GFSME to guarantee loans for long-gestating high-value crops

The Guarantee Fund for Small and Medium Enterprises (GFSME) may now guarantee long-gestating crops under its Makamasang Agrikultura Program for high value crops in line with the policy pronouncement of the Monetary Board allowing for a longer grace period in loan repayment for agriculture and fisheries projects. The loan repayment will be based on the economic life of the project.

Victor M. Hernandez, director for Business Development and Marketing of the GFSME said that with this new guidelines issued by the Bangko Sentral ng Pilipinas, the Fund will now be able to guarantee viable, long-gestating projects in crops, and agro-forestry under its Makamasang Agrikultura Program. The GFSME Makamasang Agrikultura is a guarantee program under the auspices of Agricultural Credit Policy Council (ACPC) of the Department of Agriculture.

Previously, the Fund was contained to guarantee loans to long-gestating high value crops because banking policy did not allow for grace periods of the more than three years. The new policy allows for a grace period of up to seven years.

"We are fully committed to assist the agriculture sector through our guarantee program for high value crops, but the banks must be willing to lend to long gestating projects. With the BSP allowing a longer grace period for these projects, the banks would be more inclined to lend to these enterprises, added Hernandez.

The new policy contained in Circular 217 of the BSP opens a window of opportunity for growers of long gestating crops. It also removes previous impediments and provides the encouragement for banks to lend to long gestating but viable projects.

In Mindanao where some bankers and entrepreneurs attended the recently held First National Tree Farming Congress in General Santos City, the new policy was greeted with mixed reactions.

"This is a welcome development," said Romy Francisco, treasurer of the Fruit Development Cooperative of Davao. "The government is realizing that in some agricultural sectors, you don't get results overnight."

Alex Buenaventura, president of the Davao-based Network Rural Bank of Southern Philippines said their bank is set to allocate 10 percent of its portfolio to long gestating crops projects particularly coffee, mango, and palm oil now that the kinks have been ironed out.