UCPB-CIIF hikes loans to coconut farmers by 16%

United Coconut Planters Bank-Coconut Industry Investment Fund (UCPBCIIF) Finance and Development Corp. (Cocofinance) is expected to release 710 million worth of loans to coconut farmers in 2016, about 16 percent higher year-on-year.

UCPB-CIIF Cocofinance President Edgardo Amistad yesterday said they plan to speed up loan releases to respond to the increasing financing requirements of coconut farmers. “(They) could use more financing since they need to develop other sources of income to make ends meet given the modest earnings from their farms,” he added.

Cocofinance is the only lending company in the country catering exclusively to coconut farmers. This year’s growth estimate was announced as UCPB-CIIF’s Cocofinance reported a loan growth of nine percent in 2015 of 610 million from 558.7 million in 2014. This amount was borrowed by 17,981 small coconut farmers which they used to finance livelihood projects.

Cocofinance, created in 1994, was an appropriate vehicle for channeling credit to the coconut farmers. “Because of the small size and high risk of their enterprises, (they) find it difficult to access financing from formal sources,” said Amistad.

For the past 21 years, Cocofinance has released 7.8 billion in loans which were availed of by 405,791 coconut farm households in 66 of the country’s 68 coconut provinces. Amistad said Cocofinance ties up with coconut farmers and farm workers organizations, nongovernmental organizations and rural financial institutions, using them as loan conduits, to be able reach to far-flung coconut areas.

Last year, the company accredited five more cooperatives to its credit programs bringing the number of its countryside partners to 434, half of which are in Luzon, a third in the Visayas and the balance in Mindanao. With the current network, Cocofinance can cover 20,300 coconut barangays.

“Cocofinance is able to undertake development lending on a large scale because it lends money out of its equity unlike commercial banks, which lend mainly deposits of the public and hence are strictly regulated by the BSP (Bangko Sentral ng Pilipinas),” said Amistad.

The key to managing the higher risk in development lending is proper vetting and close monitoring of the countryside partners, explained Amistad. The company has a 99 percent collection rate in 2015.