Agri loans up 7.5% in 2012

MANILA, Philippines - Agricultural loans extended to farmers in 2012 rose by 7.5 percent to P705.11 billion from P655.72 billion as lending institutions lent more for production activities, according to the Bureau of Agricultural Statistics (BAS).

The 2012 Agricultural Credit report showed that 35.1 percent of the total agricultural loans equivalent to P247.3 billion at current prices was released for production activities.

Production loans increased by 8.4 percent from P228.12 billion in 2011.

BAS said private banks continued to release the biggest amount of production loans in 2012 even if their releases have been declining over a five year period.

Private banks’ share in production loans fell to 85.6 percent from 87 percent in 2011.

Private commercial banks and rural banks remained as the biggest providers of production credit with their shares of 27.3 percent and 23.8 percent in 2012, respectively.

The least source of production loans were the stock savings and loan associations which accounted for 7.7 percent of the total agricultural production credit released by private lenders.

Specialized government banks, on the other hand, increased their share to farm production loans to 14.4 percent from 13 percent.

The lending volume provided by government and private banks also increased.

During the period, government banks extended credit actively, expanding loan releases by 19.88 percent, faster than the rate of 13.10 percent in 2011.

Land Bank of the Philippines, the largest agriculture financing arm of the government raised its supply of loans by 20.11 percent in 2012 compared to only 15.33 percent a year earlier.

Private banks slowed down their loans releases by 6.69 percent as against 10.70 percent in 2011.

BAS said 38.69 percent of total production loans were allocated for food production, slightly higher than 2011’s 38.33 percent. Of this, 16.33 percent was used for cultivating palay and 14.18 percent for raising livestock and poultry. Fruits, vegetables and rootcrops accounted for 3.88 percent.

Loans to finance the production of major industrial crops such as sugar cane and coconut comprised 8.29 percent.

Meanwhile, the ratio of production loan to Gross Value Added (GVA) in agriculture increased to 19.77 percent in 2012. This means that for every peso value of agricultural output, P0.19 was financed by bank loans.

Data showed sugarcane was the most financed crop with a ratio of 39.32 percent or P0.39 of credit assistance for every peso of sugarcane output.

The credit support for palay was P0.14 while P0.06 for corn. Rubber had a lower loan assistance with a ratio of 0.13 percent.

Livestock and poultry fetched a production loan to GVA ratio of 13.2 percent while fisheries had a ratio of 2.85 percent.