AMENDMENTS to the implementing rules and regulations (IRR) of Republic Act No. 10000 or the Agri-Agra Credit Act of 2009 have been completed, which will allow banks to lend to more types of farming communities and classify more loans as compliant with the law’s quotas.
In a statement Friday, Agriculture Secretary William D. Dar said the draft amendments to the IRR prepared by the Bangko Sentral ng Pilipinas (BSP), the Department of Agriculture (DA), and the Department of Agrarian Reform (DAR) have been signed.
Under the new IRR, the law extends the law’s coverage to households of the agrarian reform beneficiary and to agrarian reform communities.
The IRR defined agrarian reform communities as a barangay or cluster of barangays that are composed of or managed by agrarian reform beneficiaries, while the household refers to members of an agrarian reform beneficiary’s household that contribute to the productivity of the awarded land.
“After more than a decade since its enactment…, we finalized and signed on January 20, 2021 the amendments of the IRR of the Agri-Agra Law, which would facilitate higher investments by banks in the agri-agra sectors,” Mr. Dar said.
According to the DA, the other amendments to the IRR of the law include the removal of the accreditation requirements for debt securities; expansion in the modes of compliance with the agrarian reform credit; and change to the computation of total loanable funds of newly-established banks.
“The signing of the amended IRR came at a very opportune time as our agri-fishery sector takes up the challenge of leading the economic recovery amid the protracted health crisis,” Mr. Dar said.
In a statement, former Agriculture Undersecretary and current Monetary Board member V. Bruce J. Tolentino said: “There is no longer any need to have a separate, additional process to approve securities such as bonds and similar financial instruments to be eligible as compliance, as long as these have already undergone the usual prior approval by BSP and/or the Securities and Exchange Commission (SEC),” Mr. Tolentino said.
Banks have over the years routinely failed to comply with the law’s quota of 25% of loanable funds to be set aside for agriculture, often preferring to pay fines because farm loans are deemed risky.
Mr. Tolentino said another amendment to the IRR of Agri-Agra law is the inclusion of other eligible lending activities in the agricultural value chain such as production, processing, and marketing.
“Any agricultural activity listed under the Republic Act No. 8435 or the Agriculture and Fisheries Modernization Act (AFMA) is eligible. Also, (the meaning of) agriculture is (amended and) now understood to cover livestock and fisheries,” Mr. Tolentino said.
Citing data from the BSP, the DA said banks have only extended P714.5 billion worth of loans to the farm sector as of the end of 2019, as against the P1.38 trillion that should have been lent out had the quota been complied with.
Amendments to the law have been filed with House Bill No. 6134 approved in that chamber. Its counterpart, Senate Bill No. 1924, is pending.
“The proposed amendments to the law are important, since the bills recognize that the true problem is not the availability of loanable funds for agriculture, but the lack of creditworthy agricultural projects and borrowers,” Mr. Tolentino said.
“An important amendment is to ensure that funds generated from penalties are directed to organizing, training, and assisting farmers to enable them to establish viable projects and be good managers of borrowed funds,” he added. – Revin Mikhael D. Ochave