, paararo, ratooning, etc.). She had to pay P15,000 after the cropping, the loan’s high interest taking a big chunk of their net earnings. She is grateful that she no longer has to borrow at usurious rates. Her MFI provides her with loans at reasonable rates and farmer-friendly repayment terms, helping support her farm operations, piggery and children’s schooling.
Transforming lives
Many MFIs in the Philippines offer agricultural loans that help small farmers augment their farm income with other sources of livelihood like sari-sari stores, animal-raising, agro-processing, and other micro-enterprises. Their coordinated efforts ensure that not just capital, but training, technology, and other support will be provided to small farmers. Yes, theirs is a financial risk that is higher than traditional microfinance, but the opportunity to break inter-generational poverty and improve the lives of ARBs – usually the poorest of the poor – is worth it. It is, after all, the heart of MFIs’ development objectives.
As Jonathon Morduch, chair of the United Nations Committee on Poverty Statistics, stated: “Microfinance stands as one of the most promising and cost-effective tools in the fight against global poverty.”
(Dr. Jaime Aristotle B. Alip is a poverty eradication advocate. He is the founder of the Center for Agriculture and Rural Development Mutually-Reinforcing Institutions (CARD MRI), a group of 23 organizations that provide social development services to eight million economically-disadvantaged Filipinos and insure more than 27 million nationwide.)