|
THE
Department of Agriculture (DA) has set up the
Agricultural Guarantee Fund Pool (AGFP) which will
provide low-interest loans to palay growers and small
farmers.
The DA
said the AGFP will have an initial outlay of between
P500 million to P800 million. Of the initial outlay of
the fund, P100 million will be contributed by the Land
Bank of the Philippines (LBP), which will administer the
fund.
The fund
is sourced from the contributions of government-owned
and -controlled corporations (GOCCs). Their
contributions are equivalent to 5 percent of their
budget surplus in 2007.
Agriculture Secretary Arthur Yap said that farmers
tilling a maximum of five hectares each and who are
unable to obtain collateral-free credit from the formal
banking sector can now borrow from government or private
financial institutions and have as high as 85 percent of
their loans secured through the AGFP.
In
Administrative Order (AO) 23 issued earlier this week,
Yap approved the rules covering the use by small
borrowers of the AGFP. GOCCs were mandated to contribute
to the fund by virtue of AO 225-A.
Issued
three months ago, AO 225-A required GOCCs to funnel 5
percent of their respective net incomes into a new
credit facility that will be used for food productivity
programs.
“The
AGFP shall be used to provide guarantee coverage to
unsecured loans or financing extended by financial
institutions and other parties to small farmers engaged
in rice and/or food production projects or activities,”
said Yap in AO 23, which covers the implementing
guidelines for AO 225-A issued by President Arroyo.
He said
the AGFP comprises “the fund contributions of GOCCs and
GFIs (government financial institutions) out of their
combined 2007 surplus. Each contributing corporation
shall enter into a MOA [memorandum of agreement] with
the DA specifying the amount of contribution, as
supporting document to the fund remittance to the AGFP.”
The DA
will supervise the AGFP through a governing board
composed of Agriculture Undersecretary Berna Romulo
Puyat; representatives from the National Antipoverty
Commission, Land Bank and the Agricultural Credit Policy
Council; and a representative from the GOCC that has the
highest contribution to this fund pool.
Yap said LBP will serve as the institutional manager of the AGFP
for all guarantees extended to all GFIs as well as to
private institutions like rural and cooperative banks,
farmers’ cooperatives, credit suppliers and
nongovernment organizations that have good track records
in lending or financing.
He said
the AGFP will be maintained for five years, subject to
another five-year extension as may be agreed upon by the
DA and LandBank.
“The
AGFP shall extend guarantee cover to eligible
loan/financing exposure of the eligible institution of
up to 85 percent of the loan or financing principal,” he
said. “The guarantee fee shall be 3 percent per annum of
the amount covered by the AGFP guarantee.”
Eligible
for guarantee cover are unsecured individual loans of
small farmers growing palay or other crops in a maximum
of five hectares each, or those engaged in backyard
animal raising or other farm-based activities to be
approved by the AGFP Board, as well as the loans of
farmers’ groups like irrigators’ associations.
Priority
for AGFP guarantee will be given, though, to palay
farmers in light of the DA’s aim of making the country
at least “98-percent self-sufficient” in the staple by
2010 by raising harvests to 17.34 million metric (MT)
tons this year, 18.55 million MT in 2009 and 19.77
million MT the following year. |
