Agri loans hit P213 B in 2022

The share of agriculture loans and services granted by the banking sector picked up to 18.1 percent in 2022 from 17.6 percent in 2021 as the agriculture industry slowly recovered from the COVID pandemic.

Based on the 2022 Countryside Bank Survey (CBS) report released by the Bangko Sentral ng Pilipinas (BSP), the total value of agriculture loans surged by 36.7 percent to P213.1 billion in 2022 from P155.9 billion in 2021.

“This improvement was mainly due to the growing demand for agricultural loans as the sector slowly recovers from the COVID-19 pandemic,” the central bank said.

The increase was also due to Republic Act 11901, or the Agriculture, Fisheries and Rural Development Financing Enhancement Act of 2022.

“It induced flexibility on banks’ compliance on agri-agra requirements and thus allowed for alternative forms of investment that count toward their compliance,” the BSP said.

However, loans for basic crops in these agricultural loans plunged by 76 percent to P12.73 billion in 2022 from P53.33 billion in 2021.

The banks attributed the decline to lower demand for basic crop loans, uncontrolled risks such as extreme weather conditions, rising costs and lower profits in basic crop farming and the lingering effects of the pandemic on some borrowers.

Meanwhile, the value of non-agricultural loans jumped by 34.2 percent to P2.8 trillion in 2022 from P2.1 trillion in 2021.

“For banks that increased the value of granted non-agricultural loans, the growth was due to higher demand for personal and business loans by new borrowers, better marketing to small business owners and a less restrictive borrowing environment,” the BSP said.

According to the BSP, at least 50 percent of the respondent banking units offered loan products pertaining to the acquisition of seeds, fertilizer, poultry, livestock, feeds and other similar items.

The survey revealed an increase in loan products pertaining to sustainable projects, digitalization or automation of farming, fishery, agri-business activities and processes as well as for agri-tourism.

Survey results also showed that interest rates on agri loans ranged from 12 to 18 percent in 2022, higher than the interest rates on non-agri loans that ranged from 7.5 to 16 percent.

The BSP said banks saw an average repayment loan rate of 67 percent in 2022. Government-owned banks declared a higher overall repayment rate of 70 percent.