LOREN SEEKS MORE CREDIT FACILITIES FOR FARMERS

One efficient way for the Filipino farmers to become competitive and productive but is not given full attention by a parsimonious government is making credit facilities available to them through network linkages, says Senator Loren Legarda.

The chair of the Senate Committee on Agriculture, Loren explained that credit is a key input that will afford the 1.68 million farmers and fisher folks the capital to buy the needed fertilizers, implements, seedlings and pesticides.

Hence the senator urged her colleagues yesterday to expedite the passage of the Senate Bill 3431 entitled An Act Providing for An Agriculture and Agrarian reform Credit and Financing System through Banking Institutions, which had already passed second reading.

"This bill is worthy of our attention and immediate action because it will have a positive contribution to a sector in our society that is broad enough to include 35% or almost 12 million of our population's workforce but are pushed to marginalization by grievous policy market," Legarda said in her sponsorship speech that also calls for the amendments of Presidential Decree 717. Loren noted that Presidential Decree 717, or the existing law on the extension of credits to the agricultural and agrarian sector, failed to live up to its mandate, such as providing network linkages. As a result of it, Loren said, most banks resorted to alternative compliance under PD 717, and in most cases, the participating eligible banks had no connection at all to agri-agra credits.

Loren revealed that credit demand for agriculture amounted to P206.453 billion in 2008, and of that amount, only 24.05 percent or less than one-fourth was supplied by the banks and other institutions.

"Farming is the source of livelihood for many of our people in the rural areas. However production technology in farming remains primitive because our farmers do not have access to technology and inputs that would enhance their productivity," Loren said.

As of December 2008, the total loanable funds stood at P2.18 trillion, with only 25 percent or P545.274 billion pesos supposed to be lent to agriculture and agrarian reform sectors, but Loren noted that the actual compliance stood only at P492.968 billion, indicating a gap of P52.306 billion between what is mandated by the law and what was actually let out in compliance to PD 717. The 2008 figures, according to Loren, show the limited effectiveness of PD 717, in channeling credit to farmers.

Loren lamented that that the provision of allowing alternative compliance of PD 717 has slashed off P120.17 billion of funds from agriculture which she said could have gone to an estimated 1.27 million rice farmers who have no access to credit of whatever kind in 2008, the year she added, when the country was threatened by food crisis.

"This bill addresses the weakness of PD 717 by encouraging unibanks and commercial banks to be wholesalers of credit, the lending to rural banks and other institutions in rural markets who have the capability to retail credit to farmers and farmers organizations who present acceptable risk," Loren stressed.

She explained that through the network linkages between the big banks in the urban centers and the rural banks and microfinance institutions, national savings can be channeled and be made available for productive application in agriculture and rural enterprises through retail lenders in local market.