Saturday| June 24, 2017
An easy access credit program called Production Loan Easy Access (PLEA) which aims to increase agriculture productivity and address rural poverty was launched in Malimono, Surigao del Norte June 23 to mark the 119th Foundation of Department of Agriculture and Fisheries.
The first batch of 247 farmers and fisher folks were issued their Juan Magsasaka ID card, which will serve as a virtual "Credit Card," to allow them to borrow from P5,000 to P25,000 without any collateral, 6% interest per year and payable in at least two years.
The credit program, which I personally conceptualised and referred to our rural credit experts for refinement, aims to address the age-old problem of farmers and fisher folks for capitalisation to finance their farming and fishing activities.
While the government has passed the Agri-Agra Law which compels Philippine banks to allocate 25% of their loan portfolio for agriculture and fisheries, financing institutions have always considered farmers and fishermen as unreliable borrowers.
Almost all of these banks preferred to pay the fine imposed by law rather than extend loans to farmers and fisher folks.
When I assumed office as Secretary of Agriculture last year, I found out that there is a sizeable amount under the Agricultural Credit Policy Council intended for loans for farmers and fisher folks.
This amount, totally about P4-B every year, is hardly accessible to the farmers and fisher folks since the ACPC does not have the mandate to lend directly and had to course the loan funds through conduits like Land Bank and Rural Banks which, of course, imposed processes required by the Central Bank.
Farmers and fisher folks have to rely on informal lenders who impose very high interest rates so they could buy seeds, fertilisers, marine engines and fishing gears.
In Barangay Mat-i, Surigao City where I had breakfast with a group of farmers yesterday, the going rate of interest for a loan of P1,000 is two bags of paddy rice with a value of about P900 per bag, meaning the farmer has to return P2,800 for every P1,000 borrowed after only four months.
This situation has affected the productivity of the farmers and fisher folks and increased poverty in the countryside because most of them were mired deep in debts.
The PLEA program hopes to change the miserable conditions of poor farmers and fisher folks by giving them access to credit which would be available through their local cooperatives or Rural Banks who would agree to impose only 6% interest every year.
For farmers involved in cash crops like rice, corn and vegetables, the loan maturity will be two years to give them enough time to be able to recover.
This will be the same condition for fisher folks.
For those involved in high value crops like Coffee, Cacao, Coconut, Banana or Tree Farming, the loan maturity would be between 5 to 8 years.
The PLEA Program which is expected to be implemented nationwide next year with the approval of a P50-B funding requirement proposed for 2018 is expected to accomplish the following:
1. Increase agricultural and fisheries productivity because farmers and fisher folks would have access to credit needed to buy good seeds, fertiliser, farm inputs, fishing gear, ice boxes and even fuel for their marine engines;
2. Reduce and eventually eliminate the dependency of farmers and fisher folks on government subsidies and dole outs which have miserably failed to improve their lives because of the tedious procurement process of government which prevents the timely delivery of interventions.
As observed by farmers, rice seeds given out as subsidies are often delivered after the planting season because of the long bidding and procurement process.
3. Contribute to President Rody Duterte's target of reducing national poverty from 26% to 15% at the end of his term in 2022.
With the proposed initial budget of P50-B for the PLEA Program and a maximum loaning amount of P25,000 per farming and fisher folk household, an estimated 2 million families will be served by the program.
With an average family size of 5, it is projected that the PLEA Program will lift 10-million Filipinos out of poverty by 2022.
The Malimono, Surigao del Norte launching of PLEA signals the start of the nationwide program which will initially target areas with high poverty incidence and great food production potentials because of limited funds.
The program will expand with more funds expected in the 2018 Budget.