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SENATE MUST OK BILL ON FARMER LOANS — VILLAFUERTE

Camarines Sur Rep. LRay Villafuerte has called on the Senate to fast-track its approval of a year-old House-approved measure that aims to enable banks to expand its assistance  to agriculture by amending certain provisions of the Agri-Agra Law, following reports that these lending institutions have again fallen short of their loan compliance to the sector in 2020. 

Villafuerte said the House already approved on third and final reading in March last year  House Bill (HB) No. 6134, which mandates banks to strengthen the financing system to the agriculture and agrarian reform sectors.   

“The banks can hardly comply with the provisions of the Agri-Agra law not because of the lack of funds to lend to the agriculture sector, but because the only way they can comply is through loans, which they are wary of extending because of the lack of creditworthy agriculture projects.”

HB 6134 or the proposed Rural Agricultural and Fisheries Development Financing System Act was promptly transmitted  by the House to the Senate, where a counterpart version of the measure remains pending. 

“The banks can hardly comply with the provisions of the Agri-Agra law not because of the lack of funds to lend to the agriculture sector, but because the only way they can comply is through loans, which they are wary of extending because of the lack of creditworthy agriculture projects,” Villafuerte said. 

“HB 6134, which was approved by the House a year ago, aims to expand the modes of compliance for banking institutions in extending credit to the  sector by, for one,  allowing them to invest in bonds and stocks that would finance activities to boost agricultural productivity,” said Villafuerte, who was among the co-authors of HB 6134. 

Villafuerte said the country cannot attain full recovery from the Covid-19 pandemic without the government extending support to the  agriculture sector, more so now with the supply shortfalls in pork and other farm commodities that has contributed  to elevated inflation.

He noted that in 2019, loans extended by banks for agriculture and agrarian reform slipped by 2.8 percent to P713.6 billion last year from P733.92 billion in 2019. 

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed the banking system was able to allocate only about 10 percent of its total loanable funds last year, way below the 25 percent mandated under Republic Act (RA) No. 10000 or the Agri-Agra Reform Credit Act of 2009.

Villafuerte pointed out that the Executive Branch has recognized the limits of the Agri-Agra Law, which was why it has modified its implementing rules and regulations (IRR) in January  this year. 

The revised IRR  simplified bureaucratic processes,  extending the law’s coverage to households of agrarian reform beneficiaries (ARBs) and to agrarian reform communities, and allowing the eligibility of loans to all segments of the agricultural value chain to include  not only planting, but also processing and marketing, among other amendments.

The bill also allows banks to lend funds for the construction and upgrading of infrastructure, including farm-to-market roads, post-harvest facilities, and other public rural infrastructure that will benefit the agriculture and agrarian reform sectors.

Villafuerte, however, noted that the amended IRR still limits the modes by which banks can comply with the mandatory credit requirement under the Agri-Agra law. 

Under HB 6134, all banking institutions, whether government or private, except newly established banks for a period of five years from the date of the commencement of the banks’ operations, are required to set aside a credit quota, or a minimum mandatory agricultural and fisheries’ financing requirement of at least 25 percent of their total loanable funds. 

On top of lending to the agriculture and fisheries sector, HB 6134 states that banks may also comply with the mandatory financing requirement by investing in debt securities, open deposit accounts with rural financial institutions, rediscounting eligible papers covering agriculture, fisheries and agrarian reform credits; and  investing in shares of stock of rural financial institutions. 

The bill also allows banks to lend funds for the construction and upgrading of infrastructure, including farm-to-market roads, post-harvest facilities, and other public rural infrastructure that will benefit the agriculture and agrarian reform sectors.

Other forms of compliance include lending to agri-business enterprises that maintain agricultural commodity supply-chain arrangements directly with rural community beneficiaries; undertaking agricultural value chain financing that benefits rural communities; and investing in shares of stock of the Philippine Crop Insurance Corp. (PCIC) or in companies that benefit the agriculture and agrarian reform sectors, the bill states. 

Banks may also comply with the mandatory credit requirement by contributing to a special fund known  under the bill as  the Agribusiness Management Capacity and Institution-Building Fund (AFFCC), which aims to finance agricultural and fishery related activities and organizational capacity and institution building programs of cooperatives, and qualified organizations and households.                               

On top of co-authoring HB 6134 with 48 other lawmakers, Villafuerte also co-authored the Bayanihan 1 and 2 laws, which President Duterte had signed to beef up the government’s Covid-19 response and provide assistance to the hardest hit families and businesses.

He has also called on the government to place its “Plant, Plant, Plant” program on the front burner “to best prepare the country for the ‘new normal’ once the pandemic spawned by the lethal COVID-19 has been contained.”

Along with former Speaker Alan Peter Cayetano, Villafuerte also co-authored the bill establishing the Bangon Pamilyang Pilipino (BPP)  Assistance Program, which aims to provide low-income and vulnerable households at least P10,000 in cash assistance amid the high unemployment and elevated inflation resulting from the lingering pandemic.

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