Better access to loans for farmers: Agri-Agra bill lapses

FARMERS, fishers and other agricultural actors could soon get better access to loans after the bill repealing the Agri-Agra Credit Reform Act 2009 became law on Thursday, as neither President Duterte nor the current President Marcos Jr. have not acted on this measure.

Finance Secretary Benjamin E. Diokno, who previously served as governor of Bangko Sentral ng Pilipinas, announced the move to the measure, which had previously been certified as urgent by President Duterte.

“Good news: Republic Act 11901, also known as the Strengthening Agriculture, Fisheries, and Rural Development Funding Act of 2022, has become law,” Diokno told reporters in a statement. message.

Without the president’s signature, the measure “became law” on July 28, based on the copy of the law shared by Diokno with reporters.

The consolidated version of the bill was passed by the Senate and House of Representatives on May 23, but it is unclear when exactly it was sent to the Palace.

The 1987 Constitution stipulates that: “The President must communicate his veto to any bill in the House from which it originates within 30 days of the date of receipt thereof; otherwise, it will become law as if he had signed it.

President Duterte ended his six-year term on June 30.

Senator Cynthia Villar, chair of the 18th Congress’ Agriculture, Food and Land Reform Committee, said concerns have been raised because banks would rather pay fines than lend money. money to farmers, fishermen and other agricultural actors.

The Strengthening Agriculture, Fisheries and Rural Development Finance Act 2022 consolidated the previous loan allocation set by the Agri-Agra Act, which required banking institutions to set aside 15% for the agricultural sector and 10% to beneficiaries of the agrarian reform.

Under the new law, all banking institutions, whether public or private, with the exception of newly established banks, must, for a period of five years from the date of commencement of bank operations, reserve a credit quota, or mandatory minimum for agriculture and fishing. require financing of at least 25 percent of their total loanable funds.

To comply with this requirement, banks may lend to beneficiaries in rural communities to finance agricultural and fisheries-related activities or through other means, such as loans for the construction and upgrading of infrastructure, including, but not limited to, roads connecting farms to markets, as well as the provision of post-harvest facilities and other public rural infrastructure that will benefit the rural community.

The law also paved the way for the creation of a special fund from the penalties to be imposed on banks for non-compliance or non-compliance with the mandatory agri-agra credit requirement.

Twenty percent of the special fund should be allocated to programs and activities to strengthen organizational capacities and institutions related to agriculture and fisheries. This will be implemented by the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP) with the assistance of training providers as well as the Agricultural Credit Policy Board and the Cooperative Development Authority.

Net of the 5% to be withheld by BSP to cover administrative expenses and 20% for agriculture and fisheries capacity building programs and activities, the special fund will be allocated to these executing agencies:

  • 65% of the fund will be made available as a credit facility with minimum interest rates and with a minimum collateral requirement to be managed equally by LBP and DBP;
  • 35 percent of the fund will be allocated to the Department of Agrarian Reform for the titling and parcelling of land holdings covered by collective certificates of land ownership.

The new law mandated a system of financing agriculture, fisheries and rural development through government and private banking institutions that is expected to improve the productivity, incomes, competitiveness and welfare of beneficiaries of the rural community, including farmers, fishers and land reform communities.

The financing system will include loans and investments to finance activities that improve the productivity and increase the income of a farming and fishing household, thus promoting the productivity and competitiveness of the agricultural sector, as well as the sustainable development of communities. rural.

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