The Bangko Sentral ng Pilipinas is strongly pushing for the amendments of Republic Act No. 10000, or “The Agri-Agra Law,” to address the persistent challenges in agriculture financing.
BSP Governor Benjamin Diokno said in a statement “the Agri-Agra bill will strengthen rural development by providing a holistic approach in addressing the financing needs of the broader agricultural financing ecosystem.”
Diokno said the BSP’s legislative agenda would help usher the Philippines’ next stage of economic development.
The proposed amendments to the Agri-Agra Law—House Bill No. 6134 or the bill approved in the House of Representatives—aim to principally tackle the persistent challenges in agriculture financing that emanate from both the borrowers’ side and the banks’ and lending institutions’ side.
Monetary Board Member Bruce Tolentino, in a statement at the Senate committee on agriculture, food and agrarian reform hearing, asserted the agricultural sector’s significant role in promoting inclusive and broad-based economic growth.
“The BSP fully supports the objectives driving the various Agri-Agra bills which seek to strengthen rural development through holistic approaches that consider the broad context for agricultural financing and rural community development,” Tolentino said.
Data showed the banking system extended P713.6 billion in Agri-Agra credit that as of end-December 2020. Even with such an amount, banks were still unable to comply with the mandatory Agri-Agra credit. Broken down, the P642.4 billion in agricultural credit during the period translated into a 9-percent compliance ratio, below the 15-percent requirement.
Likewise, the P71.2 billion in agrarian reform credit translated into a 1.0-percent compliance ratio also below the minimum 10 percent.
The proposed amendments are envisioned to strengthen rural development and improve well-being of agricultural and rural community beneficiaries through three main components.
These include enhancing access by rural communities to private sector financing, such as by expanding the modes of compliance by banks; creating an Agribusiness Management Capacity and Institution-Building Fund [Special Fund] that will be used to finance organizational-, capacity- and institution-building programs and activities of rural agricultural and fisheries households; and establishing an Agricultural and Fisheries Finance and Capacity-Building Council which will be responsible for the management and operations of the Special Fund.
As part of the comprehensive amendments to the Agri-Agra law, the BSP, Department of Agriculture and the Department of Agrarian Reform approved the amendments to the implementing rules and regulations of the Agri-Agra Law in March 2021.
This is an interim measure pending the passage of the proposed amendments to the Agri-Agra Law.