Fostering financial freedom for Filipino farmers

It cannot be denied that the agriculture sector is the country’s lifeblood. Farmers who till the land and grow the food we put on our tables significantly contribute to our economic growth.

According to the Department of Budget and Management’s (DBM) latest data, the sector accounted for 9.1 percent of the Philippines’ gross domestic product (GDP) in 2023. Despite their importance, however, Filipino farmers face challenges in securing financing to help them thrive.

The Bangko Sentral ng Pilipinas’ (BSP) 2021 Financial Inclusion Survey states that farmers or workers in the agriculture sector had the highest financial exclusion level, with 73 percent having no accounts.

The survey found that the top reasons for not owning a bank account were the lack of enough money and documentary requirements for opening an account.

Partnerships for financial inclusion

How do we promote financial inclusion among our farmers? One way to achieve this is to make financing options for the agriculture sector accessible. This entails creating financial products and services that are affordable and do not require the submission of many complicated documents.

This is why BanKo, the microfinance arm of the Bank of Philippine Islands (BPI), developed and recently launched the Agri-NegosyoKo Loan Program.

This facility has been developed with our farmers in mind. Through it, farmers can access loans ranging from P50,000 to P300,000.  The interest rate per month is only 2.3 percent.

For the application requirements, only one valid ID is needed (e.g., a barangay certificate), together with an ID picture, and a certificate of membership in a cooperative.

BanKo will also go to the cooperatives to guide farmers on the application process. We make sure that we build trust and confidence among our farmers through face-to-face meetings with community leaders to address their local needs.

Through these direct and personal engagements, BanKo will be able to provide the necessary support and guidance in
the loan availment process.

To address the barriers to owning a bank account, the Agri-NegosyoKo Loan program ensures that applicants will receive their loan through the PondoKo Savings account. This is a bank account that will be opened together with the loan application.

The account includes an ATM card that will allow our farmers to easily access their money anytime that they need it.

On top of making this loan product accessible, we partnered with Agrilever to promote this loan facility. Agrilever is an agri-tech company that uses technology and digital transformation to positively impact farmers through flexible financing, market access, digital agronomy services, and crop insurance.

Through this partnership, farmers who are members of Agrilever’s clustered farming initiative apply for the Agri-NegosyoKo Loan. This facility will significantly help them in buying essential supplies (seeds, fertilizers, and others) and upgrading their machinery.

Alignment with key policies

Recognizing the importance of the agriculture sector, the government has set out to implement policies that aim to help our farmers. An example of this is the New Agri-Agra Law (Republic Act 11901). This policy mandates banks to allocate at least 25 percent of banks’ loanable funds to the agriculture and fisheries sector to increase their access to credit.

Products such as the Agri-NegosyoKo Loan can significantly help not just in complying with the law, but in ensuring that the products and services that we offer are aligned with the government’s goal of financially empowering the agriculture sector.

This goal was echoed by BSP Deputy Governor Bernadette Romulo-Puyat, who graced the media launch of the Agri-NegosyoKo Loan on June 5, 2024.

Puyat said that enhancing the agriculture financing ecosystem is one of the strategic objectives of the National Strategy for Financial Inclusion (NSFI) 2022-2028. Through the Agri-NegosyoKoLoan, BanKo and Agrilever will be able to help achieve this objective.

Beyond financing

Our efforts do not stop with making financing mechanisms accessible to the agriculture sector. A significant component of the program is financial education.

We believe that, for our farmers to be truly financially empowered, it is necessary to equip them with the skills and knowledge to help them manage their money properly. Thus, we have partnered with BPI Foundation to educate farmers and their family members about financial management, budgeting, and the importance of building a good credit standing.

Financial literacy is a vital component of economic empowerment. By teaching different ways to save, budget, and plan
their expenses, we help farmers understand how to maximize their capital and sustain their income.

Farmers who avail themselves of the Agri-NegosyoKo Loan are covered by the Secure Assist Lite insurance. This is a microinsurance product that provides financial benefits for accidental death and permanent disability, hospital cash assistance, burial cash assistance, and property cash assistance.

Investing in the agri sector

The Philippines’ economic development is deeply intertwined with the success of the agriculture sector. By empowering farmers with access to financial resources, we invest in their success and in the future of the country’s food security and economic prosperity.

Accessible and affordable financing facilities are crucial tools that will help strengthen farming communities, boost their livelihood, and ensure that the whole country continues to benefit from the food and resources that the agricultural sector provides. — Contributed

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The author is the head of mass retail products of BPI, chair of BPI Direct BanKo, Inc., and a director of Legazpi Savings Bank, Inc.