ADB Loan to Support Livelihood Improvements for Poor Philippine Farmers

News Release | 3 November 2008

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is embarking on a fresh loan project to improve the lives and incomes of more than 150,000 poor farmers in southern Philippines - including six provinces in the Autonomous Region of Muslim Mindanao that have high levels of poverty.

Funding will come from a loan of $70 million from ADB's ordinary capital resources (OCR), with an additional $30 million to be sourced from the OPEC Fund for International Development (OFID), which is administered by ADB. The Philippine government will contribute $52.4 million and local government units, $56 million.

The Agrarian Reform Communities Project II (ACRP II) will allocate $135.2 million for rural infrastructure projects and $25.2 million for agriculture and enterprise development. The remaining funds will be used for capacity building, project implementation management, and contingencies.

The ARCP II will build on the momentum created by the success of ARCP, approved in 1998, which assisted 165 agrarian reform communities in 35 provinces.The project will train farmers to support community-driven development (CDD) for infrastructure projects and enhance agribusiness activities to support poor beneficiaries of the government's Comprehensive Agrarian Reform Program (CARP). CARP redistributes land to landless farmers and helps them to become market-oriented producers.

The project will target capacity building for organizations of agrarian reform beneficiaries and local government units in CDD, improve rural infrastructure and distribution networks, including farm-to-market roads, bridges, small-scale irrigation systems, post-harvest facilities, and widen the access of target communities to social infrastructure such as potable water supply systems and other community facilities. It will also provide technology and extension support to assist farmers boost the productivity of their crops, as well as partner with micro-finance institutions and nongovernment organizations to develop new agri-enterprises and markets.

"The project will substantially expand the rural production base by assisting the poor to break out of subsistence farming, to diversify their livelihood activities, to raise production and distribution efficiencies, to improve their market position, and to provide employment opportunities for landless households," said Manoshi Mitra, Senior Social Development Specialist at ADB's Southeast Asia Department. Around a third of the target beneficiaries are expected to be lifted out of poverty.

It will also aim to build stronger, more representative farmer organizations with vulnerable groups, particularly women, involved in the consultation process for new development initiatives.

ADB's OCR loan will have a 25-year repayment period, including a grace period of five years, and an interest rate based on the ADB London Interbank Offered Rate-based lending facility. The OFID loan will have a 20-year maturity, including a five-year grace period, a 1% service charge and a 3% interest rate.