Sustainable funding for agriculture

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May 7, 2026 | 12:00am

The latest report from the Philippine Statistics Authority reflects the economic pressures that Filipinos face today. Inflation accelerated to 7.2 percent in April, driven largely by surging fuel and food costs.

Food inflation alone jumped sharply, rising to 6.1 percent, with rice inflation climbing to 13.7 percent, up from 3.5 percent the previous month. Prices of fish and vegetables have also continued to rise, pushed up by higher fuel costs. According to the PSA, many fisherfolk,  faced with expensive fuels costs, now limit how often they go out to sea, consequently reducing supply just as demand remains steady.

While the latest data paints a sobering picture, agriculture has always been a wellspring of optimism for the Philippines. As a country blessed with fertile land and rich coastal waters, we possess all the fundamentals needed for a strong and resilient agricultural sector. Food security may remain a long-standing national concern, but it is also a challenge well within our reach, if we build on what already works, address structural gaps with discipline and commit to solutions designed not just for today, but for the long term.

One of the most persistent challenges is agricultural credit. For decades, it has remained a puzzle. Every year, billions of pesos are allocated to support agriculture and yet many farmers and fisherfolk remain locked out of formal credit. They continue to rank among the poorest Filipinos, their livelihoods increasingly vulnerable to climate shocks, rising fertilizer prices and fuel spikes. Despite public funding, financial uncertainty remains their daily reality.

Unable to secure loans from banks, many farmers and fisherfolk turn to informal options, often at punishing interest rates. Instead of enabling growth, these loans frequently deepen indebtedness. Just last month, the Department of Agriculture (DA) temporarily suspended loan payments for farmers and fishers as global fuel prices surged, a move intended to prevent widespread defaults and safeguard the country’s food supply.

At the national level, government support has grown. The 2026 budget allocated P215 billion for agriculture, a 38 percent increase from the previous year, meant to improve infrastructure and expand sectoral support. Yet despite this sizable allocation, banks continue to shy away from lending directly to farmers and fisherfolk. Many opt instead for “alternative compliance” under the Agri Agra Reform Credit Act, channeling funds into government securities rather than into farms and fishing communities. The mandate exists, but the money rarely reaches the ground.

Speaking at the European Chamber of Commerce of the Philippines Sustainable Agriculture Conference, Rep. Arthur Yap summed up this long-standing dilemma, “The Philippines does not lack capital. It lacks execution discipline,” he said.

This statement truly resonates because it reflects lived experience. Farmers and fisherfolk hear figures about expanding budgets year after year, but still stand in line outside lending offices, unable to qualify for affordable credit. This is not simply a matter of banks being unwilling to lend. Financial institutions, by nature, operate on measurable risks. In agriculture, however, the rules governing risks such as weather shocks, crop failures and price volatility remain unclear and lack structure. When losses are not clearly allocated and recoveries uncertain, risk cannot be priced. And if risk cannot be priced, banks cannot commit capital.

The consequences are visible in the data. Coupled with the climb in latest inflation hat continues to erode purchasing power, poverty incidence remains high among agricultural workers, at 27 percent among farmers and 27.4 percent among fisherfolk, based on 2023 figures.

These are not abstract statistics. They are realities felt most acutely at the kitchen table and in the marketplace- where every peso buys a little less and where the poor, including farmers and fisherfolk, bear the heaviest burden.

The instinctive response is to turn to subsidies. While necessary at times, subsidies are ultimately band aid solutions. In my humble opinion, Philippine agriculture needs smarter and more durable structures- systems with clear rules that define and manage risk. In such a framework, losses are allocated in advance, recoveries are institutionalized, insurers absorb shocks, collateral systems improve and monitoring reduces information gaps. Banks can then lend with confidence. The challenge lies in execution.

As Rep. Yap puts it, “Once risk is executable, it becomes priceable. And once risk is priceable, capital can move.”

With scalable and affordable credit in place, farmers can invest in productivity, recover more quickly from shocks and contribute more steadily to food supply. This is where food security strengthens, inflation pressures ease and the broader economy benefits. Without structural reform, however, billions in public funds risk continuing to circulate within government systems instead of translating into real gains at the community level.

At its core, the challenge comes down to execution discipline. With the right structures in place, government can ensure that credit reaches farmers and fisherfolk in ways that enable growth rather than deepen vulnerability, allowing them to move beyond being recipients of policy and become stronger, more reliable pillars of the national economy.