The Department of Agriculture and Fisheries (DAF) is proposing an easy access credit facility which would allow farmers and fisher folks to avail of government financing for food production without collateral, a 6% interest rate per year and a minimum loan maturity period of at least three to eight years.
The scheme, called the Farmers and Fishermen Quick Credit Facility (FFQCF), proposes a P50-B loan portfolio which would offer only production loans of not more than P50,000 per farmer or fisherman to be handled by an agency which will be created by law or existing credit cooperatives and organisations.
The repayment period of the loan will depend on the commodity that a farmer or fisherman will be producing, like three years for rice, corn, banana, sugarcane or fish drying facilities and eight years for coconut, mango, cacao, coffee or palm oil.
This modified repayment period for loans is based on the reality that when a farmer applies for a loan to plant coffee or cacao, he will not be harvesting until after at least three years later.
This new financing scheme is expected to address the very low productivity in the agriculture and fisheries sector because of the inability of farmers and fishermen to access government loan funds.
When I became Secretary of Agriculture and Fisheries last year, I discovered that the department had billions of pesos intended to be loaned out to farmers and fishermen which barely reached them.
While there is money for loans and there are several loaning programs intended for the agriculture and fisheries sectors, the DAF through its credit agency, the Agricultural Credit Policy Council (ACPC) does not have the mandate to directly lend to the farmers and fishermen.
So, loaning programs like Sikat Saka and others are coursed through the Land Bank of the Philippines, rural banks or credit cooperatives who have to observe the loaning guidelines set by the Central Bank.
The tedious and stringent bank requirements imposed by the banks before the loans are released, not to mention the very high interest rates which push the farmers and fishermen instead to usurers who could lend money in a snap of a finger.
Also, the unrealistic short loan maturity period has resulted in high delinquency, thus the proposal to base the loan repayment on the commodity or activity that the farmer or fisherman is involved with.
I believe that if farmers and fishermen are given easy access to production loans which could be granted without the tedious and stringent processes, they would be more productive as they could easily acquire the needed farm inputs like good seeds, fertilisers and value adding for their catch.
The Production Loan Easy Access Program (PLEA) which will implement the FFQCF was already presented to the Congressional Committee on Credit Policy and Small and Medium Enterprise headed by Cong. Peter Unabia of Cagayan de Oro City two months ago.
The Committee members have endorsed the proposal and asked the DAF to prepare a draft bill so Congress could enact the Production Loan Easy Access Act.
The draft bill was submitted to House Speaker Pantaleon Alvarez last month.
The PLEA, along with the Small-Scale Irrigation Systems Act and the nation-wide implementation of the Farm Mechanization Law, is expected to boost food production and address poverty in the countryside.