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Fisheries Financing

Pilar F. Fontelar, Ph.D.


Chief, Fisheries Industry Development Support Division
Bureau of Fisheries and Aquatic Resources
Resources: Philippine Marine
Jurisdictional Boundaries

As an archipelagic country, the


Philippines has more water than
land resources. In fact, this
country has an abundant and
rich fishery resources, that if
Pacific
China Sea Ocean

given appropriate and adequate


financing will be able to
contribute significantly to the
solution of the perennial BORNEO
problem of poverty and CELEBES SEA

unemployment. Needless to say,


a solution to the ailing national
economy. Legend
Archipelagic waters
Territorial waters
EEZ
Treaty limits
Kalayaan claim
The Bureau of Fisheries and Aquatic Resources
BFAR TECHNOLOGY & REGIONAL TRAINING CENTERS
Current Status of the Industry (Action Research)

BIG
ENTREPRENEURS

SMALL & MEDIUM


ENTREPRENEURS
(SME’s)

FA’s; PO’s; NGO’s; LGU’s; WG’s; YG’s; Others


I. II. III.

With Desire ON With stable


With Interest & “BILAO”
With Ability OFF
Business Business
But 0% resources OPERATIONS Operations

Problem: “How to start?” “Why?” “Why?”

(BROAD-BASED MASS - - - FISHERFOLK)


PROBLEM:

• LACK OF CREDIT FACILITY FOR THE


INDUSTRY

• LACK OF ACCESS OF BROAD BASED MASS


FISHERFOLK
The Fisheries Financing Program
Fisheries Financing Program (FFP)
Present Status of the Philippine Fishery Industry:

BIG
ENTREPRENEURS

SMALL & MEDIUM


ENTREPRENEURS
(SME’s)

FA’s; PO’s; NGO’s; LGU’s; WG’s;


I. YG’s; OthersII. III.

With Desire ON With stable


With Interest & “BILAO”
With Ability OFF
Business Business
But 0% resources OPERATIONS Operations

Problem: “How to start?” “Why?” “Why?”

(BROAD-BASED MASS - - - FISHERFOLK)


GOALS
1. To improve credit delivery to Fishery
Industry
2. Generate livelihood and income
generating fishery-based activities.
3. Develop an appropriate credit facility to
the different levels of stakeholders in the
industry.
OBJECTIVES
1. Develop and implement credit modalities
applicable to the different fisheries
production and commodity;

2. Monitor and document results of the


Program for the development of policy on
fisheries credit;

3. Capacitate fisherfolk association / coope-


ratives and other fishery-based social
organization.
FFP Implementation
I. Background Information
Name of Organization

Address

Tel Cell
Contact Info
Fax Email

Contact Person/s

Year Established No. of Members No. of Employees

Line of Business Asset Size (exclude land)

Products/Services

Market (domestic/international)
II. Proposed Financial Requirement

Project Description
Proposed Project (Include commodities/activities and define firm and Project Cost
established market)
III. Eligibility Requirements
Minimum Criteria Assessment

Must have a juridical personality, registered as an association, corporation or  Registered  Not Registered
cooperative with farmers and/or fisherfolk as members/shareholders. Registered With:

Must be in operation for at least 1 year.  Yes  No No. of Years:


 Yes  No
Must have an accounting and internal control system.
 Full Implementation  Partial Implementation
Must pass the following risk acceptance criteria:

1. Paid-up capital or networth of at least P150,000.00  Pass  Fail Current Amount:

 No Past Due  With Past Due


2. No existing past due account with any government or private
Amount: Institution(s):
lending institution.
 Willing to execute repayment plan

3. Past due ratio of not more than 25% of the consolidated loan
 Pass  Fail Past Due Ratio:
and accounts receivables portfolio.*

4. Debt-to-equity ratio of at most 85:15 including loan applied for.*  Pass  Fail Debt-to-Equity Ratio:

 Yes  No
Must have a Core Management Team (COMAT) If Yes:  Full Time  Part Time
COMAT:  Manager  Bookkeeper  Treasurer

*3. Past Due Loans / Total Loans Outstanding = Past Due Ratio *4. Total Debt / Equity = Debt-to-Equity Ratio
IV. Documentary Requirements

 Certificate of Registration  Financial Statement (Interim)

 Articles of Cooperation  BOD Resolution authorizing


and By-Laws the organization and its
representative to transact
 List of members of the business concerning the
Board of Directors FFP

 List of members of the  Business Plan


Core Management Team
V. BFAR Endorsement
Reviewed By:
________________________________________________________________
Name / Signature / Designation

_________________________________________
Date
Endorsed to the FFP Program for Evaluation:

________________________________________________________________
MALCOLM I. SARMIENTO, JR.
Director, BFAR
_________________________________________
Date
BFAR Focal Credit Person: ___________________

Office/Area: ____________ Contact No. ________


AVAILMENT PROCESS FLOWCHART
KEY WORK AREA RESPONSIBLE ENTITY

Formal designation/ assignment of Focal Person BFAR thru FIDSD

Identification of potential Beneficiary


Designated Focal Person
Fisherfolk Associations/ Cooperatives (BFACs)

Short-listing/ Selection of BFAC FIDSD & Focal Person

Compliance of BFAC with FFP requirements FIDSD, Focal Person & BFAC

Packaging of Business Plan FIDSD, Focal Person & BFAC

Submission of Loan Proposal


FIDSD
to BFAR Director for endorsement

Submission of BFAR-endorsed
FIDSD
Loan proposal to TWG

TWG to evaluate & recommend


TWG
loan proposal to ACPC Exec. Dir.

ACPC to endorse risk


ACPC
coverage guarantee to LBP

Processing/ Approval of loan & release of fund LBP Lending Center


A Case In Point:

Sibunag Seaweeds Growers and


Traders Association, Inc. (SSGTA, Inc.)
Municipality of Sibunag, Guimaras
Island, Province of Iloilo
Awarding of FFP Check of PhP 5.2 Million to the
SSGTA, Inc. November 2009
Credit: BFAR
Fishery Technology:
FFP Php 5.2 million Seaweeds Farming

SSGTA, Inc.
275 Fisherfolk
Members/Beneficiaries

Social Organization:
SSGTA, Inc. Market: MCPI
Seaweeds Farming Timeline
Feb-
Jan May June July Aug Sept Oct Nov Dec
Planting
1st Cropping
Planting
2nd Cropping
O Planting
3rd F Cropping
F Planting
4th Cropping
S Planting
5th E Cropping
A Planting
6th S Cropping
O Planting
7th N Cropping
Planting
8th Cropping
Planting
9th Cropping
Seaweeds Production and Harvest Timeline
¼ HA SEAWEEDS FARM INPUTS & INCOME PER FARMER:
Production Capital for Start-up PhP 47,205.00
Interest for 4 Months Payment (1% IR/month) PhP 1,888.20
Total Loanable Amount (Payable within 3-months) PhP 49,093.20
Monthly Amortization starting August to October 2010 PhP 16,364.40

June 1 - July 30 (1st Cropping)


Yield 884 Kgs RDS
Gross Income (PhP 60.00/kg) PhP 53,040.00
Less: Operating Expenses PhP 47,205.00
Total Net Income for 1st Cropping on July 30 PhP 5,835.00
Farm er's Daily Allow ance for August P hP 194.50
Re-planting: June 21 another ¼ hectare
June 21 - August 20 (2nd Cropping)
Yield 884 Kgs RDS
Gross Income (PhP 60.00/kg) PhP 53,040.00
Less: Monthly Amortization PhP 16,364.40
Less: Operating Expenses for the 2nd cropping PhP 5,110.00
Total Net Income for 2nd Cropping on August 20 PhP 31,565.60
Farm er's Daily Allow ance for Sept. P hP 1,052.19

Re-planting: July 10, another ¼ hectare


July 11 to Sept. 10 (3rd Cropping)
Yield 884 Kgs RDS
Gross Income (PhP 60.00/kg) PhP 53,040.00
Less: Monthly Amortization PhP 16,364.40
Total Net Income for 3rd Cropping on on Sept 10 PhP 36,676.00
Farm er's Daily Allow ance For Oct P hP 1,222.53
Re-planting: July 31, ¼ hectare
July 31 to Sept. 31 (4th Cropping)
Yield 884 Kgs RDS
Gross Income (Price at PhP 60.00 kg RDS) PhP 53,040.00
Less: Monthly Amortization PhP 16,364.40
Total Net Income for 4th Cropping on Sept. 31 PhP 36,676.00
Farm er's Daily Allow ance for N ovem ber P hP 1,222.53

Re-planting: August 20
August 20 to October 20 (5th Cropping*)
Yield 884 Kgs RDS
Gross Income (Price at PhP 60.00 kg RDS) PhP 53,040.00
Total Net Income for 5th Cropping on Oct 20 PhP 53,040.00
Less: Maintenance and operatimg Expenses PhP 5,110.00
Total Net Income for 5th Cropping on Oct 20 PhP 47,930.00
Farm er's Daily Allow ance for Decem ber P hP 1,597.70

*5th to 9th cropping


Summary of Net Income per Cropping
(1/4 ha per Seaweeds Farmer)
60,000.00

50,000.00

47,930.00
40,000.00

47,930.00

47,930.00
47,930.00

47,930.00
Income (PhP)

30,000.00

36,676.00
36,676.00
31,565.60

20,000.00
5,835.00

10,000.00

0.00
1st 2nd 3rd 4th 5th 6th 7th 8th 9th
Number of Cropping

Total Net Income per Farmer = PhP 350,402.60


SSGTA, Inc. Utilization of FFP Credit Funds
Releases Payments Collectibles
Date Amount (PhP) Date Amount (PhP)
23-Dec-09 466, 048.80 8-Jun-10 477, 159.96
29-Dec-09 684, 451.20 25-Jun-10 720, 662.00
12-Feb-10 463, 136.90 11-Aug-10 478, 416.50 PhP 1, 882, 658.00
22-Apr-10 500, 000.00
11-Jun-10 500, 000.00
Total 2,613,636.90 Total 1,676,238.46

Production Yield Losses Value (PhP) Remaining Balance (PhP)


29.49 tons RDS 1,740,000.00
(3 shipments)
Trading (4 tons) 360,000.00 1,380,000.00
Ice-ice occurence 492,000.00 888,000.00
Issues and Concerns
1. Term of Payment does not coincide with
the production and harvest timeline of
seaweeds farming.
2. Occurrence of force majure like ice-ice
was overlooked.
3. Funds was released prior to the planting
season of seaweeds.
Recommendations
• Schedule of fund release and repayment
should be in accordance with the
production and harvest timeline.

• There must be a provisions or safety nets


for possible occurrence of force majure like
ice-ice phenomenon.
Follow Through
Activity
Fishery Industry Financing Needs
1. Continue FFP and add more similar
financing facility for the broad based
mass fisherfolk.

2. Provision of Financing Facility for the


Fishery based MSMEs in Aquaculture,
Fishing, and Fish processing.
MSMEs: Upgrading of Fishponds for Greater
Productivity
Finances
•Grants Fisheries Technologies
•Partnerships •Fisheries Specialist
•Investments •Practitioners
•Credits •Farm Technicians

Fishponds
•FLAs (58,000 has)
•Titled
•Others

Workers
•Individual Fisherfolk Market
•Fisherfolk Association •Institutional Buyers
•Cooperatives (processors)
•Others
Status of the Philippine Fishery Industry,
FY 2000-09

BIG
ENTREPRENEURS

MSMEs

BROAD-BASED
MASS FISHERFOLK
Poverty Reduction Among the Broad Based
Mass Fisherfolk by 18.2% per Year
120%

100%

80%

60%
Percent
Reduction 40%

20%

0%

-20%
Current
Year 1 Year 2 Year 3 Year 4 Year 5
Status

Big Entreprenuers 5% 5% 5% 5% 5% 5%
MSMEs 10% 28.2% 46.4% 64.6% 82.8% 101.0%
Broad Based Mass 85% 66.800% 48.600% 30.400% 12.200% -6.000%
Thank You
Fisheries Financing Team

Alice C. Roque, Market Specialist


Marlene G. Calangian, Community Dev’t. Specialist
DA-ACPC & LBP, Funding Institution
Pilar F. Fontelar, Ph.D., Fishery Industry Dev’t. Specialist