Press Release
May 22, 2020

Recto: Time to write off CARP loans of small farmers

Senate President Pro Tempore Ralph Recto today called for Senate action on his bill condoning all the debts farmers incurred in owning lands under the government's Comprehensive Agrarian Reform Program (CARP).

He made the appeal following the approval by the House of Representatives on Wednesday of a bill that contains his proposal.

Recto's measure seeks the write-off of all unpaid amortizations, interest, penalties and surcharges on loans secured under CARP.

Once this mass amnesty of farmer's obligations is approved by law, "the agrarian reform beneficiaries shall be deemed rightful owners of the lands awarded to them."

"This is one COVID-response measure worth approving. If greater food production is what we should be doing to cushion the economic impact of the pandemic, then it is an incentive for those who feed us all," he said.

"Emancipation from debt is what they also need," Recto said.

Recto said the total amount of land reform loans for forgiveness is small compared to the hundreds of billions in private sector loans which had been written off over the past 40 years.

"We have bailed out banks, paid for white elephant projects, amortized foreign loans of dubious benefits, lost money in bankrupt firms, and entered into joint ventures which left us holding the bag," Recto said.

He said a succession of governments has been generous to corporate deadbeats whose loans we guaranteed and eventually assumed.

"We should extend the same consideration to the farming poor," he lamented, adding that government has always been a "white knight" to many private corporations in distress.

Recto said condoning the loans will be a big load off farmer's backs and also from offices that manage these receivables.

In one official report, only P2.5 billion of the P14.3 billion in amortization for loans granted to awardees of CARP from 1987 to 2004 was paid.

Collection performance by the Land Bank of the Philippines on CARP loans, on the other hand, was about 51% as of March 2015.

"There is a huge administrative cost in managing this important aspect of the agrarian reform program. In fact, in one study, the system to collect loan payments from CARP beneficiaries was not fully put in place due to the high costs required," Recto explained.

While farmers' debts will be condoned, landowners whose properties were subjected to land distribution will still be paid, Recto explained.

"Their right to be paid on time and based on the legal contracts will be honored and will not be impaired," Recto said.

Recto's bill limits the condonation to CARP loans "and is not a 100% write-off of all agricultural debts, because if we will do the latter, then those who had maliciously wasted millions in other programs will get a free pass."

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