The government has rolled out its contract farming program for agricultural products, in particular onions, to improve farmers’ access to markets and achieve fair prices for their produce.
The Farmer Retail Market program seeks to establish a direct linkage between onion farmers and institutional buyers by removing traders from the supply chain.
According to the Consumer Policy and Advocacy Bureau (CPAB), the program will provide a reliable supply of local onions, particularly during lean months.
The country’s big retailers — SM Supermarkets, Robinsons, and Puregold — agreed to take part in the program.
CPAB is also eyeing partnerships with the Hotel and Restaurants Association of the Philippines (HRAP), as well as with ALLDAY supermarkets.
In addition, Monde Nissin Corporation and Unilever Philippines Inc. also agreed to source shallots directly from the farmers for their seasoning products.
The Department of Trade and Industry intends to apply the same strategy to other agricultural products such as rice, garlic, corn, and sugar.
Through the Small Business Corporation (SB Corp.), the DTI also urged farmers to access the Diminishing Loan Assistance (DLA) to help agricultural producers gain access to financing.
CPAB said 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.
The DLA is a loan program wherein 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, CPAB said.
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.