LETTER OF INSTRUCTIONS NO. 372

TO    :      The Secretary

        Department of Agriculture
        The Secretary
        Department of Agrarian Reform
        The Secretary
        Department of Local Government and Community Development
        The Secretary
        Department of National Defense
        The Governor
        Central Bank of the Philippines
        The President
        Philippine National Bank
        The Administrator
        National Grains Authority
        The Administrator
        Agricultural Credit Administration

1.    The National Grains Authority, the Central Bank of the Philippines, the Philippine National Bank, and the Agricultural Credit Administration are hereby directed to evolve within the framework provided for in these instructions an effective marketing system through the establishment of a credit triangle which will provide a direct link among the NGA-operated or -designated warehouses, as depository of the farm produce, the financial institutions and the farmer-borrowers under the abovementioned programs.

2.    The marketing system shall be established in accordance with the following guidelines:

a.    After threshing and cleaning of the crop financed under any of the programs, the farmer-borrower shall deliver to an NGA-designated collection center a portion of his farm produce equivalent to his outstanding loan obligation with the lending financial institution concerned based on the current market price or Government-supported price, whichever is higher.

b.    From the collection centers, the farm produce shall be delivered to NGA-operated or -designated warehouses for drying and/or storage. The warehouse receipt issued to the farmer shall be assigned or pledged in favor of the financial institution concerned, which shall dispose of the farm produce upon the maturity of the loan at the current market price or Government-supported price, whichever is higher, provided that the farmer-borrower shall have the option to have the produce sold by the financial institution at any time before the maturity of his loan to a buyer of his choice at the prevailing market price of Government-supported price, whichever is higher. The proceeds of such sale shall be applied against his outstanding loan obligation and any excess shall be delivered to the farmer-borrower.

c.    The mode of payment prescribed herein shall be included in the loan document to be entered into between the farmer-borrower and the financial institution concerned.

d.    The Department of Agriculture, the Department of Agrarian Reform, and the Department of Local Government and Community Development are hereby directed:

1)    to orient the farmer-borrowers on the rationale and mechanics of the marketing system provided herein;

2)    to coordinate with representatives of financial institutions and the NGA in the selection of the collection centers; and

3)    to submit a list of farmer-borrowers indicating the area planted, estimated production and expected date of harvest at least two weeks before the harvest.

Since 19.07.98.