To help boost farmers’ productivity in the long run, Senator Win Gatchalian is pushing for the passage of a measure that will revitalize and overhaul the over a century-old warehouse receipt system of the Philippines.
Senate Bill No. 2171 (SBN 2171) or the Philippine Warehouse Receipts Act of 2019, principally authored by Gatchalian, has been sponsored on the floor by the chairman of the Senate Committee on Trade, Commerce, and Entrepreneurship, Senator Koko Pimentel III.
The lawmaker described the legislation as a “win-win for farmers and consumers” since it is expected to help boost the country’s agricultural productivity and food security, while improving farmers’ margins in the long run.
“The aim of the bill is to revitalize and overhaul the warehouse receipt system of the Philippines. Primarily, this will be done through the establishment of an online centralized registry of warehouse operators and warehouse receipts,” said the legislator during his co-sponsorship speech on the measure.
“This will be done through the establishment of an online centralized registry of warehouse operators and warehouse receipts.”
SBN 2171 provides for the creation of an online and uniform registry system where all electronic warehouse receipts can be registered and accessed. The Securities and Exchange Commission (SEC) will be tasked to create and maintain the registry.
The bill also establishes the Warehousing Accreditation Council, which will be tasked to institutionalize and operationalize a system of accreditation for warehouses and warehouse operators.
A Warehouse Relief Assurance Fund will also be created to cover for losses involving warehouse receipts stemming from Registry based failures, including but not limited to the irretrievable destruction of the registry or any entities therein.
Gatchalian recalled that Act No. 2137 or the Warehouse Receipts Law of 1912 was enacted into law more than a century ago in order to help farmers and other agricultural workers to obtain credit by storing their goods in a warehouse in exchange for a warehouse receipt, which could then be traded or encumbered.
However, Gatchalian also noted that the archaic provisions of the 107-year-old law has hindered farmers from taking advantage of modern technological advances which could have helped leverage their warehouse receipts as more potent commercial and financial instruments.
“The archaic provisions of the 107-year-old law have hindered farmers from taking advantage of modern technological advances.”
Gatchalian also lamented that despite remaining to be a central pillar of the Philippine economy, agriculture only accounts for less than 1 percent of total credit. This, according to him, is a clear indication that warehouse receipts issued to farmers are not collateralized to their full potential because of a lack of transparency and efficiency in the system, which results in a lack of confidence on the part of financial institutions in the viability of warehouse receipts as sound financial paper.
Through SBN 2171, Gatchalian expressed optimism that a more secure and transparent framework for the trading of warehouse receipts will prompt banks to be amenable in accepting farmers’ warehouse receipts as collateral for loans.
“Put very simply, we will be giving farmers the financial tools they need to produce more crops at lower prices. This will eventually result in a greater stock of food at lower prices in markets all across the Philippines. This makes this legislation a win-win for farmers and consumers alike,” he said.