Agribusiness Venture Arrangements (AVAs) as a Collateral Substitute

A Case Study of ARB Cooperatives’ Farm Rehabilitation Loan in Compostela, Valley

A Case Study of ARB Cooperatives’ Farm Rehabilitation Loan in Compostela, Valley
Paper author: 
IDEALS, Fair Finance Philippines
Paper publication date: 
Wednesday, July 15, 2020

Many studies (Llanto and Orbeta, 1999; Llanto, 2004; 2005) argued that heavy government interventions, such as loan quota, subsidized interest rates and directed credit programs, failed to promote efficient rural financial markets. Hence, these studies suggested the need for market-oriented credit approach to increase the flow of credit in the rural areas (Llanto and Orbeta, 1999; Llanto, 2004; 2005). Unfortunately, in the Philippines’ case, farmers’ access to formal credit remained problematic despite the paradigm shift to a market-oriented credit policy in 1980s. One major reason was that the government continued to implement subsidized credit programs because of the pressure coming from the different interest groups. Such decision undermined the government’s own market-oriented credit and financial policy reform efforts (Llanto, 2005).