Department of Agriculture (DA) Secretary Proceso Alcala is calling for rural banking innovations that will increasingly help the agri-fishery sector reduce its estimated P252-billion financing gap and improve its access to credit so more funds can be tapped to further hike nationwide agricultural and fisheries production.
He raised urgency for such innovations and expressed concern that the sector has lesser funding sources, noting Bangko Sentral ng Pilipinas data show the number of rural banks nationwide already declined to 607 institutions in December 2010 from 631 institutions the year earlier due to either closure or merger.
“We therefore welcome all innovative banking policies and programs aimed at strengthening rural finance institutions and making lending services more accessible to small farmers and fisherfolk – join us in lifting their lives so they can be progressive rural entrepreneurs and the country can achieve sufficiency in food,” he urged participants in the 52nd Charter Symposium of Rural Bankers Association of the Philippines (RBAP) held this week in Metro Manila.
Citing latest available Agricultural Credit Policy Council (ACPC) data, Alcala said estimated total credit requirement for palay, corn, coconut, sugarcane, fisheries and other local priority commodities already hit P359 billion in 2010.
“Of this amount, banks were only able to finance P107 billion or 30 percent, leaving a financing gap of about P252 billion,” he said.
He noted the agri-fishery sector suffered such gap despite the 13.4 percent growth in domestic agricultural lending during the past year.
Alcala lauded the rural banks for extending to the sector last year loans totalling nearly P57 billion, saying this amount is 5.1 percent higher than what such lenders released in 2009.
He also commended the banks for complying with the Agri-Agra Law.
“Last year, rural banks again recorded the highest compliance with such law with nearly 33 percent of total loans going to agriculture and agrarian reform clients – this is way beyond the 25 percent required under the law,” he said.
Such accomplishment by the rural banks also exceeded the entire Philippine banking industry’s average compliance of up to 20 percent only, he noted.
He pointed out such average compliance involved modes other than direct loans to the law’s target agricultural and agrarian reform beneficiaries.
Alcala reported earlier data show all banks nationwide released in 2010 a total of P25 trillion in loans. Of such total loan amount, he said only P624 billion or 2.5 percent went to the agriculture, fishery and forestry sector.
