Emerging precepts during the discussions in the Agriculture and Fisheries (AF) 2025 1. Philippines as predominantly agriculture and fisheries-based economy, must post vital growth in the agri-fishery sector to impact on the country's GDP. 2. It is thus imperative for the NG to determine the

kind, quality, and extent of crucial intervention

to this sector in order to harness optimum and sustained gains, as well as aspirations.

Government intervention to agri-fishery in the past decades came in the form of subsidies directed at

farm-to-market roads, irrigation, etc., training and extension services, research and technology enhancement, distribution and dispersal of various production inputs.

GOVERNMENT SUPPORT FOR THE SECTOR’S CREDIT AND GUARANTEE REQUIREMENTS HAS NOT BEEN SUBSTANTIAL TO IMPACT ON THE AGRI-FISHERY SECTOR

.

In 2008 credit data from the Agricultural Credit Policy Council (ACPC) indicates that, for 2008, an estimated P420 Billion worth of loans were released by banks to the agri-fishery and forestry (AFF) sector representing 2.3 % of the total loans disbursed by the banking system amounting to P18 trillion to finance the country’s economic activities.

Only P178 billion or 42 % of this P420 billion financed agricultural production. Credit gap in 2008 was P156 Billion but ACPC reported this to have increased to P252 Billion in 2010 despite the registered increase in the banks loans to AFF to P624 Billion. This is a measly 2.5% of the total bank loans of P25 trillion in 2010. This can be attributed to the aversion of the Philippine banking system that normally treats agriculture and fisheries as

“high risk and high cost”

sector.

Attitude towards credit is likewise molded by prevailing Keynesian free market paradigm entangling the bureaucratic and finance industry into thinking that the market must determine accessibility and cost of rural finance.

If we are visioning for 2025, shall we not get out of this box?

Two issues that haunt Credit:

Accessibility

and

Cost

Quedancor Rural Finance Plan addresses two pronged concerns: 1) turning around a moribund credit agency to fuller potency in order that; (2) the strengthened credit guarantee agency can be a pivotal generator of rural financing starting in the next five years through the QRFP from which the Quedancor Corporate Plan is essentially anchored.

O R I G I N

Quedancor traces its origin from the erstwhile Quedan Guarantee Fund Board (QGFB) created by Letter of Instruction No. 704 in 1978. Originally established for grains inventory stock financing, QGFB later included in its guarantee financing activities other storable agri-aqua produce even for farmer groups.

In 1992, QGFB was reorganized into the Quedan and Rural Credit Guarantee Corporation by virtue of RA No. 7393 or the Quedancor Charter providing the agency with a corporate set-up with an authorized capitalization of P2.0 Billion, 60% of which or P1.2 B shall be owned by the National Government (NG) while the remaining 40% or P800 M shall be open for private sector subscription Since then, Quedancor was operating as a government-owned and controlled corporation under the policy and administrative supervision of the Department of Agriculture.

GUARANTEE MANDATE

 “To accelerate the flow of investments and credit resources into the countryside so as to trigger the vigorous growth and development of rural productivity, employment and enterprises populace”. thereby generating more livelihood and income opportunities for the disadvantaged rural  The QUEDANCOR Charter calls for the setting-up of a convenient credit support mechanism and reliable guarantee system that shall effectively: a) improve the bankability of and access by rural workers, their cooperatives and small rural enterprises to formal credit institutions; b) provide incentives for the banking sector to focus upon and enlarge the flow of credit funds and investment into the rural areas; and c) enhance farm income through direct linkage between the producers, the market and the end-users.

 QUEDANCOR’s role as guarantee institution is further recognized under RA No. 8435 or the “Agriculture and Fisheries Modernization Act (AFMA) of 1997” which directs QUEDANCOR to help transform agriculture into a highly productive and competitive sector and enable farmers and fisherfolk to meet the challenges of modernization through the implementation of the law’s credit and guarantee provisions.  In particular,

Section 25 of AFMA designates QUEDANCOR as the Fund Manager of the Agriculture and Fisheries Credit Guarantee Fund (AFCGF)

which clothed it with the important role of serving as guarantor to the unsecured loans of farmers and fisherfolk thereby encouraging local banks to increase their loan portfolio to the sector. To date, QUEDANCOR is the only government agency with legal mandate to provide guarantee services for the agri-fishey sector.

SOVEREIGN GUARANTEE

Section 19 of R.A. 7393, provides that Quedancor’s guarantee obligations are backed up by the guarantee of the Republic of the Philippines, to wit: “The Republic of the Philippines shall answer for the payment of guarantee obligations duly incurred by the Corporation… Provided, however, that the Corporation’s assets shall have been fully exhausted to satisfy its guarantee obligations.” At present, Quedancor is the only guarantee institution for the agri fishery sector that carries a sovereign guarantee.

Vision

Greater access to credit and guarantee by agricultural stakeholders towards increased productivity and improved quality of life.

Mission

Provide better and accessible guarantee system and convenient credit support mechanism.

Core functions

Section 2 of RA 7393 provides that QUEDANCOR shall set up a convenient credit-support mechanism and reliable guarantee system that shall effectively:   Improve the bankability of and access by rural workers, their cooperatives and small rural enterprises to formal credit institutions Provide incentives for the banking sector to focus upon and enlarge the flow of credit funds and investments into the rural areas;  Institutionalize the quedan or warehouse receipt and other negotiable instruments, evidencing stored agri-aqua produce in bonded warehouses, as the more convenient collateral for obtaining credit financing;  Support dynamic cooperativism, capital formation and savings mobilization among the rural populace;  Increase farm income by promoting a system that by passes unnecessary layers of middlemen and links producers more closely to end-users through auction markets, trading centers, consumer cooperatives and the like;  Harmonize and coordinate with all government institutions, non-governmental organizations, private voluntary organizations, and other groups involved in providing support services to rural inhabitants.

For the last five years, losses have been increasing due to the decreasing income generating activities and bad collection.

Year

1978-89 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

TOTAL Guarantee Releases SGM

7,966.81

GCFM

400.25

Total

8,367.06

2,481.21

1,705.79

121.79

157.22

2,603.01

1,863.01

1,066.65

580.74

834.52

1,433.12

189.06

212.74

328.08

345.48

1,255.71

793.48

1,162.60

1,778.60

1,238.47

1,292.05

1,066.50

639.05

484.70

402.55

305.91

427.39

282.93

176.95

379.69

295.03

278.70

133.75

12.22

5.30

1.96

1,533.50

1,570.75

1,200.25

651.26

489.99

404.51

305.91

427.39

282.93

176.95

379.69

396.80

-

23,161.85

1.08

2,482.65

396.80

117.37

14.50

25,776.35

SGM

1,922,390 326,766 222,871 115,260 79,221 129,404 180,060 103,894 97,311 78,369 50,649 45,489 40,697 26,543 23,551 19,962 15,213 30,907 59,470 -

Beneficiaries GCFM

13,709 4,261 4,805 7,123 7,268 14,198 16,652 13,764 12,283 7,371 829 679 603

3,568,027 103,587 Total

1,936,099 331,027 227,676 122,383 86,489 143,602 196,712 117,658 109,594 85,740 51,478 46,168 41,300 26,543 23,551 19,962 15,213 30,907 59,470 4 2

3,671,620

Year

2001 2002 2003 2004 2005 2006 2007 2008

Loan Releases (PM) Beneficiaries

1,389.7

1,624.1

2,662.6

4,890.6

4,818.7

3,794.8

1,794.0

792.6

114,553 169,759 320,487 202,270 102,488 100,705 90,271 31,000

Year

2004 2005 2006 2007 2008 2009 2010

Past Due

2,486.5

3,591.7

4,189.4

5,331.1

5,744.7

6,419.2

6,266.9

Past Due Ratio (%)

36.0

42.8

48.6

61.5

69.2

89.2

90.1

For the period CY 2004 to 2007, the past due accounts of the agency has been appending at an incremental rate. From P2.5 Billion in 2004, it has ballooned to 69.2% or P5.7 Billion in 2008 and stood at P6.3 billion with 90.1 % past due rate in 2010.

ORGANIZATIONAL STRUCTURE

 QUEDANCOR currently operates under the 1994 DBM approved organizational structure and staffing pattern with 451 regular and 35 casual positions. This was augmented by 502 contractual positions from 2001 to 2005 and 601 casual positions in 2005.  From 520 personnel in 2001, the complement ballooned to 1,634 in 2004 resorting to job order scheme and probationary status hiring approach to meet manpower requirements.

 As of April 25, 2011, manpower complement stands at 769, with 201 regular, 462 casual and 106 contractual employees.

GOOD GOVERNANCE

   Filed 22 docketed administrative and criminal cases before the Office of the Ombudsman and the courts involving 77 officers and employees and 48 private respondents, of which 10 favorable decisions have been secured.

Abolished various committees created by the previous administration including the District and Regional Credit and Guarantee Committees (DCGC and RCGC) and effected centralized loan approval.

Crafted and institutionalized the Code of Ethics for implementation nationwide. Conducted seven (7) seminars/training on Corporate Values, Code of Conduct and Ethical Standards for officers and rank-in-file employees which started in August 2010.

    Re-engineering of corporate structure and right-sizing of personnel complement through EO 366 (Rationalization Plan). Creation of a Change Management Team to conduct a strategic review of Quedancor's operations in relation to its organizational units Quedancor’s Proposed Rationalization Plan with a complement of 258 employees was officially submitted by former DA Secretary Arthur C. Yap to DBM. DBM approved it on February 5, 2010 retaining only 191 employees out of the 838 present complement, as part of the rehabilitation plan prescribed by DOF and Economic Managers but which did not materialize.

On March 14, 2010, the Quedancor Employees Association (QUEMAS) questioned the legality of RATPLAN and filed a case which until now is being heard in court.

A. Growing-out its guarantee business through the existing guarantee funds and by tapping other available funds at the dispensation of the Department of Agriculture, particularly the Agricultural Guarantee Fund Pool (AGFP) and the Agricultural Competitiveness Enhancement Fund (ACEF) in order not to impinge on fiscal management efforts of the present Economic Managers; B. Settlement of obligations through bonds redemption without sovereign guarantee but sweetened with confidence building mechanisms (CBMs) until the transfer of all liabilities and assets to the National Government upon enactment of new charter, likewise complemented by intensified trade receivables collection and sale of acquired assets and further internal corporate reforms; C. Institutionalizing accessible credit at subsidized cost of 6% interest per annum within special niches using zero-cost government funds counter-parted with market priced bank loans and borrower’s equity; and D Strengthening the credit guarantee institution by enabling a debt-free Quedancor, increasing capitalization to P20-B and rationalizing management of existing agri-fishery guarantee funds.

STRATEGIC DIRECTION: The Guaranteed Credit Stimulant (GCS) Formula

GCS Formula interplays these strategies as Quedancor grows out its guarantee business.



Grow Out of Guarantee Business (2010 onwards)

Three (3) guarantee products shall be offered carrying the new program banner

Agricultural Credit Guarantee for Rural Productivity or AGRICORP:

• • • AGRICORP Guarantee Program for Agri-Fishery Inventory Management (AGRICORP-AIM); AGRICORP Guarantee Program for Production Inputs and Labor, Facilities, Machinery and Equipment (AGRICORP-PILFAME); and AGRICORP Guaranteed Co-Financing Program for Agri-Fishery and Livelihood Projects (AGRICORP-AFLIP).

The guarantee programs can be a flagship credit undertaking within an innovative purview of Private-Public Partnership (PPP) to push agri-fishery development through the proposed 6/5 Credit System. PRIVATE: The banking industry shall make available market priced lending funds to agri fishery project proponents availing of Quedancor’s credit guarantees as collateral substitute. PUBLIC: NG provides zero-interest counterpart funds for PPP lending with Quedancor guarantees pushing bank’s fund exposure and investment to agri-fishery sector.



Evolving a stronger guarantee fund base for Quedancor

1.Expediting the transfer of management of AGFP’s P2.5 B, where DA remains to be fund owner and Land Bank as trust manager, paves the way for Quedancor’s pursuit of guaranteed credit for post-harvest activities not covered by Administrative Order No. 225-A which likewise translates to additional revenue streaming for the financially ailing corporation; 2.Quedancor is the duly constituted agency rearing agri-fishery business through guaranteed credit employing the powers and mandate of RA 7393; and 3. Quedancor, has agri-credit guarantee expertise and existing nationwide manpower complement translating into regional presence and network. It has once established relationships and gained trust with the agri-fishery stakeholders that need only to be rekindled through a credible guarantee fund base and aggressive confidence building measures (CBMs); and



Evolving a stronger guarantee fund base for Quedancor

4. Quedancor is empowered by its charter to provide access to credit and help reduce cost of credit through the following: a. Can leverage guarantee fund base as much as five (5) times; b. Investments to Quedancor stocks as well as the guarantees of Quedancor are compliance with the Agri-Agra Law; c. Accessibility of Quedancor guarantees to BSP rediscounting facility; and d. Guaranteed obligations possess sovereign guarantee.

5. Quedancor products come with “extras” e.g. credit evaluation, client prospecting, Group Credit Life Insurance, friendly staff, waiver of penalties, interest condonation, etc. and it has an excellent variety of credit guarantee product mix, covering marketing, inventory financing, investments, business start ups and three (3) modes of participation for the lending bank, quite better than AGFP which only offers guarantee cover for production.

6. AGFP's life term is provided by EO 225- A to be at 5 years subject to extension for another 5 years. Quedancor, being a GOCC with original charter, has a corporate life of 50 years.



Surviving Quedancor's Indebtedness Through Bond Redemption (2011)

Strengthening Quedancor's new guarantee business through the Enhanced GCS Formula would bolster the revenue streaming and thereby help meet the interest maturities relative to the capital market obligations of P2.4 Billion under the Multi-Series Bonds (MSB) and Corporate Notes (CN) transactions entered into by the agency's previous administration.

 Under the Enhanced GCS Formula, the P2.4 B MSB/CN obligations shall be settled through issuance of new bond complemented by confidence building mechanisms and intensified trade receivables collection activity and sale of acquired assets.  Under the Bond Redemption Scheme, Issuer-Quedancor shall issue new bonds under new terms of five more years with a reduced interest of 6% or less but without sovereign guarantee.

THE 6/5 CREDIT SYSTEM - REDUCING THE COST OF AGRI-FISHERY CREDIT (2012-ONWARD)

  Helps decrease the cost of credit to as low as 6% per annum compared to the prevailing market rates ranging from 20 to 36 percent per annum.

Practically intends to provide credit at 6% interest per annum within 5 weeks or 5 days for micro-agri loans for pioneering ventures, start-ups, and projects of young agripreneurs and agri-fishery activities with growth potential.

 In effect, the national government's intervention comes in the form of indirect subsidies to the farmer's credit needs by lowering credit cost to: 1.

2.

3.

Half the prevailing market rate through counterpart funding of zero-rated ACEF funds; Additional 4% through Quedancor's rediscounting line with BSP; and Another 2.5% though subsidizing Quedancor's PS and MOOE cost which thereby reduced guarantee fee rate to only 0.5%.

 Aside from lowering the cost of credit, this becomes the potent mechanism to regain the confidence Quedancor once enjoyed with the banking industry as a partner when it used to be a competitor in an imperfect rural finance market.

    The need to revisit Quedancor's mandate and continued existence, in consonance with the present policy thrusts on fiscal, livelihood support and employment generation of the new administration, merits preferential focus more particularly in the aspect of fund support and freeing up the credit agency from its present indebtedness.

The convenors of AF 2025 can heed this need through their collaborative executive and legislative powers and resources in pushing Quedancor’s charter amendment. The draft bill enhances credit guarantee potency by empowering the reorganized corporation with increased capitalization of P20 Billion.

Leapfrogging AF 2025 entails jumpstarting with substantial subsidies to crop insurance and guarantee if the present leadership wants the floodgates of liquidity of private financial institutions to be wide open to agriculture and fisheries. In the first place, government can not be a reliable source of credit that is mainly looked at as dole outs

Quedancor’s corporate survival under the GCS Formula shall be carried out to enhance corporate efficiency and governance through the following operational plans focused on five (5) areas namely:

program implementation, personnel and administration, marketing, financial and legislative concerns

:

1. Repackaging of guarantee programs ; 2. Intensifying collection of accounts receivables and disposal of acquired assets; 3. Enactment of new charter 4. Restructuring of obligations and debt servicing; 5. Rationalization of existing organizational structure and staffing pattern; 6. Enhancement of human resource competency and values; 7 Enforcement of management systems and internal control; and 8. Improving corporate image.



Program Implementation

• •

1. Repackaging of Guarantee Programs under the new AGRICORP

Launch revitalized guarantee programs and services under a new brand name AGRICORP which stands for Agricultural Credit Guarantee for Rural Productivity. Two (2) schemes of guarantee products shall be available namely, the Sole Guarantee Mode (SGM) and the Guaranteed Co-financing Mode (GCFM). As of March 31, 2011, there are six new accredited lending entities and three (3) more banks are undergoing accreditation processes.



Program Implementation

•

Sole Guarantee Mode

Quedancor guarantees 85% of the amount of loan provided by the participating bank to its borrowers in the implementation of various agricultural lending programs. There are two (2) major programs under this mode depending on the purpose:

a. AGRICORP for Production Inputs and Labor, Facilities, Machinery and Equipment ( AGRICORP-PILFAME) -

caters to the capital needs of farmers and fishers for the acquisition of farm/fishing machineries, equipment, implements, facilities, labor and even inputs (seeds, fingerlings, feeds, fertilizers, pesticide etc.) Under this program, the LE funds the loan of the borrower at 100% while Quedancor guarantees up to 85% of the outstanding principal plus accrued interest of the loan.



Program Implementation

Sole Guarantee Mode b. AGRICORP Guarantee Program for Agri-Fishery Inventory Management (AGRICORP-AIM)

- provides additional capital to farmers and fishers whose produce (such as grains, coconut, other storable commodities, and frozen products under livestock and poultry or aquaculture and fisheries) are stored in accredited warehouses and are issued quedans or negotiable warehouse receipts which they can use to avail of loans from participating banks, 85% of such loan to be covered by Quedancor's corporate guarantee. The LE funds the loan of the borrower 100%, while Quedancor guarantee 85% of the lost or unaccounted agri-fishery stocks covered by quedan or warehouse receipts.



Program Implementation

Guaranteed Co-financing Mode

• •

a. AGRICORP Guaranteed Co-Financing Program for Agri Fishery Projects (AGRICORP-AFLIP)

Aimed to encourage and re-establish participation of LEs in extending credit to farmers, fisherfolk, rural workers, small retailers, wholesalers, sole proprietorships, cooperatives, agriculture based enterprise, Non-Government Organizations, Local Government Units, People's Organizations, federation of cooperatives, partnerships, corporations or other similar organizations engaged or will engage in viable and highly profitable agri-fishery and livelihood projects. Quedancor with a financing institution have an equal share in the loan releases. The loan from the bank is backed-up with 100% Quedancor guarantee.



Intensifying Collection of current and past due accounts

a. Accounts Remediation Program (ARP)

initial down payment. which aims to provide borrowers relief from financial burden through flexible repayment terms and conditions with provisions for conditional reduction or condonation of incurred surcharges and penalties without need for

b. Loan Modification Program

requested by the borrower.

features re-pricing of interest rates which will be covered by a new PN, change in the mode and/or term of payment based on a favorable evaluation, waiver of service fee for past due and remediated accounts and the maintenance of existing charges for current accounts but with condonation of surcharges and /or re-pricing of interest as

c. Pursuit of legal actions against delinquent borrowers

small claims cases in pilot areas. using the services of OGCC and contracted private lawyers and filing of



Intensifying Collection of current and past due accounts

Promotions and marketing of Quedancor acquired assets for eventual sale to interested parties shall be pursued. As of December 31, 2010, a total of 278 properties worth P267,047,653 located in different regions have been consolidated under Quedancor. Under this are: • Publication of the list of Quedancor acquired assets for sale /lease in the major dailies and in the internet, in addition to regular publication in the local media.

• Engagement of the services of licensed real-estate brokers subject to accreditation guidelines.

• Exploring innovative approaches in the management of corporate assets such as joint venture, BOT, lease, etc. in order to bolster revenue streaming and partly subsidize guarantee operations.



Financial Restructuring of obligations and debt servicing

QUEDANCOR shall seek to restructure its current obligations with both private and government creditors and pursue payment through any of the following schemes:

a. Bond redemption with credit enhancements

Under the Bond Redemption Scheme, Issuer-Quedancor shall issue new bonds under new terms of five more years with a reduced interest of 6% or less; b. Payment in kind utilizing the accumulated acquired assets already consolidated in the name of Quedancor; and c. Debt to equity swap



Personnel and Administration

•

1. Rationalization of existing Organizational Structure and Staffing Pattern (OSSP)

The modified OSSP has 405 plantilla positions which reduces Quedancor’s 451 plantilla positions under its 1994 DBM-Approved Organizational Structure by 10%. • Structurally, the modified OSSP is more responsive to the core business of the Corporation of credit guaranteeing and collecting.

• • The Program Operations Department I and II in the 1994 DBM Approved Structure are renamed Credit Guarantee Department and Collection and Remedial Department tasked to implement the revitalized guarantee programs and collection, respectively.

The Legal Department is given the investigative functions while Finance Department is split into two departments to be more supportive to the core business of the Corporation.

MODIFIED ORGANIZATIONAL STRUCTURE AND STAFFING PATTERN GOVERNING BOARD INTERNAL AUDIT SERVICES PRESIDENT EXEC. VICE-PRESIDENT COMMISSION ON AUDIT (COA) PLANNING AND MANAGEMENT SERVICES DEPT MANAGEMENT SERVICES INFORMATION TECHNOLOGY PLANNING LEGAL AFFAIRS DEPARTMENT LITIGATION DOCUMENTATION INVESTIGATION CREDIT GUARANTEE DEPARTMENT GUARANTEE MANAGEMENT CREDIT EVALUATION AND ACCREDITATION FIELD SUPPORT COLLECTION AND REMEDIAL MGT. DEPARTMENT BUDGET AND FUND MGT. DEPARTMENT COLLECTION AND REMEDIAL ASSETS MANAGEMENT FUND MANAGEMENT BUDGET MANAGEMENT ACCOUNTING DEPARTMENT CLAIMS CORPORATE ACCOUNTING LOANS ACCOUNTING ADMINISTRATIVE SERVICES DEPARTMENT HUMAN RESOURCES LOGISTICS MANAGEMENT PUBLIC INFORMATION REGIONAL OFFICES NCR III IV V VII VIII IX X XI XII XIII I II VI

*Terminating 327 of its existing manpower complement of 778 (as of December 2010). Under the modified, Quedancor’s presence will be regional rather in five (5) strategic area field offices only, namely: North Luzon, South Luzon, Visayas, North and South Mindanao.

2. Enhancement of human resource competency and values

To improve competency of its employees and develop and advocate code of conduct and moral reformation, it shall implement the following policies: a. A standing policy not to assign any employee in a specific position unless he meets the minimum qualification and given proper orientation and training.

b. For position that requires trust and confidence, the employee's background check should be updated and bonded in case he will be handling cash or any accountability.

c. All employees are required to read and sign the Code of Corporate Values and Ethical Standards on a semestral basis to signify his understanding and his agreement to comply.

d. All employees will be given technical training on a regular basis while supervisors will need to take courses on supervision and management.

Expensive courses relating to technology will be funded but provisions for re-echo will be facilitated.

2. Enhancement of human resource competency and values

e.

Recruitment, placement, promotion will be professionalized.

• • All job applicants will be evaluated based on merit and fitness for the job. Promotion and placement shall likewise be based on merit.

f.

A performance contract shall be executed among all officers and the DOF.

g. Performance evaluation shall be conducted regularly and feedback to further improve performance.

h. Personnel Benefits will be processed and given promptly.

i.

Good performance will be recognized regularly through awards and citations.

j.

Scholarships will be sourced more diligently while procedures for availment will be systematized.

2. Enhancement of human resource competency and values

k. The Governing Board as the highest policy making body of the Corporation shall be guided by a Code of Corporate Governance. l. The Executive Committee shall be institutionalized consisting of the President, the Executive Vice President and all Vice Presidents. It shall meet regularly to plan and decide on all matters relating to all aspects of administration and management.

m. The Management Committee shall be composed of all members of the Executive Committee, all Assistant Vice -President and all the Field Office Heads. The Excom shall regularly provides directions and exercise control while the ManCom takes care of operationalizing plans and supervising staff.

2. Enhancement of human resource competency and values

n. Management team gaps will be patched through:   Trainings to function not only as technical experts but as effective managers; Communication gaps will be improved and refocused through the use of effective management information system, computerization, team building, fellowships and the like; • • Career paths will be established for each position; Job Specification for all functions will be documented and discussed; • The Administrative Code shall be a compulsory reading for all, while an effective grievance system shall be put in place; and • The QUEMAS is recognized by management as the legitimate and effective association for advancing the employees rights and welfare.



Marketing

o Thrust will be towards the introduction of a NEW, DIFFERENT and VALUE ADDING credit guarantee product.

o o Product differentiation will be anchored on BRANDING the new guarantee products and will be called Agricultural Credit Guarantee for Rural Productivity (AGRICORP), built and managed well to support the vision, mission and passion of the new management of Quedancor.

Consumer decision on product selection is determined by product

recall, accessibility, availability or convenience and

assurance of extra service or after sales service. For Quedancor products to be marketable they must be laced with these features.



Marketing

1. Product Positioning

a. For the AGRICORP products and services, market positioning will be established mainly through a brand awareness program.

b. Product positioning offensives shall center on two issues, prop up sagging image of Quedancor and market push of Quedancor products and sevices.

c. To maximize use of limited guarantee funds, product positioning mix for the initial years will be concentrated on pushing the SGM, and only a limited scale for GCFM, CFM d. Only well-trained credit guarantee operations officer who have passed the guarantee retooling course will be fielded to ensure quality service needed to create good brand imagery for the new AGRICORP.



Marketing

1. Product Positioning

e. Product introduction advertisements will be launched to run in the first year which aimed at creating brand awareness for the AGRICORP and stimulate the market to avail of Quedancor’s programs and services.

f. Advertisement shall make use of product endorsements by well known allies in either the Senate or the Congress to endorse for free as well as similar endorsement catered to the lending partners can be obtained from any of the economic managers or the DOF. g. Radio plugs using AGRICORP jingles or songs and posters shall be preferred for rural clientele while product promotion to be embedded as news items will be arranged to appear in the printed media periodically at least twice a week.



Marketing

1. Product Positioning

h. The Field Office Head will be tasked to coordinate with local radio or television stations for interviews regarding the new corporate thrusts, preferably with a local Congressman or official. i. Prospective borrowers shall be profiled and approached one on one for personal promotions on Quedancor products with effective supervision by the Field Office Head.

j. Advertisements should highlight product features of Quedancor guarantee and should not negatively hit against AGFP and its products. k. The renewed promotions and strengthening on Quedancor will impact psychologically on borrowers with past due accounts.

l. The internet using Quedancor's website shall be widely used as a medium for promotion.



Marketing

1. Promotion

First Phase aimed to introduce the AGRICORP as a brand name and its products to create awareness and to position them accordingly. Announcements of product come on for the account remediation program, the loan modification program, small claims settlement program, sale of acquired assets and others, for the “old” Quedancor shall likewise be effected to attract delinquent borrowers to update their accounts. Second Phase aimed at brand management. AGRICORP brand will continuously be promoted through sustained advertisement using the product promotion strategies described above to constantly stir interest on Quedancor and its products.



Marketing

1. Support System

• Computerization for the new guarantee programs will be outsourced after manual system has been perfected. • Patching of loopholes in its credit guarantee implementation like a stronger control mechanisms to effectively monitor and inspect stocks inventory. stronger controls in the management of legal cases and collections from old accounts. • A reference price monitoring system for commodities covered should likewise be put in place to protect Quedancor from price fluctuations.

• A management information system that would put emphasis on monitoring loans collections and loan releases for each subdivision of the office should be put in place. • A performance contact will be executed and signed by all employees to serve as contract for their services. • Contract for highly specialized services shall be outsourced.



Improving Corporate Image

To regain its eroded image as the guarantee institution for the agri-fishery sector, Quedancor shall implement a

Corporate Re-imaging Program

.

A comprehensive corporate re-imaging campaign shall be pursued to rebuild the tarnished image of the corporation and to strengthen its credibility and integrity as a guarantee corporation.



Financial Performance

1. Showing the projections for 2011 only without any fund infusions and operating at present complement of 778; and 2. With fund infusions from the AGFP and ACEF and with PS/MOOE subsidy under a modified organizational structure presented in two (2) stages with the

stage

showing the effect with additional funds and the

second stage

amendment.

first

reflecting the impact of additional funds and the debt assumption by the NG by way of charter



Without fund infusion AGRICORP GUARANTEE TARGETS PER YEAR WITH P 304M 2011 -2015 Year Amount (In PM) Beneficiaries

2011 2012 2013 2014 2015 TOTAL 608.0

577.6

548.7

521.3

495.2

2,750.8

10,120 9,614 9,133 8,677 8,244 45,778

PROJECTED CASHFLOW BALANCE, PROFIT AND LOSS STATEMENT AND ASSETS for 2011 (Without Fund Infusion) FINANCIAL INDICATOR

Cash Ending Balance Net Income Assets

AMOUNT (In PM)

154.84 (1,338.94) 4,135.89

B. With Fund Infusion at Stage I with the AGF and ACEF Funds and with PS/MOOE Subsidy AGRICORP GUARANTEE TARGETS PER PROGRAM/YEAR 2011 – 2015, WITH P2.5B AGFP (In PM) AIM PILFAME AFLIP YEAR 2011 2012 2013 2014 2015 TOTAL Amount Bene

1,250.0

2,462.5

2,388.6

250,000 492,500 477,725 2,317.0

463,394 2,247.5

449,491

10,665.6 2,133,110 Amount

375.0

738.8

716.6

Bene

37,500 73,875 71,659

Amount

437.5

424.4

411.6

Bene

87,500 84,875 82,329 695.1

69,509 399.3

79,858 674.2

67,424 387.3

77,463

3199.7 319,967 2,060.1 412,025 Amount

2,062.5

3,625.6

3,516.9

3,411.8

3,309.0

13,863.3

TOTAL Bene

375,000 651,250 631,713 612,761 594,378

2,865,102

B. With Fund Infusion at Stage I with the AGF and ACEF Funds and with PS/MOOE Subsidy TARGET COLLECTION FROM OLD ACCOUNTS, 2011-2015 (in PM)* YEAR

2011 2012 2013 2014 2015

TOTAL

*Including sale/lease of acquired assets.

Amount (PM)

345.0

330.6

257.1

90.5

45.5

1,069.3

INCREMENTAL AGRICORP GUARANTEE TARGETS PER PROGRAM/YEAR 2011 – 2015, WITH P2.5B ACEF (In PM) AIM YEAR 2011 2012 2013 Amount

375.0

392.8

361.6

78,557 72,367

PILFAME Bene

75,000

Amount

375.0

392.8

361.8

Bene

37,500 39,279 36,183

2014 2015 TOTAL

61.0

258.9

1,449.3

61,011 51,782 305.1

258.9

338,717 1,693.6

30,505 25,891

169,358 AFLIP Amount

1,750.0

1,833.0

1,688.6

Bene

350,000 366,600 337,712

TOTAL Amount

2,500.0

2,618.6

2,412.2

Bene

462,500 484,435 446,263 1,423.6

1,208.3

284,717 241,650 2.033 7 1,726.1

376,233 319,323

7,903.5 1,580,679 9,256.9 2,088,754

With the infusion of the P2.5 billion ACEF funds for the 6/5 credit system, there will be an assured incremental P2.5 billion worth of credit for the agri-fishery sector in 2011 and for the succeeding years.

Stage I

Revenues are expected to be generated by income from collections of old accounts and lease, supported with income from guarantee operations, backed by both corporate guarantee funds and the fresh funds from AGFP and ACEF.

PROJECTED CASHFLOW BALANCE, PROFIT AND LOSS AND ASSETS, 2011-2015 (in PM) STAGE I WITH THE P2.5B AGFP and P2.5B ACEF FINANCIAL INDICATOR 2011 Cash ending balance Net Income 2012 2013

(1,123.86) (1,086.61) (1,088.32)

2014

1,600.71

(128.14)

2015

(103.34) (65.71)

Assets

6,350.99

8,033.30

6,983.85

6,809.27

5,081.77

Stage II With Fund Infusion and with NG Debt Assumption by

2015. With the infusion of about P5.0 billion funds from AGF and ACEF and with the debt assumption by NG by way of the new charter, cash flow will register positive balances from 2011 to 2015 with a substantial cash ending by 2015 that will allow the agency to sustain its operation and realize net income.

PROJECTED CASHFLOW BALANCE, PROFIT AND LOSS AND ASSETS, 2011-2015 (In PM) STAGE II WITH THE P5.0B AGF and ACEF FINANCIAL INDICATOR 2011 Cash ending balance Net Income

(1,336.97)

Assets

6,350.99

2012

(721.43) 7,790.04

2013

1,332 (889.45) 7,258.32

2014

1,651.47

95.37

7,860.03

2015

1,848.66

145.16

8,543.77

1. Reduce cost of credit 2. Vibrant countryside lending translating into P27 billion worth of credit guarantees that will be channeled to agri-fisheries from 2011 to 2015 thus contributing to bridging the credit gap in agri-fishery sector.

3. Invigorated investments in the sector in consonance with the private-public partnership thrusts and the corporate social responsibility projects of participating financial institutions which will fund almost P17.28 billion of various agri-fishery projects.

4. Enhanced confidence on credit guarantees as collateral substitute.

5. Stimulated agricultural production, maintenance and distribution of national inventory procured from domestic producers for food security and global competitiveness. 6. Increased rural income as a result of higher employment and productivity.

7. Better quality of life.

8. Continued existence of QUEDANCOR as credit and guarantee institution while it evolves into AGRICORP.