Credit & Climate – Reviewing PH Agricultural Credit Policy Council (ACPC) 2020 Report On Nationally Low Credit Availability & Availment, Here’s Worldly Advice – Flood Farmers’ Fields With Easy Loans On Organic Agriculture!

Shockingly, the Agricultural Credit Policy Council (ACPC) annual report “2020 State Of Agricultural Finance” states that PH banks’ overall compliance to the Agri-Agra Law of 2009 was only 10% – despite the fact that the banking system generated a total of P6,500,000,000,000 (P6.5 Trillion) loanable funds! Meaning, measly credit was availed of by farmers and fishers who needed it the most. Credit assistance – our farmers fail because we fail our farmers!

Even if, as I understand, the DA did its credit best. The ACPC report says:

The Department of Agriculture (DA) continues to provide services and resources needed by the country’s farmers, fishers and agri-fishery-based micro and small enterprises…  (intended to produce) adequate supply of food.

Some 31% or 509 municipalities, outside the National Capital Region, were still unbanked or without any banking office. Mindanao had the highest proportion of unbanked municipalities, 51%.

It is interesting to note that despite (or maybe because of) the pandemic, loans for both agricultural production as well as transportation and storage grew by the same rate of 6% in 2020 from previous year’s level.

State or private controls are holding back growth of loan use? The report says “Universal and Commercial Banks (UCBs) continue(d) to be the predominant lenders to agriculture, owning 93% of the total agricultural loan exposure of the entire banking system.”

Collectively, thrift banks (TBs) and rural and cooperative banks (RCBs) “had roughly the same size of portfolio dedicated to the agriculture section, each sharing 4% of the total in both years” (2019 and 2020).

Therefore, I say the ACPC needs to come up with a comprehensive policy pronouncement & some promotional activities covering TBs and RCBs to encourage farmers & fishers for them to enjoy a great amount of the total national loanable funds. Farmers and fishers are not conscious of credit because we are not conscious of credit ourselves?
(“LoanTap” image from Loantap.in)

RA 10000 (Agri-Agra Reform Credit Act of 2009) “aims to provide an agriculture, fisheries, and agrarian reform credit and financing system to improve the productivity of the agriculture and fisheries sector,” requiring each bank to set aside at least 25% of loanable funds: 10% agrarian, and 15% agriculture. In 2020, the banking system generated a total of P6.5 Trillion: By law, P651 Billion was to be allocated for agrarian credit (Agra) and P976 Billion for agricultural credit (Agri). Banks, however, were only able to provide Agri-Agra assistance amounting to about P663 Billion, or only 10% Overall Assistance, 90% No-Demand.

We have to give credit to whom credit is due!

Here’s my original if unsolicited advice to banks to move heaven & earth: Package tempting loans for organic agriculture (OA), because OA reduces much, much the cost of farming, produces only healthy foods, and eliminates 100% greenhouse gases from farmers’ fields. By this, Filipino farmers can teach the world how to defeat 3 Goliaths with 1 Stone: Farmer Poverty, Unhealthy Foods, and Climate Change!@517