LOREN PUSHES FOR MORE CREDIT FOR AGRICULTURE

The banking sector and government agencies engaged in agriculture development are all in agreement that the agricultural sector should be given more credit to boost development.

Sen. Loren Legarda, chair of the Senate committee on food and agriculture, made this disclosure as her committee continued consultations on bills proposing revisions to Presidential Decree 717, otherwise known as the Agri-Agra Law.

The law provides for "an agrarian reform credit and financing system for agrarian reform beneficiaries through banking institutions."

The law requires lending institutions (banks), to allocate 25% of their loanable funds to agriculture (15%) and agrarian reform beneficiaries (10%).

Loren said she had been expecting "adamant opposition from the banking sector against the bills proposing revisions to the Agri-Agra Law. However, banking representatives were supportive of the goal of the bills to improve the plight of our agricultural sector through credit."

"The taking up of these proposed revisions is timely, as the existing Presidential Decree 717 is already 34 years old. Further hearings will be taken in the context of holistic agriculture development, the role of the different stakeholders and the role of credit," said Loren.

The details that will be threshed out in following technical working groups will be on the modes of compliance and the penal provisions, Loren said.

In several hearings conducted by the Legarda committee, the government agencies represented were all in support of the bills, barring a few specific differences.

"They (resources persons) were all in agreement that there is a very big credit gap that needs to be filled by the financial sector. The taking up of the bills is especially timely for the Department Agrarian Reforms with the extension of CARP, as credit for agrarian reform beneficiaries is a much-needed support structure for the success of the agrarian reform program," Loren added.

The Department of Agriculture wanted to focus revisions on the modes of compliance to remove non-agriculture related provisions and channel funding more towards agriculture and agrarian reform beneficiaries, and to improve penal provisions to be more deterrent.

The Philippine Crop Insurance Corporation, a government -owned corporation, also raised good points regarding climate change and agriculture.

With the increasing effects of climate change, crops and planting cycles are more at risk, PCIC said. However, with its limited capacity, only two percent of palay and corn farmers have insured crops.

But because of climate change, insurance is a growing need in the face of increased risk. Though increased available credit can be used for insurance premium payments, there is a need for insurance education and other support services.

The Bangko Sentral ng Pilipinas brought up the need to look into the role of local governments in crafting localized and specialized agricultural development agendas to improve the effectivity of credit provided by the Agri-Agra Law.