Villar urges Landbank to ease loan process for sugar farmers

Aika Rey
Villar urges Landbank to ease loan process for sugar farmers
Senator Cynthia Villar, chair of the Senate committee on agriculture, says Landbank was taking too long to process farmers' loan applications

MANILA, Philippines – Senator Cynthia Villar on Thursday, August 15, asked the Land Bank of the Philippines (Landbank) to relax the loan process for farmers.

Villar, the chairperson of the Senate committee on agriculture, made the call during a hearing into the failed implementation of Republic Act No. 10659 or the Sugarcane Industry Development Act (SIDA) of 2015.

According to Landbank representatives at the hearing, the bank received 1,433 applications in 2018, amounting to P406.83 million. Landbank granted 841 applications for a total of P126 million, but some 327 applications amounting to P172 million were still being processed while the rest were being revalidated by the bank.

Obviously miffed, Villar said that the state-owned bank was taking too long to process the loan applications. (FAST FACTS: What you should know about Landbank)

“Ang mga small farmers natatakot sila sa bangko; nahihiya sila. Eh kung ganyan pa ang treatment ‘nyo sa kanila, wala nang babalik sa inyo (The small farmers are afraid of banks; they get embarrassed. If that’s how you treat them, no one will go back to you),” Villar told Landbank representatives during the hearing.

Under SIDA, 15% of the mandated P2 billion annual allocation goes to socialized credit to farmers through the Landbank. 

Villar said in a media interview after the hearing that banks are strict in approving loan applications because “the money they are managing is a deposit from the public” but added that “it’s the money of the government intended to be lent to the farmers.”

At the hearing, Senate Majority Leader Miguel Zubiri proposed that Landbank create a special window for socialized credit to sugarcane farmers.

“We should open really this credit to the farmers. Kung hindi, hindi aangat ‘yung agriculture sector. Negative palagi. Wala nang gusto magsaka, sa totoo lang (If not, the agriculture sector won’t improve. It would always be negative. Nobody wants to venture into farming, honestly speaking). They can’t support themselves financially. That’s where Landbank comes in,” Zubiri said.

He also said that the bank’s strictness in granting loans has driven some farmers to turn to loan sharks.

Reform?

Villar led the hearing as the allocation for the SIDA in the  proposed 2020 budget was reportedly cut to P500 million from P2 billion due to underspending.

The Department of Budget and Management will submit the proposed 2020 national expenditure program to the House of Representatives on August 20.

In an interview with reporters, Villar said that they would ask the Sugar Regulatory Administration to be reformed, to be able to push for the additional budget.

She said that she will be pushing for at least P1.5 billion worth of funds for the SIDA program, as P500 million was “very small.”

Villar also said that the economic managers want to liberalize sugar imports, as the production of raw sugar in the Philippines decreases. This, she said, would adversely impact the farmers.

Newly-appointed Agriculture Secretary William Dar gave assurances during Thursday’s hearing that he would conduct a “necessary” rebooting of SIDA’s implementation to help improve the industry.

“I have personally analyzed that the projects under the law has not moved. Hence, my first order of the day is now to review and strengthen the IRR as well as the MOA with partner government agencies and the private sector,” Dar said.

In June, raw sugar production inched up by 0.63% from 2018 to 2.067 million metric tons. In 2018, the SRA had expressed “worries” over the decrease in field workers.

The low sugar supply led economic managers to propose the liberalization of sugar imports, a move rejected by industry stakeholders and even some lawmakers including Villar and Zubiri. – Rappler.com

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Aika Rey

Aika Rey is a business reporter for Rappler. She covered the Senate of the Philippines before fully diving into numbers and companies. Got tips? Find her on Twitter at @reyaika or shoot her an email at aika.rey@rappler.com.