July 2, 2024

 

Philippines advocates for greater access to government-backed loans for farmers

Philippines Agriculture Secretary Francisco Tiu Laurel Jr is advocating for increased access to government-backed loans for farmers, emphasising the necessity of more effective support for the agricultural sector, The Manila Times reported.

 

Tiu Laurel highlighted the case of the Agricultural Credit Policy Council (ACPC), which has disbursed only PHP 100 million (US$1.6 million) out of its PHP 600 million (US$10.1 million) in available funds. He stressed that robust crop insurance coverage could help "mitigate risks for farmers" and create an environment conducive to adopting new technologies and sustainable practices.

 

He noted that Filipino farmers require support measures like those in Vietnam, where subsidies, credit, and crop insurance are provided to farmers.

 

In March, the Philippines' Department of Agriculture permitted partner lenders to charge a 2% annual interest rate on a state-funded loan for small farmers and fisherfolk. This is in addition to the 3.5% service fee on loans extended under the ACPC's Agri-Negosyo (ANYO) Loan program, totalling a 5.5% finance charge per annum.

 

A recent survey by the Bangko Sentral ng Pilipinas (BSP) indicated that loans for agriculture and related services accounted for 18.1% of the total loans of the banking sector in 2022, up from 17.6% in 2021. The 2022 Countryside Bank Survey report, released in May, attributed this increase mainly to the lending activities of rural and cooperative banks.

 

The central bank also linked the growth in agricultural loans to the need to provide working capital, acquire farm equipment, undertake sustainable projects, digitalise farming activities, and promote agri-tourism. Agricultural lending has primarily been for acquiring seeds, fertilisers, and farm inputs.

 

Tiu Laurel emphasised the importance of providing strong financial support to the farming sector to adopt new technologies and best practices. "Focus must be on comprehensive training in modern farming techniques instead of traditional methods," he said.

 

He added that technology-based farms could revolutionise Philippine agriculture, increasing productivity and profitability while attracting a younger generation of Filipinos to farming and fishing. "The solution lies in embracing technology-based farming methods," he said.