Rural credit works! CORDILLERA VEGGIE FARMERS POST 100% LOAN REPAYMENT RECORD

By Manny Piñol

Buenos Aires, Argentina – As I packed my bags and prepared to take the long flight home, I received what I consider as the best birthday gift – a report that vegetable farmers of Cordillera who availed of production loans amounting to P6.1-M have posted a 100% repayment record.

The P6.1-M loan under the Production Loan Easy Access (PLEA) program is part of the P43.6-Million Loan fund which was downloaded to 14 lending conduits to be extended to vegetable farmers of the Cordillera Region who for so long have been borrowing from informal lenders who charged usurious rates.

This is an emotional issue for me as Secretary of Agriculture because when I introduced a more intensified Rural Credit Program for the country’s agriculture and fisheries stakeholders, I was met with incredulous comments by oppositionists who said that farmers and fishermen have a reputation of not paying back their loans.

They also pointed out that there are loan windows available in government lending institutions, a claim which I refuted by pointing out the reality that farmers and fishermen could not comply with the stringent requirements of the banks.

In proposing the PLEA, I argued that credit should be made easier for our farmers and fisher folks because this was critical to their productivity.

The PLEA is a non-collateralized loaning program with funds coming from the Agricultural Credit Policy Council (ACPC) which channels it through accredited Rural Banks, Credit Cooperatives or Farmers Associations.

It imposes a 6% interest per year which goes to the conduit banks or coops as their service fees and applicants are screened, validated and issued computerized ID cards which would indicate the location of their farms or homes.

Loans range from P5,000 to P50,000 although recently it was modified to accommodate farm equipment loan which could be as much as P50-M for established cooperatives who would like to buy tractors, rice transplanters, harvesters and even storage facilities.

Since its launching early this year, 48 provinces have been covered by the PLEA and a total of P750-M has been transferred to 117 lending conduits which extended loans to 28,266 farmers and fishermen.

ACPC Executive Director Joyce Badiola reported that 83% of the farmer borrowers in the Cordillera are first time borrowers of the partner conduits while 56% are borrowing from formal lenders for the first time.

“If this continues, the DA will be able to reach farmers who are called by the Bangko Sentral ng Pilipinas as “financially excluded,” meaning they had no access to formal credit,” Badiola reported.

As an added safeguard to the loaning program, I have directed ACPC to assign a Project Management Officer for every loan package in specific areas where the PLEA is now being granted.

The PMOs will evaluate the viability of the project being presented by the loan applicant and advise him to look at other options if it is deemed that his project is risky.

Will there be a 100% repayment for the whole loaning program?

Honestly, I do not believe so. There will always be risks in this program.

For me, however, the benefits far outweigh the risks.

In my calculation, even if 20% or even 50% of the recipients will not be able to repay their loans, the 50% whose lives would improve because of this program is a very high batting average in combatting rural poverty.

#TiwalaSaMagsasakangPilipino!

(Photos provided by ACPC and DA-RAFID Cordillera and Region VI)