MANILA, Philippines - The Department of Agriculture (DA) is working with the rural banks to come up with measures to facilitate and improve access and sources of credit to the farmers and fisherfolk.
In a recent meeting with the officers and members of the Rural Bankers Association of the Philippines (RBAP), Agriculture Secretary Proceso J. Alcala sought the rural bankers’ inputs and recommendations on crop insurance, government guarantees for agriculture-related loans and insurance, ability and readiness of the rural banks to lend to the agriculture sector, as well as funding sources from the rural banks for the agri sector.
Following the meeting with the RBAP officers and members, it was agreed to form a technical working group.
RBAP executive director Vicente Mendoza said that the technical working group would formulate recommendations to the agriculture department.
“What is clear is that the rural banking system is more than willing to extend credit to the agri sector. The system is very liquid,” Mendoza said.
Last year, more than 50 percent of the rural banks’ loans were invested in the agri-agra sector.
A little over 32 percent of its total loan portfolio is invested in the agriculture sector amounting to P35 billion.
“Loans to the agriculture sectors have been exceeding 30 percent of the total loan portfolio of rural banks for the past several years,” Mendoza indicated.
Meanwhile, rural banks are already reportedly making a beeline to the Bangko Sentral ng Pilipinas (BSP), seeking accreditation to tap into the funds for the agri sector resulting from the implementation of Republic Act 10000 or the Agri-Agra Reform Credit Act of 2009.
Rural bankers said that the DA is interested in the amount that can be raised from the implementation of RA 10000
“The secretary wants to know how much could still be raised by the agriculture department if a shortfall is evident,” the RBAP said.
Earlier, the Philippine Crop Insurance Co. (PCIC) said it was inclined to adopt a microinsurance model for agriculture introduced by German International Cooperation organization GIZ or Deutsche Gesellschaft fur Internationale Zusammernarbeit.
The PCIC is the only insurer of crop damage for small farmers. Its existing product for rice is called multi-peril, which has a coverage of P10,000 per hectare with premiums worth roughly P900 per ha.
The German funding agency introduced last month the area-based yield insurance (ARBY) scheme for crop insurance, which potentially could result in huge savings for the government, and at the same time, protect farmers from losses.
The scheme would result in faster payment of claims and better protection in the face of climate change.
The ARBY is an index-based crop insurance, classified as microinsurance.
It is designed to protect farmers from below-average yield, regardless of cause. The importance of insurance protection has been magnified by the worsening conditions of climate change.