Fast titling, acceptance of CARP lands as collateral can help defeat '5-6 bankers'

Comprehensive Agrarian Reform Program (CARP) lands will remain a "5-6 paradise" unless roadblocks that prevent them from being used as collateral for production loans from formal sources are lifted, Senate President Pro Tempore Ralph Recto said.

Recto said the free and speedy titling of CARP lands and for more banks to accept those not yet titled are keys to making these assets sources of financing "of the kind that will help farmers improve their income without leaving them indentured."

In a Senate bill, Recto called for the accelerated subdivision and titling of lands awarded under government's agrarian reform program.

Recto's bill mandates that lands, regardless of whatever lawful manner in which they came into the possession of the farmer, shall be accepted as collateral by any lender, bank or other financial institution.

Covered by this provision are Emancipation Patents, Homestead Patents, Free Patents and Certificates of Land Ownership Award.

Recto scored what landtillers have to hurdle in getting credit as compared to the ease by which other professionals can secure consumer loans.

"Farmers are sitting on an immovable asset which they cannot use for bank loans while any Juan, Pedro, Maria can walk into a car showroom and in 48 hours can drive out with a car bought on credit. 'Yung kotse pwede itakbo, 'yung lupa hindi."

Four in five farmers and fishermen take out loans, and of those, three borrow from non-formal sources, like usurers, Recto said, citing a government study.

One in eight farmers who need credit has been dissuaded by the failure to present documentary proof of ownership of collateral offered.

On the side of lenders, 36 percent admitted that they have rejected loan applications for having insufficient collateral.

"Thus, it is not surprising that nearly a decade since the enactment of Republic Act No. 10000, or The Agri-Agra Credit Reform Act of 2009, direct compliance of Philippine financial institutions to the credit quota requirement remained at a low 25 percent," Recto explained in the bill's preface.

"Hindi rin naman sila pwede tumakbo sa gobyerno, kasi hindi naman malalim na balon ang pondong pautang na mina-manage nito kaya one percent lang ng farmers ang nagsabi sa isang survey na regular silang nakaka-access ng credit mula sa pamahalaan," Recto said.

The weak presence of a formal rural credit market can also be traced to a provision in the Comprehensive Agrarian Reform Law which prohibits beneficiaries from selling, transferring or conveying the land within 10 years of the award, Recto explained.

The said law also bars the mortgaging of the rights to the awarded land until it has been fully paid.

"This bill provides a way for these assets to be used for resource generation," he said.