LBP, DBP to charge DA less on loan disbursements

Published December 9, 2019, 12:00 AM

by manilabulletin_admin

By Madelaine B. Miraflor

State-owned financial institutions Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP) have cut the management fees they charge for processing three of the Department of Agriculture’s (DA) financial programs.

The loss on the part of LBP and DBP and the gain on DA will be about ₱34 million, based on the latter’s estimate.

Apparently, Agriculture Secretary William Dar made a request from Finance Secretary Carlos G. Dominguez III for LBP and DBP to reduce the fees they charge DA on processing and disbursing loans to farmer-clients under three financing programs.

This was eventually approved, with the two banks reducing their previous management fee rate of 4.5 percent by one percentage point to 3.5 percent, which will be applicable to the P1-billion credit component of the Rice Competitiveness Enhancement Fund (RCEF); ₱1-billion credit program under the Sugarcane Industry Development Act (SIDA); and the ₱1.4-billion Agricultural Competitiveness Enhancement Fund (ACEF).

RCEF is the tariff collected from imported rice and is supposed to help rice farmers become competitive and more productive. Under the Rice Tariffcation Law or Republic Act (RA) 11203, RCEF should be first injected with ₱10 billion annually from 2019 to 2024 or a period of six years.

Under the RCEF, the ₱1-billion credit fund is equally shared by the LBP and DBP at ₱500 million each.

The SIDA fund, on the other hand, was created to implement the law that aims to improve the production in the local sugar industry and make the sugarcane farmers competitive by providing them equipment, scholarship, funding, and better yielding varieties.

The SIDA and ACEF financing programs are both managed by the LBP on DA’s behalf.
ACEF is a fund collected by the Department of Finance (DOF) through the Bureau of Customs (BOC) from tariffs imposed on imported agricultural products. It is meant to increase the productivity of agricultural and fisheries producers through the provision of loans particularly to Small and Medium Enterprises (SMEs).