The Department of Finance (DOF) welcomed the enactment of the Agriculture, Fisheries and Rural Development Financing Enhancement law, commonly known as Agri-Agra law, that is expected to boost the local farm sector.
In a statement Friday, July 29, Finance Secretary Benjamin E. Diokno said Republic Act No. 11901 (RA 11901), which lapsed into law last July 28, is a welcome development for the agriculture sector.
Agriculture, a top priority area of the Marcos administration, one of the key drivers of economic growth," Diokno said.
He added that the new law is also consistent with the re-assessment of the Agri-Agra law, which is part of the Philippine Sustainable Finance Roadmap.
RA 11901 mandates an agriculture, fisheries, and rural development financing system to improve the productivity, income, competitiveness and welfare of farmers, fisherfolk, agri-based workers and organizations, and other target rural community beneficiaries.
Financing shall come in the form of loans and investments to support productivity-enhancing programs, projects, or activities, encourage competitiveness, and promote sustainable development of rural communities.
A menu of activities that may be supported includes, among others, agricultural mechanization, agri-tourism, entrepreneurial activities, green projects, digitalization of farming, fishery and agri business, and acquisition of lands authorized under the Agrarian Reform Code of the Philippines and its amendments.
Post-harvest activities, such as processing, storage, marketing, distribution, and logistics, are also eligible for financing under the law.
Other projects that may be enrolled under the financing system are public rural infrastructure and programs that promote the health and wellness of farmers and fisherfolk.
Financing will be available to rural community beneficiaries, cooperatives, associations, MSMEs, or organizations in good standing regardless of capitalization. Beneficiaries will be assessed based on the feasibility of the project, their estimated production, and paying capacity, among other criteria.
Diokno said that RA 11901 expands the role of the banking industry and eases their compliance with Agri-Agra requirements, allowing banks to lend stronger support to the whole value chain of agri-enterprises.
Under the law, banking institutions are expected to design and offer financial products and services that suit the specific requirements of their agricultural clients, taking into account their cash flows and the gestation and harvest period of the agricultural produce, activity, or project being financed.
All banking institutions whether government or private except newly established banks shall set aside a credit quota or a minimum mandatory agricultural and fisheries financing requirement of at least 25 percent of their total loanable funds.
Meanwhile, the total loanable funds generated by banking institutions shall be defined by the Bangko Sentral ng Pilipinas (BSP).
The BSP is also in charge of monitoring compliance with the law and imposing administrative sanctions and penalties on lending institutions for any violations.
Diokno, who was BSP governor when the law was being crafted, said that the new financing system shall enhance the capacity of the country’s farmers and fisherfolk.
"Strong financing support for the country's agriculture sector will build the capacity of our farmers and fisherfolk, enhance productivity through modernization, and mobilize resources towards profitable domestic and export-oriented enterprises," said Diokno.