Agrarian

Lack of Knowledge on Financial Assistance Offered by Government Financial Institutions

The agrarian reform beneficiaries interviewed from Brgy. Damo-ong, Janiuay have insufficient
awareness on the financial assistance facilities offered by government financial institutions. They
are unable to gain access to credit and finance as they are not aware of the availability of the
loan programs that cater specifically to farmers offered by Land Bank of the Philippines.

The agrarian reform beneficiaries from the municipality of Oton are more familiar with the loan
programs of Land Bank of the Philippines for farmers. This is attributed to the fact that the
Southern Iloilo Area Multi-Purpose Cooperative (SIAMPC) to which they are members has
availed of loans from the said institution.

In the Philippines, most farmers are financially unstable particularly those who depend on
agriculture as a major source of livelihood, hence there is a gap in cash resources which blocks
the adoption of new technologies and credit is needed to fill the gap. The inadequate awareness
of the agrarian reform beneficiaries on credit and finance programs prevents them from
becoming economically viable producers. Financial resources are necessary in order for the
farmers to be able to adopt to technology innovations. Moreover, a number of farmers are not
able to pay the amortizations regularly from lack of funds.

The farmers are likely to source their credit from moneylenders who charge very high interest
rates. They view this as a convenient and immediate answer to their financing needs in time for
the cropping season. This informal funding only partially covers the financial needs of farmers
and usually at a high cost.

Recommendations

Among the credit and microfinance programs of the Department of Agrarian Reform is the DAR-
LANDBANK Credit Assistance Program for Program Beneficiaries Development (CAP-PBD). This is
a credit program that provides credit assistance to non-bank eligible ARB cooperatives and
farmers associations and assists them to become bank-eligible organizations. Another project is
the DAR-LANDBANK Microfinance Capacity Development Program in Agrarian Reform Areas
which aims to provide financial access to ARBs in agrarian reform areas by linking them to well
established micro-finance institutions (MFIs) and developing ARB cooperatives to become
effective and efficient microfinance service providers. 1

The objective of the Micro-Agri Loan Product (MALP) Development Program is to provide
sustainable credit access by developing various micro-agri credit loans products (MALPs)
channeled through bank-assisted cooperatives and countryside financial institutions (CFIs). The
DAR-CARD, Inc.-Microfinance Capacity Building for Partner Cooperatives is a partnership
endeavor between DAR and CARD Inc. that seeks to develop, strengthen and enhance capacities
of selected ARB cooperatives to become microfinance service providers and provide sustainable
access to financial services to ARBs and community members. The DAR-NATCCO-Microfinance

1
Credit and Microfinance Programs. (n.d.). Retrieved October 1, 2016, from
http://www.dar.gov.ph/index.php?option=com_content&view=article&id=294
Innovations in Cooperatives in Agrarian Reform Areas is a project undertaken by DAR and the
National Confederation of Cooperatives (NATCCO) which aims to enable selected relatively weak
ARC cooperatives to provide bank-like microfinancial services to the ARBs and the whole
community through the Build-Operate-Adopt-Transfer (BOAT) scheme. 2

Pursuant to the Comprehensive Agrarian Reform Program Extension Program with Reforms
(CARPER) Law or Republic Act No. 9700, the Department of Agrarian Reform (DAR) and Land
Bank of the Philippines pooled their resources and forged a partnership to implement the
Agrarian Production (APCP). Considering that the organizations of agrarian reform beneficiaries
are predominantly weak, streamlined the lending approach to address their credit requirements.
The APCP has three major components: credit, technical assistance and other support services. 3

In addition, Land Bank of the Philippines offers the Sikat Saka Program in partnership with the
Department of Agriculture (DA) and its attached agencies such as the National Irrigation
Administration for the implementation of the DA-Sikat Saka Program. This program makes
available a credit window to provide small farmers direct access to credit and recognizes the
significant and critical role of individual palay farmers as a major player in supporting rice
production program towards attaining food sufficiency. 4

Aside from the existing loan facilities of Land Bank that provide financial assistance to the
agrarian reform beneficiaries, Land Bank recently made available a new loan program
Empowering Barangays in Remote Areas through Credit and Enterprise or EMBRACE. This loan
facility aims to complement the existing loan programs for small farmers and fishers through
conduits as well as existing programs in partnership with the Department of Agriculture and
Department of Agrarian Reform. The program will give utmost priority to farmers who are
cultivators, tenants, leaseholders, who are tilling not more than five hectares of agricultural
land.5

It is worthy to note that the Department of Agrarian Reform (DAR), Department of Agriculture
(DA) and Land Bank of the Philippines, as the lead agencies in the implementation of the
agrarian reform program have already laid out a framework of initiatives on credit and finance
for farmer beneficiaries. However, many agrarian reform beneficiaries have not been able to
access these facilities as the rudimental and essential information on these projects have not
reached them.

It is crucial for the dissemination of information on the credit and finance programs to be
purposeful and targeted. Thus, it is recommended that the appropriate delivery channels that
would serve agricultural clients should be identified. In line with this, agrarian reform
beneficiaries should be encouraged to organize or join as members of farmers cooperatives or
associations. The presence of these organizations is a valuable means to reach farmer

2
Credit and Microfinance Programs. (n.d.). Retrieved October 1, 2016, from
http://www.dar.gov.ph/index.php?option=com_content&view=article&id=294
3
LBP Exec. Order No. 118 (2016).
4
Land Bank of the Philippines. (n.d.). Sikat Saka [Brochure]. Iloilo City.
5
Dalumpines, S. J. (2016, September 19). Land Bank launches P1-B EMBRACE loan
program. Newsgram, 30.
beneficiaries. These organizations can serve as conduits through which technical information
with regard the available loan programs can be cascaded.

Further, the integration of farmers into cooperatives and associations promotes delivery
channels for the credit and finance programs in disperse populations in rural areas. Cooperatives
can serve segments of farmer beneficiaries through their local presence in the municipalities as
well as their homegrown expertise. The loan programs shall be coursed through the
cooperatives thereby promoting the flow of credit services and enabling farmers to conveniently
avail of these facilities.