Pass the warehouse receipts law
The House of Representatives has made good progress by approving House Bill No. 198, otherwise known as the Revised Warehouse Receipts Law of the Philippines. Still currently pending in the Senate is its counterpart measure that seeks to update the law, which has remained the same for over a century.
Once enacted and implemented, the revised law will help address the following issues and challenges more effectively:
Insufficient agricultural support. The creation of a centralized repository of warehouse receipts can comprehensively capture, among others, important data such as the type, grade, and volume of goods/crops—providing crucial information needed for policy decisions, supply monitoring, and price mechanisms. It will also give farmers the knowledge they need to determine the best time to sell their produce, reduce post-harvest losses, and boost incomes.
National food security. Aside from agricultural crops, the same central repository can also help build the critical mass of data for raw materials, manufactured goods, and other commodities. For agricultural goods, the data may cover details like the type and quantity of crops harvested, their quality, and their storage location. These are valuable for creating strategic policies and decisions related to food security.
Logistics challenges brought by e-commerce. Having a centralized online system for warehouse receipts will make it easier for businesses to track their inventory and manage their supply chains, as well as make it easier for banks to provide financing, as warehouse receipts can serve as collateral for loans.
Banks’ lack of confidence to lend to farmers. The centralized registry will make it easier for banks to verify the authenticity of warehouse receipts to assess the risk of lending to farmers and to determine whether the collateral is sufficient to secure the loan.
Further, the revised warehouse receipts law could encourage the private sector and local government units (LGUs) to play a bigger role in the agriculture supply chain.
Production and farm management. LGUs can actively participate in agricultural production by providing cofinancing with farmers, cooperatives, and other stakeholders to ensure the timely availability and accessibility of quality agricultural inputs.
The private sector, meanwhile, can invest in new technologies that could reduce production costs and improve productivity, sustainability, and the quality of produce.
Post-harvest and cold storage facilities. The revised law will also attract investments in post-harvest handling and storage facilities by providing incentives such as tax exemptions for warehouse operators’ income and lease of space, loan guarantees from the Philippine Guarantee Corp., and infrastructure grants to LGUs for post-harvest and cold storage facility construction.
Private companies can build warehouses, cold storage units, and processing centers for agricultural commodities, while LGUs can streamline the permitting process for setting up and operating such facilities.
Logistics. The private sector and LGUs alike can support road development and maintenance to reduce logistics costs and ensure the timely and cost-effective movement of agricultural commodities from farms to the markets. For example, San Miguel Corp.’s expressway initiative and the Fruit Growers Development Corp.’s network of roads in the provinces of Benguet, La Union, and Pangasinan have helped lower logistics costs and make agricultural products cheaper.
Marketing. The proposed law also enables private sector entities to actively participate in marketing agricultural commodities. Firms can trade warehouse receipts and establish a robust market for them, effectively simplifying the process for farmers and businesses to sell their products. LGUs can support these efforts by organizing trade fairs, promoting local products, and assisting in developing marketing plans.
The warehouse receipts law, if amended, has the potential to revolutionize the agricultural sector by encouraging more private sector and LGU participation in each component of the agriculture supply chain.
It is included in the president’s common and priority legislative agenda, as noted in his second State of the Nation Address, signifying the bill’s importance and urgency. We, therefore, recommend that the Senate prioritize the passage of this reform bill as part of its commitment to assist farmers in reaping greater benefits from their agricultural harvest, which would, in turn, help boost economic growth and make food products more affordable for consumers.
We also encourage the continued active involvement and collaboration of the private sector and LGUs in cofinancing, investing, and enhancing the competitiveness and efficiency of the agriculture sector.
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Gary B. Teves served as finance secretary under the Arroyo administration.
