MANILA, Philippines — The Department of Agriculture is planning to adopt the cash advance system for farmers to slowly liberate them from loan sharks which hinder improved rice production of the country.
In a recent meeting with the National Food Authority and other related agencies, Agriculture Secretary Emmanuel Piñol said he has directed the NFA and the Agricultural Credit Policy Council to implement the cash advance credit program for rice farmers.
“In many farming areas all over the country, the absence of credit programs has pushed farmers to loan sharks and local traders who give them cash advances at atrocious interest rates and who also corner the farmers’ produce during harvest time buying it at prices they dictate,” he said.
The cash advance is commonly used for buying seeds, fertilizers and other farm inputs, as well as to pay for labor and other personal needs.
“This is a response to the problems raised by many rice farmers who said that they could not deliver their produce to the NFA, even if it offers a higher price, because they have borrowed money from the local traders and financiers at very high interest rates,” Piñol added.
The program, which will be under the Production Loan Easy Access (PLEA), will only be available to rice farmers who will sell their produce to the NFA.
Piñol said there would be no collateral and a three percent service fee payable after every harvest will only be imposed.
“This means that if a farmer’s cash advance is P50,000, he will only pay a service fee of P1,500 which is a far cry from the 10 percent per month interest rates imposed by loan sharks and local traders,” he added.
The DA-ACPC will conduct a geo-tagging and aerial mapping as well as update the registry of all rice farmers in all rice producing areas of the country in preparation for the applications.
“Given the 97 percent repayment rate of the PLEA, this cash advance program will be another innovation which will increase farmers’ production, liberate him from loan sharks and lift him up from poverty,” Piñol said.