Landbank loans to priority sectors rise 35%

MANILA, Philippines - Loans extended by state-owned Land Bank of the Philippines to its priority sectors rose 35 percent in 2014 to P331.3 billion from P244.6 billion in 2013, representing a record-high share of 85.9 percent in the bank’s total loans.

The bank’s priority sectors include small farmers, agrarian reform beneficiaries and fishers as well as their associations, microenterprises and SMEs, agri- and aqua-businesses, agri-aqua related projects of local govenrment units (LGUs) and govenrment-owned corporations, communications, transportation, housing, education, health care, environment-related projects, tourism, utilities, and livelihood loans.

Landbank president and CEO Gilda E. Pico attributed the expansion in loan extension to the bank’s consistent efforts to strengthen credit support to project with high development impact.

“Enabling the growth of our priority sectors remains a priority for us at Landbank as we are committed to extending financial and technical assistance to those who need it most. This is also in line with our continuing thrust to support the national govenrment’s efforts to promote inclusive growth,” she said.

Landbank’s loan releases to small farmers and fishers increased 13 percent to P58.4 billion in 2014 from P51.6 billion in the previous year. The loans were channeled through 793 farmer and fishers cooperatives, 206 countryside financial institutions and 226 irrigators’ associations.

Meanwhile, outstanding loans to microenterprises and SMEs grew 37 percent to P51.4 billion from P37.5 billion in December 2013.

Loans to the utilities sector reached P52.1 billion, a 24 percent increase from P42.1 billion in 2013, while the bank’s loans for socialized, low cost, and medium cost housing expanded 38 percent to P37.3 billion from P27.1 billion.

Outstanding loans to LGUs reached P42.9 billion, financing various agri-aqua-related projects, priority programs of the national government, and other developmental projects.

Outside of its regular loan programs,  LanBank also works with the Department of Agriculture (DA) to provide financial assistance to farmers who are not members of accredited coopreratives and are unable to secure loans from lending institutions.

These programs include the Sikat Saka program that provides direct access to credit for small rice farmers who are not yet members of Landbank-assisted cooperatives.

Most of the country’s rice farmers have no access to formal credit and thus depend on informal lenders who charge exorbitant interest rates.

As of December 2014, P1.2 billion in loans were released to 5,904 farmer-borrowers under the Sikat Saka program. Through the program, the income of each farmer-beneficiary increased by roughly 65 percent per annum per hectare.

Sikat Saka was pilot-tested in 2012 in major rice-producing provinces like Nueva Ecija, Isabela, Iloilo and North Cotabato, and has been expanded to cover 45 provinces in the country.

Under the Sikat Saka program, small palay unhusked rice farmers are able to borrow from state-run Landbank of the Philippines as much as P47,000 per hectare, if they are cultivating certified seeds and P52,000 if they are planting hybrid rice.

Another retail lending program the bank implements with DA and the Department of Agrarian Reform is the Agrarian Production Credit Program (APCP). The APCP is a transition credit program designed to help Agrarian Reform Beneficiaries Organizations (ARBOs) become credit conduits of the bank under its regular credit window. 

Landbank is also a partner of the DA, the Agricultural Credit Policy Council and the People’s Credit and Finance Corp. in implementing the Agriculture and Fisheries Financing Program (AFFP), a flexible credit facility that provides agricultural loans to marginalized farmers and fishers from the 20 poorest provinces in the country.  

Among the priority provinces for AFFP implementation are Abra, Apayao, Ifugao, Kalinga, Masbate, Romblon, Batanes, Benguet, Ilocos Norte, Isabela, Nueva Vizcaya, Cagayan, Aurora, and Zambales.