DA blames slow agri growth to non-lending by banks

The farm sector continues to lag behind and contribute measly to the national economy due to the non-lending by banks, the Department of Agriculture (DA) said.

Agriculture Secretary Emmanuel Piñol slammed banks because of their lack of support for the industry.

“How can you expect an impressive growth in agriculture when the banking institutions are not complying with the agri-agra law. It’s like milking an ill-fed cattle,” Piñol said.

The law requires banks to allot 15 percent of their loan portfolio for agriculture and the remaining 10 percent for agrarian reform beneficiaries. However, the banking industry has been non-compliant with the law for many years now.

“They expect so much from Philippine agriculture and yet they do not want to lend money to farmers?” Piñol said.

“The problem is that many of these banks are cheating. What they declare in their compliance to the law is filled with wrong computations,” he said.

Data from the Bangko Sentral ng Pilipinas showed that non-compliance of banks to the law translated to P460 billion as of end-2017 as most banks prefer to just pay the penalty of about P5 billion instead of lending to farmers who are considered as high-risks.

“If you are doing anything you could to avoid fulfilling your legal commitments, and simply pay the fine instead, how can you expect agriculture to grow?” Piñol said.

“This is why the DA is moving toward easy access financing using our own funding and we are proving to them, as cited by the Philippine Statistics Authority, that it is one of the contributors to the growth of agriculture,” he said.

Furthermore, the agri chief is backing amendments to the Agri-Agra Reform Credit law and the consolidation of the 25 percent legal requirement.

“I am okay with the removal of distinction and making it full 25 percent,” Piñol said.