DA, LBP open P400-M loan window for rice farmers

MANILA, Philippines - The Department of Agriculture (DA) and Land Bank of the Philippines are forging an agreement to launch a P400-million loan program for rice farmers in four pilot provinces. 

Agriculture Secretary Proceso J. Alcala and LBP president and CEO Gilda E. Pico are launching today the loan program as one of the credit components of the Aquino administration’s Food Staples Sufficiency Program (FSSP). 

The DA and LBP are contributing  P200 million each to come up with the initial P400 million loan program that will be initially implemented this 2012 dry season in four major rice-producing provinces of Isabela, Nueva Ecija, Iloilo and North Cotabato. 

The loan program will initially serve farmers who are members of irrigators’ associations (IAs) of good standing.

A farmer can borrow a maximum of P42,000 per hectare per cropping, if they will plant hybrid rice, and P37,000 per hectare if they will produce inbred rice. 

The initial P400 million will serve approximately 2,000 farmers per province, for a total of 8,000 farmers.

To qualify, IA members must at least own one hectare or up to five hectares of irrigated land which will be used as a “table collateral” for their loan.

A “table collateral” means that the bank merely holds on to the collateral, but does not register the collateral yet.

Other loan requirements include a farm plan and budget, purchase order from the National Food Authority or National Agribusiness Corporation, and a promissory note for the amount borrowed.

Applicants must have no existing palay production loan. 

Borrowers will be charged 15 percent interest per annum, inclusive of crop insurance, payable within six months.

Declining interest will be applied to borrowers who establish good credit standing.

For the first two cropping cycles, the interest rate will be pegged at 15 percent which will be reduced by one percent every succeeding cycle, starting from the third cycle up to the sixth cropping cycle.