Agriculture Secretary Arthur C. Yap has urged the Land Bank of the Philippines to release nearly P600 million under the Agricultural Guarantee Fund Pool (AGFP) to enable more rice farmers to plant and stave off a continuing deficit in the country’s palay production this year and next.
The AGFP was established by the Landbank in compliance with Administrative Order 225-A wherein government financial institutions (GFIs) and government-owned and controlled corporations (GOCCs) are mandated to allocate and contribute five percent of their 2007 surplus for palay production and food projects.
The AGFP would encourage financial institutions and other conduits to expand their outreach to palay farmers by providing guaranteee coverage to unsecured loans extended to palay farmers.
Most financial institutions are reluctant to lend to farmers and the agricultural sector because they are considered high risk borrowers.
Even though there are various laws mandating financial institutions and banks to allocate a portion of their loanable funds for the agriculture and agrarian sector, the FIs and banks are able to skirt the law by engaging in alternative investments, specifically in government securities.
Landbank said the GFIs and GOCCs which have so far remitted their contributions for the AGFP are the Local Water Utilities Administration (LWUA); Landbank, P100 million; the Development Bank of the Philippines, P100 million; National Power Corp., P100 million; National Transmission Corp., (TransCo), P111 million; Philippine Charity Sweepstake Office (PCSO), P52.4 million; Philippine Economic Zone Authority (PEZA), P3.73 million and the National Electrification Administration (NEA), P1.029 million.