State-run Land Bank of the Philippines (LandBank) is set to release P4.3 billion worth of loans to six local government units (LGUs) for the sole purpose of buying palay directly from farmers during this harvest season.
In a statement, LandBank said yesterday that it recently made loan approvals under PALAY ng Lalawigan Lending Program, which was officially launched in October 2019 and is open to municipal, city and provincial governments of palay-producing provinces.
Aside from loans for palay procurement, eligible LGUs may also use the fund borrowed from this loan program to acquire farm machineries and post-harvest facilities, as well as finance other rice-related activities.
The recently approved loans, according to LandBank, will be released to the Provincial Government of Nueva Ecija, City Government of Cabanatuan City in Nueva Ecija, Provincial Government of Isabela, Municipal Government of Alicia in Isabela, Provincial Government of Tarlac, and Provincial Government of Camarines Sur.
“We are encouraging our LGUs to avail of the LANDBANK PALAY ng Lalawigan Lending Program to bankroll their direct engagement in the local rice industry value chain,” said LandBank President and CEO Cecilia C. Borromeo.
“It will be a big help to our local farmers whose incomes may have been affected, in one way or another, by the fluctuating farmgate prices of palay,” she added.
The fund facility is LandBank’ss answer to the government’s call to prop up the livelihood of rice farmers heavily affected by the seasonality of palay planting.
Rather than sell to unscrupulous rice traders who offer very low prices, farmers can now sell their produce to the LGUs.
The loanable amount of qualified LGUs under the PALAY ng Lalawigan Lending Program shall be based on the requirement of the project but shall not be more than the Net Borrowing Capacity (NBC) of the LGU per Bureau of Local Government Finance (BLGF) computation/certification.
Short-term loans and permanent working capital under the program bear a fixed interest rate of 2 percent per annum until December 31, 2022.
Term loan, on the other hand, carries an interest rate of 4 percent per annum until the same period, and is subject to re-pricing afterward.
Data from the Philippine Statistics Authority (PSA) showed that palay prices had sunk to as low as P12 per kilogram (/kg) in some areas in the country during the third week of September, which means some farmers barely made money during this harvest season.
To produce a kilo of rice in the Philippines, Filipino rice farmers currently have to spend P12.72, which is higher compared to the production cost of farmers in Vietnam and Thailand at P6.22/kg and P8.86/kg, respectively.
This means that the breakeven farmgate price of fresh harvest should be around P14.50/kg.
Last week, Agriculture Secretary William Dar pledged to support rice farmers by asking the National Food Authority (NFA), which buys palay at P19/kg, to ramp up its palay procurement.
He said the government is also considering giving another batch of one-time cash assistance to rice farmers.