Higher LandBank exposure to agri sector vowed
Credit to Author: EIREENE JAIREE GOMEZ| Date: Tue, 06 Aug 2019 16:58:43 +0000
STATE-RUN Land Bank of the Philippines (LandBank) has committed to increase its loans to the agriculture sector by targeting to cover at least 3 million farmers and fishermen across the country in the next three years, newly appointed Acting Agriculture Secretary William Dar said on Tuesday.
In a press briefing in Quezon City, Dar said LandBank officials had reported to President Rodrigo Duterte during the Monday cabinet meeting the banks’ intensive efforts for the farm sector.
This, as Dar disucssed with LandBank his plan on updating the Department of Agriculture’s Registry System for Basic Sectors in Agriculture (RSBSA), a nationwide database of baseline information concerning farmers, farm laborers and fishermen located in 75 provinces of the Philippines, excluding Autonomous Region in Muslim Mindanao (ARMM) and the National Captial Region (NCR).
RSBSA is used as the basis for Department of Budget and Management (DBM) to target beneficiaries of some of the different agricultural support programs of the government, as implemented by various government agencies, such as the RSBSA agricultural insurance program of Philippine Crop Insurance Corporation (PCIC), and the Agriculture and Fisheries Financing Program of
LandBank and People’s Credit and Finance Corporation.
“Last (Monday) night, LandBank discussed how they would increase their exposure in agriculture sector. Their initial exposure is to almost 1 million farmers with P10 billion. Their plan in the next three years is to elevate this exposure to P30 billlion and giving credit to almost 3 million farmers,” Dar explained.
While the target is a “substantial initiative,” Dar noted that huge gap between the yearly credit requirement in agriculture sector amounting to about P270 billion a year and to the P30 billion provided by Landbank annually.
Under the Agri-Agra Law or Republic Act 10000, enacted in 2009, banks are mandated to allocate at least 25 percent of outstanding portfolio to agriculture. Of this, 10 percent should be devoted to credit for agrarian reform beneficiaries.
However, the law, which was passed during the Marcos administration, has been yielding to low utilization of the loan funds as banks would choose to pay penalties instead, Dar said.
“Agri-Agra Law is not properly implemented because almost all the banks still wants to just pay the penalties. Some banks say [the programs] are not bankable… that they are high risk,” he said.
RA 10000 aims to provide agriculture, fisheries and agrarian reform credit, insurance and financing system to improve the productivity of the agriculture and fisheries sectors. The law consists of loans to support activities and purposes pertaining to agriculture as stipulated under the Agriculture and Fisheries Modernization Act (AFMA) and the Agrarian Reform Code of the Philippines.
“[W]e discussed that lengthfully because the credit availability, affordability and accessibility is one of those that can make the farmers productive and competitive,” Dar said.
“The Cabinet understood that LandBank should remain a universal bank so that whatever is the profit from the universal banking should be [plowed] back to the agriculture credit facility,”he added.
In a statement on Monday, LandBank said its loans to agriculture has been on the uptrend in the past 10 years, reaching P219.62 billion as of June 2019 from P93.3 billion in 2009. These include P42.31 billion in loans to small farmers, fishers, and their associations and P177.32 billion to other players in the agri-business value chain.