By Manny Piñol
Farmers and fisherfolk, long branded as unreliable borrowers with high rate of deliquency, are actually paying back their loans from the Department of Agriculture’s rural credit programs at an incredible rate of 96%.
Agricultural Credit Policy Council (ACPC) Executive Director Jocelyn Badiola reported that the highest repayment record was posted by Cordillera vegetable farmers who posted a 100% repayment rate for the P46-M loan portfolio opened by DA-ACPC.
This very high repayment rate by rural borrowers who are often neglected by formal lenders repudiates the claim of so-called credit experts that lending to farmers, fishermen and rural woman groups is high risk business.
For me, this is a vindication for my firm position that rural borrowers could be relied upon to pay back their loans provided the terms are easy and the process is not very complicated.
I have always argued that if rural borrowers could pay back informal lenders at usurious rates of 10% per month payable right after harvest, there is no reason why they could not pay back a loan which imposes a 6% interest per year or 0.5% per month.
This means that for a loan of P10,000, rural borrowers will only have to pay a P600 interest in one year compared to an interest totalling P12,000 for one year if they borrowed from informal lenders.
At the start of the administration of President Rody Duterte, I convened the ACPC board, where I am the Chairman with agencies like Bangko Sentral, Department of Finance, Land Bank of the Philippines, Department of Budget and Management and representatives of farmers and fishermen as members, and asked for a consolidation of all loaning programs of the DA.
I discovered that there were so many lending programs with a total loan portfolio of about P5-B but which was largely unutilized because the requirements were voluminous and the process was difficult.
Discovering this, I asked the board to consolidate the loans program and make it easily accessible to rural borrowers.
Today, DA-ACPC has four major loan programs and these are:
– PUNLA which is offered to borrowers in the poorest provinces of the country;
– PLEA or the Production Loan Easy Access with an interest rate of 6% per year without collateral;
– SURE or Survival and Recovery Loan Program which offers a P25,000 no-interest, no-collateral loan to farmers and fishermen whose livelihood was affected by natural or man-made calamity.
– Agriculture and Fisheries Machinery, Equipment and Post-Harvest Facilities Loaning Program.
So far, the DA-ACPC has released almost P1-B under the first three loans programs while P400-M is available under the Machinery and Equipment Loans Program.
With these easy access loans programs, the DA expects greater productivity from the agriculture and fisheries sector while a reduction in rural poverty is also projected.
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