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AAE 130 > UNIT VIII: Agricultural Credit Policies and Programs in the Philippines > Flashcards

UNIT VIII: Agricultural Credit Policies and Programs in the Philippines Flashcards

1
Q

AGRICULTURAL CREDIT PROGRAMS

credit programs that are directed to a specific sector for a specific purpose and its fin resources come from the gov’t, internal agency funds, or donors, to promote agri development

A

Directed Credit Programs

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2
Q

AGRICULTURAL CREDIT PROGRAMS

issues with directed credit programs (DCPs)

A

-limited access
-unsustainable
-credit players did not reach intended markets
-low repayment (–>default)
-costly for gov’t

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3
Q

AGRICULTURAL CREDIT PROGRAMS

what is the RA 8435?

A

Agriculture and Fisheries Modernization Act (AFMA) of 1997

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4
Q

AGRICULTURAL CREDIT PROGRAMS

in 1990s, two reforms were put into place, namely:

A

-RA 8435 or the Agriculture and Fisheries Modernization Act (AFMA) of 1997
-National Strategy for Microfinance

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5
Q

AGRICULTURAL CREDIT PROGRAMS

principles of the two major reforms instituted in 1990’s

A

-increased participation of the private sector/microfinance institutions
(MFIs)
-adoption of market-based financial and credit policies
-focus on proper management and utilization of the loan fund
-active participation of banks and government financial institutions
-government to provide the enabling policy and regulatory
environment and critical support services

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6
Q

AGRICULTURAL CREDIT PROGRAMS

umbrella credit program of the Department of Agriculture (DA), administered by the Agricultural Credit Policy Council (DA-ACPC), to cater to the financial needs of small farmers and fisherfolk

A

Agro-Industry Modernization Credit and Financing Program (AMCFP)

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7
Q

Agro-Industry Modernization Credit and Financing Program (AMCFP)

AMCFP funds are channeled through which institutions?

A

government financial institutions

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8
Q

Agro-Industry Modernization Credit and Financing Program (AMCFP)

gov’t fin insti acted as _______ of ag credit funds to private fin insti and as ________ to smallholders

A

wholesalers; direct retailers

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9
Q

PROGRAMS under Agro-Industry Modernization Credit and Financing Program (AMCFP)

A

-Sikat Saka Program
-Agriculture and Fisheries Financing Program
-Coop Bank Agri-Lending Program
-Agricultural Microfinance Program.

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10
Q

AGRICULTURAL CREDIT PROGRAMS

main goal of Sikat Sika

A

to provide credit assistance to small palay and corn farmers for their production activities/projects

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11
Q

AGRICULTURAL CREDIT PROGRAMS

main goal of the Agriculture and Fisheries Financing Program (AFFP)

A

provides small farmers with fishers access to formal credit to finance their economic activities

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12
Q

AGRICULTURAL CREDIT PROGRAMS

main goal of Cooperative Bank Agri-Lending Program (CBAP)

A

increase outreach of gov’t ag credit funds by tapping cooperative banks as conduits and to increase access to sustainable fin services among FFH

note: FFH = farmer and fisherfolk households

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13
Q

AGRICULTURAL CREDIT PROGRAMS

Agri-Microfinance Program (AMP) for Small FFH goal

A

reduce poverty and improve quality of life of marginalized FFH by financing ag projects and acts that will increase their prod and income

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14
Q

AGRICULTURAL INSURANCE

transfers risks of individuals and enterprises to an insurer that spreads the risk either internally or by reinsurance

A

insurance

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15
Q

AGRICULTURAL INSURANCE

economic rationale for insurance

A

-factors beyond farmer’s control
-adverse weather events
-it spreads risk across the economy
-see an opportunity for a positive actuarial outcome and profit
-NOT the universal solution sa risk and uncertainties ng farmers
-addresses only a PART of the losses from some perils

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16
Q

AGRICULTURAL INSURANCE

Asymmetric information and insurance availment

high-risk farmers are more likely to purchase crop insurance as they perceive larger benefits from
participating. as a result, indemnity payments are higher than the premiums collected.

A

adverse selection

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17
Q

AGRICULTURAL INSURANCE

Asymmetric information and insurance availment

occurs when insured farmers worry less about the likelihood of a loss (i.e., due to the insurance coverage), take less care of their fields (i.e., use less inputs than is recommended), and consequently, are more likely to experience a loss

A

moral hazard

18
Q

AGRICULTURAL INSURANCE

principal mandate of the Philippine Crop Insurance Corporation (PCIC)

A

provide insurance protection to farmers against losses arising from natural calamities, plant diseases, and pest infestations of their palay and corn crops

19
Q

one of a pool of instruments for risk mitigation and credit enhancement measures.

A

CREDIT GUARANTEE

20
Q

AGRICULTURAL CREDIT GUARANTEE

economic rationale for guarantees

A

-ratioining is widely seen in the loan market especiallly for FFH as well as MSMEs
-important policy tools as it can enhance efficiency in providing add fund for FFH $ MSMEs which can be creditworthy but has informational gap

21
Q

AGRICULTURAL CREDIT GUARANTEE

asymmetric information and guarantee availment

adverse selection

A

banks that transact with risky small businesses are more likely to offer loans with guarantees

22
Q

AGRICULTURAL CREDIT GUARANTEE

asymmetric information and guarantee availment

moral hazard

A

small businesses with guaranteed loans are more likely to default

23
Q

AGRICULTURAL CREDIT GUARANTEE

provides 85% guarantee cover on agricultural production loans granted by accredited private financing institutions and other lending entities against all types of risks of non repayment

A

Agricultural Guarantee Fund Program

24
Q

AGRICULTURAL CREDIT GUARANTEE

OBJECTIVE OF Agricultural Guarantee Fund Program

A

encourage banks, coops, and other lending insti to increase their loans to small FFH and reduce risk on the lenders’ side

25
Q

AGRICULTURAL CREDIT GUARANTEE

OBJECTIVE of Credit Surety Fund Program

A

increase creditworthiness of MSMEs including coops that are experiencing difficulty in obtaining loans from banks

26
Q

envisions a viable and sustainable microfinancial market that will help provide marginalized households and microentrepreneurs with greater access to microfinancial services.

A

National Strategy for Microfinance

27
Q

provision of a broad range of financial services such as deposits, loans, payment services, money transfers and insurance products to marginalized and low income households

A

microfinance

28
Q

clients of microfin?

A

economically-active, entrep poor

29
Q

core principles of microfinance?

A

-sustained access to fin services and products
-marginalized must have the capacity to repay loans and save
-MFI can be operationally and financially self sufficient

30
Q

providers of microfinance?

A

banks ( mainly thrift and rural), NGOs and coops

31
Q

different methodologies of microfin?

A

-group methodology
-individual approach

32
Q

small loans granted to the marginalized and low-income households for their microenterprise and small businesses to enable them to raise their income levels and improve their living standards

A

MICROCREDIT

33
Q

also know as microfinance loans

A

microcredit

34
Q

unique features of microcredit

A
  • cash-flow based
  • frequent amortization
  • minimal requirements
  • typically unsecured (no collateral)
35
Q

allows a number of individuals to provide collateral or guarantee a loan through a group repayment pledge.

A

group lending

36
Q

an activity of providing products or services that meet the needs of the low-income sector for risk protection and relief against distress, misfortune, and other contingent events.

A

MICROINSURANCE

37
Q

microinsurance products (MIP) include:

A

-life insurance (term life, group life)
-non-life insurance (first-loss insurance covering perils)

38
Q

features of a microinsurance product (MIP)

A

-simple application reqs
-affordable premium
-flexible payment
-clear and simple contracts
-quick claim processing
-guaranteed benefit

39
Q

MIP providers includes:

A

-commercial insurance companies
-coop insurance societies
-MFIs
-mutual benefit assoc
-banks, pawnshops, and other non-bank fin insti

40
Q

all MIP providers must adhere to the?

A

Performance Standards for Microinsurance

41
Q

Performance Standards for Microinsurance considers what standards?

A

-solvency and stability
-efficiency
-governance
-understanding of the product by the client
-risk-based capital
-outreach

AAE 130 (9 decks)

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