Agri production loans hit high in 2017
Credit extended to farmers and fishermen reached P618.79 billion last year, the highest in five years, according to data from the Philippine Statistics Authority.
The total loans were up 23.76 percent from the P500 billion extended in 2016. Of the amount loaned out in 2017, P350.38 billion was used for production purposes.
Credit growth last year accelerated from the average annual increase of just 6.47 percent from 2012 to 2016.
But according to the Philippine Chamber of Agriculture and Food Inc. (Pcafi), of the banks’ around P10 trillion in total loans, only 14 percent was released to the farm sector in 2017, short of the mandated 25-percent share under the Agri-Agra Law.
For 2017, private banking institutions were the biggest source of loans for agricultural production activities. Last year, their loans to farmers and fisherfolk increased by 26.09 percent to P284.95 billion.
Among private banks, commercial banks continued to be the biggest providers of credit with a share of 48.63 percent.
This was followed by rural banks (12.07 percent), savings and mortgage banks (8.02 percent), private development banks (7.32 percent) and stock savings and loan associations (5.29 percent).
Credit assistance from government banks also increased by 29.93 percent to P65.43 billion in 2017, mainly from the Land Bank of the Philippines followed by the Development Bank of the Philippines.
Pcafi has urged banks to allot more money to the agriculture sector, to help reduce poverty.
“Investing in food and agriculture is the surest way to reduce poverty, but banks would rather pay a fine because they do not appreciate agro-based industries and their impact on poverty reduction,” Pcafi director and agro-economist Pablito Villegas said.
Historically, banks are reluctant to invest in agricultural industries due to the perceived high risk.
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