The Quedan and Rural Credit Guarantee Corp., born 22 years ago as an agricultural credit arm of the government, is now being eyed for conversion as a full-pledged government financial institution, since it functions as a credit corporation as well.
Informed sources said Agriculture Secretary Edgardo J. Angara wants Quedancor -- previously known as the Quedan Guarantee Fund Board (QGFB) during its establishment on June 9, 1978 -- converted into a GFI since it operates as one.
However, such a conversion would require amendments to its charter -- which was last changed by virtue of Republic Act 7393 in 1992 -- by no less than Congress. Such congressional action could take a long time.
When it started operations in 1978, the company was providing credit guarantee using quedans -- or warehouse receipts -- as collateral in exchange for a loan from the banks for initially rice and corn crops. The company gave out full guarantee coverage for the loans obtained by farmers from the banking sector.
Such a guarantee cover was important to banks, which shunned agricultural loans because of the very high risk and low repayments from farmer-borrowers. QGFB's entry into the picture was thus the solution to the virtually negative cash flow into the countryside.
The agency thus channeled P8.2 million worth of credit to 30 grains businessmen and farmer associations. Its first three accredited banks and the 30 borrowers were able to set the records straight. A repayment rate of 100 percent.
By 1980, feedgrains like sorghum, soybeans, mongo, peanuts and other food commodities were placed under quedan guarantee. The following year, 28 other storable agri-aqua commodities were included and qualified for financing under the program, including garlic, onions, potatoes, pomelo, assorted meat, processed fruits, dried squids, marine products, smoked fish, ham and orange concentrates.
The '80s also saw the company providing credit to a broader range of borrowers namely sugar planters, tobacco growers, cassava planters, fishers, aquaculture cultivators and other marginalized sectors whose livelihood depended on agriculture.
By the '90s, the company -- feeling the pinch of a very restrictive charter -- sought changes which raised its capital base to P2 billion and semi privatization, with only 60 percent owned by the government.