World Bank funds $1B farm modernization

The Philippines is set to launch its largest results-based agriculture modernization effort after securing a $1-billion financing package from the World Bank aimed at boosting farm productivity, strengthening food security, and protecting rural livelihoods against climate and economic shocks.

The new Philippine Sustainable Agriculture Transformation (PSAT) Program, unveiled Friday, 15 May by the Department of Agriculture (DA), marks the country’s first project under the World Bank’s Program-for-Results financing model, where funding is released only after measurable targets are achieved.

The initiative comes as the government faces mounting pressure to stabilize food supply, raise farm output, and shield the agriculture sector from rising energy costs, climate disruptions, and supply chain volatility.

Agriculture Secretary Francisco P. Tiu Laurel Jr. described the program as a major step toward long-term agricultural reform.

“This financing allows us to raise farm productivity, stabilize food supply, and protect millions of livelihoods dependent on agriculture,” Tiu Laurel said.

“By strengthening value chains and building climate resilience, we are supporting rural incomes and reinforcing a key pillar of the economy,” he added.

The PSAT program will focus on increasing rice-based farming output, improving efficiency and climate resilience across agricultural value chains, and strengthening institutional performance within the sector.

Unlike traditional financing arrangements, the World Bank’s Program-for-Results scheme requires the government to hit verified performance targets before accessing portions of the funding, placing stronger emphasis on accountability and measurable outcomes.

Government officials expect an initial $300-million release next year, providing support as the country deals with inflationary pressures and climate-related risks affecting food production.

The World Bank said the program could benefit at least five million farmers through improved services, stronger supply chains, and more resilient agricultural systems.

“These programs will help at least five million farmers diversify livelihoods, increase income, and manage climate risks,” said Zafer Mustafaoğlu, World Bank division director for the Philippines, Malaysia, and Brunei.

The financing package is complemented by a $24.5-million technical assistance grant under the Technical Assistance for Sustainable Agriculture Transformation program, including $14.5 million from the United Kingdom through its Just Rural Transition Support Programme.

British Ambassador Sarah Hulton OBE said agriculture has become central to the broader challenge of balancing food security, economic growth, and climate resilience.

“Agriculture sits at the crossroads of climate change, food security and economic growth,” Hulton said.

“As farmers face stronger typhoons, floods and disrupted supply chains, transforming agriculture is not just a technical task—it is a strategic necessity,” she added.

Agriculture Assistant Secretary Arnel de Mesa said the program could also become a model for future results-based financing projects in the Philippines, shifting government focus toward measurable economic impact rather than simple fund disbursement.