The Reform CARP Movement (RCM), a broad coalition of small farmer organizations, non-government organizations, and other agrarian reform advocates pushing for the passage of the CARP extension with reforms bills, today called on the Arroyo administration to provide agrarian reform beneficiaries (ARBs) support services instead of relying on the farmland as collateral proposal to provide farmers access to formal sources of credit.

RCM issued the recommendation a day after President Gloria Macapagal-Arroyo delivered here eighth State-of-the-Nation Address (SONA) at the House of Representatives.

RCM said that President Arroyo's proposal on farmland as collateral is contrary to her social payback framework of alleviating poverty and sustaining economic development. "While the President should be commended for declaring during her SONA that CARP extension with reforms is on top of her legislative agenda, her inclusion of the farmland as collateral proposal goes against her concern and desire to help the poor. The proposal will not shield the farmer-beneficiaries from greater impoverishment and indebtedness. On the contrary, it will accelerate it," said PARAGOS-Pilipinas Chair Ka Jimmy Tadeo. PARAGOS-Pilipinas is one of several national peasant organizations in the broad Reform CARP Movement.

RCM explained that farmers groups and other agrarian reform advocates have already registered their strong opposition against the farmland as collateral proposal in the past. In a situation where most ARBs have poor economic conditions, incur crop losses due to vagaries of the weather, and are adversely affected by the lingering effects of the global food and oil crises, the collateralization of farmlands will only lead to massive bankruptcy and indebtedness among the farmers. This will then pave the way for financial institutions and private moneylenders to reconsolidate the landholdings when they foreclose the mortgaged lands in case of failure of the ARBs to repay their loans.

According to RCM, government's failure to provide support services in the past was actually what pushed them to the wall and forced them to consider other options like illegally pawning or selling their lands and subjecting their lands under unfair leaseback arrangements.

RCM also questioned the viability of the farmland as collateral proposal. Most formal lending institutions, according to RCM, will not accept Certificate of Land Ownership Awards (CLOAs) as collateral given that most farmers already have a second mortgage (i.e., land amortization payments and loans from informal lenders). RCM also explained that some government financial institutions (GFIs), such as the Asian Development Bank (ADB), already provide collateral-free loans to farmers. Moreover, RCM disclosed that a provision on credit and initial capitalization for ARBs is already provided under House Bill (HB) No. 4077, the consolidated bill pending before the House of Representatives.

RCM recommended that instead of pursuing the collateralization of farmlands, government should provide support services, such as production capital, irrigation, post-harvest facilities, and farm-to-market roads, to sustain the productivity and incomes of the ARBs. Likewise, RCM advised the Arroyo administration to provide public investments to strengthen small farm production.

Tadeo added that, "The provision of support services will not only help increase agricultural productivity and rural incomes, but it will also boost domestic spending in the rural areas thereby contributing to a more equitable economic development. At the same time, government does not need to reinvent the wheel to provide public investments for agriculture. Various policies, such as the Agriculture and Fisheries Modernization Act (AFMA) and the Agricultural Competitiveness Enhancement Fund (ACEF), are already in place to help the farmers. What is only required is for government to fully finance the implementation of these programs."

For inquiries, please call Mr. Eugene Tecson at 928-7464 or Mr. Anthony Marzan at 433-0760