The Bangko Sentral ng Pilipinas is pushing for amendments to Republic Act 10000, or the Agri-Agra Reform Credit Act of 2009, as part of its reform agenda in the 18th Congress.
Amendments to the mandated loan threshold for the agricultural and agrarian reform activities are hoped to push the country into the next stage of development post-pandemic.
“The agri-agra bill will strengthen rural development by providing a holistic approach in addressing the financing needs of the broader agricultural financing ecosystem,” BSP Governor Benjamin Diokno said.
The proposed amendments are envisioned to strengthen rural development and improve the well-being of agricultural and rural community beneficiaries. It would enhance access of rural communities to private sector financing through the expansion of modes of compliance by banks, creation of a special fund managed by an Agricultural and Fisheries Finance and Capacity-Building Council to finance organizational capacity and institutional building programs and activities of rural agricultural and fisheries households.
Latest data from the BSP showed loans extended by banks for agriculture and agrarian reform declined by 2.8 percent in 2020 as the industry continued to fall short of the mandated threshold for the sector. The banking system was only able to allocate 10 percent of its total loanable funds last year, way below the 25 percent mandated by law.
Agriculture in the Philippines needs all the help it can get and access to financing is a critical component that needs to be addressed. Whether the problem is with the banking sector or with the farmers themselves, both have to change their paradigms if they are going to join hands and transform the sector and contribute more to the country’s economy and recovery from the pandemic.
The reforms being pushed to the Agri-Agra Reform Credit Act will play a role but educating our farmers and fishermen on how to best take advantage of such opportunities will also be important.*