DA, Land Bank offer collateral-free credit for farmers
by Prix D Banzon
Davao City (19 July) -- The Agricultural Guarantee Fund Pool (AGFP) allows farmers tilling a maximum of five hectares each and unable to obtain collateral-free-credit from formal banking sector can now borrow from government or private financial institutions.
The loan is as high as 85 percent that is administered via the Land Bank of the Philippines.
In a press statement Agriculture Secretary Arthur Yap said the fund pool will have an initial outlay ranging from P500 million to P800 million, of which P100 million will be contributed by the Land Bank.
Yap said the AGFP shall be used to provide guarantee coverage to unsecured loans or financing extended by financial institutions and other parties to small farmers engaged in rice and/or food production projects or activities.
He said the AGFP comprises the fund contributions of GOCCs and GFIs (government financial institutions) our of their combined 2007 surplus. Each contributing corporation shall enter into a memorandum of agreement with the DA specifying the amount of contribution, as supporting document to the fund remittance to the AGFP.
The DA will supervise the AGFP through a governing board and the Land Bank will serve as the institutional manager for all guarantees extended to all GFIs as well as to private institutions like rural and cooperative banks, farmers' cooperatives, credit suppliers and government organizations that have good track records in lending or financing.
AGFP he said will be maintained for five years, subject to another five-year extension as may be agreed upon by DA and Land Bank. (PIA) [top]