By Madelaine B. Miraflor
Some Philippine banks may finally break their years of non-compliance of the Agri-Agra Reform Act by providing loan of as much as P200 billion to the Department of Agriculture (DA).
Agriculture Secretary Emmanuel Piñol
Agriculture Secretary Emmanuel Piñol said some banks, including a government bank and a group of thrift banks, have offered to provide funding to the banner projects of the DA, including the Solar-Powered Irrigation Projects (SPIS), the farm mechanization program, and construction of Farm-to-Market Roads (FMRs).
During the meeting, Piñol said these banks offered to release a combined loan amount of P200 billion to bankroll some agriculture and agrarian projects in order to comply with the Agri-Agra Act.
Under the Agri-Agra law, banks are required to set aside 25 percent of their loan funds to the agriculture and fisheries sector.
Over the years, however, banks would just opt to pay the hefty fines for their failure to comply with the law since they consider farmers and fishermen "high risk" borrowers.
In May last year, Piñol said Philippine banks "cheat" just to get away with Agri-Agra Reform Act. This, after banks cited the lackluster performance of agriculture sector as one main reason why they refuse to lend to farmers.
A few months later or just when DA faces a financial setback for some of its projects, Eastern Samar Congressman Ben Evardone, who chairs the House Committee on Credit and Banking, had set a meeting between Piñol and some bankers, led by former Ambassador Alfredo Yao, who owns Zest-O Corporation and Philippines Business Bank.
Piñol said that during the meeting, which was just held this week, the bankers said they fully supported the idea earlier submitted by the DA for the floating of bonds to finance the banner programs of the agriculture sector.
Other banks that were represented in the initial meeting are the Chamber of Thrift Banks, Metropolitan Bank and Trust Company, Bank of the Philippine Islands, East West Banking Corp., and Sterling Bank of Asia and Development Bank of the Philippines.
"We prefer to participate by funding Agri-Agra Projects rather than pay fines and penalties every year," said Suzanne Felix, executive director of the Chamber of Thrift Banks.
It was agreed during the meeting that DA's financing arm, Agriculture Credit Policy Council (ACPC), will send the aforementioned banks a list of Agri-Agra Law Compliant projects that could use some additional funding.