Saying cheap credit will also improve the agriculture sector’s productivity, Senator Cynthia Villar commended thrift banks for being at the forefront of providing this to farmers and fisherfolks.
During the Chamber of Thrift Banks General Membership Meeting at the Makati Shangri-La Hotel, Villar said agri-entrepreneurs, businesses and rural cooperatives are also among the beneficiaries of cheap credit.
“Access to cheap credit or the lack of it is among the barriers that prevent farmers and fisherfolks from being competitive and profitable.”
Access to cheap credit or the lack of it, the veteran legislator said, is among the barriers that prevent farmers and fisherfolks from being competitive and profitable.
As chairperson of the Senate Committee on Agriculture and Food, the seasoned lawmaker has been working on measures to remove these barriers.
According to the lady senator, she has conducted hearings on the proposed amendments to Republic Act (RA) 10000 (Agri Agra Reform Credit Act of 2009) or popularly known as the Agri Agra Law.
When the law was amended in 2009 as the Reformed Agri Agra Law and implemented in 2011, she said the intention was to provide a financing system to improve the productivity of the agriculture and fisheries sectors.
“And years after its enactment, I wanted to know if the law delivered on the promise to improve competitiveness or further amendment needs to be done since it’s the provision to review the law 3 years after implementation,” said Villar.
She said the law specifies the 25 percent requirement of the loanable funds of banks to be dedicated for agriculture and fisheries and of which 10 percent shall be for agrarian reform beneficiaries (ARBs).
The law provides for loans to support activities and purposes specified under the Agriculture and Fisheries Modernization Act (AFMA) and the Agrarian Reform Code of the Philippines.
“Mechanization or the lack of it is among the oftentimes cited barriers to the growth of the agriculture sector. The other barriers, according to the Philippine Institute for Development Studies are lack of technical expertise and lack of financial literacy,” Villar said.
In one of the hearings, she said they tackled the bills filed seeking the condonation or restructuring of unsettled interests, penalties and surcharges on loans availed under the program.
“But resource persons we invited failed to give the committee specific information on the amount sought for condonation and we don’t encourage condonation as a policy. Gusto namin malaman why farmers cannot pay their loans and do something about it,” Villar stated.
As far as the committee is concerned, she said they are reviewing the Agri Agra Law to possibly enact a remedial legislation or bills of extending state insurance which can be collateral for loans from banks.
“So we are trying to pass a law on agricultural insurance which today is a climate-based free insurance for farmers,” Villar added.
“We are passing also the Secured Transaction Bill in Congress which will enable borrower to use movable collaterals like warehouse receipts.”
“We are passing also the Secured Transaction Bill in Congress which will enable borrower to use movable collaterals like warehouse receipts. Movable collaterals account for 40 percent of commercial lending in China and 30 percent in Vietnam,” she concluded.
