State-guaranteed agri loans hit P3.5-B in H1

MANILA, Philippines – The government has provided guarantees to a total of P3.5 billion loans in the agriculture sector in the first half, benefitting thousands of farmers and fisherfolk amid the coronavirus pandemic.

This means state-run Philippine Guarantee Corp. (PhilGuarantee) will back the loans extended to 35,360 small farmers and fisherfolk nationwide in case of default, the Department of Finance said in a statement on Thursday.

The loans, which were guaranteed through PhilGuarantee’s partner-lending institutions (PLIs), already accounted for 95% of the state corporation’s goal of covering P3.7 billion worth of credit to the agriculture sector this year.

“The outstanding balance as of 30 June 2021 amounted to P1.247 billion,” PhilGurantee President and CEO Alberto Pascual said.

A bulk of these guaranteed loans, at P3.35 billion, was cornered by crop sector, responsible for producing Filipino staples such as rice, coconut, and tobacco. The remaining amount went to the livestock sector (P112.63 million), fisheries (P27.86 million) and poultry (P12.03 million).

A flurry of natural disasters — made worse by disruptions from harsh lockdowns — foiled the agriculture’s rally that was seen at the onset of the health crisis.

Apart from pandemic pressures, the farm industry, especially the livestock sector, endured a beating from African swine fever outbreak that killed a large portion of the country’s hog population. The resulting supply gap pushed up prices of pork in marketplaces especially in Metro Manila, which eventually spilled over to headline inflation, prompting more state interventions.

PhilGuarantee manages the Agricultural Guarantee Fund Pool, which has aided agricultural workers by guaranteeing their unsecured production loans to make it enticing for institutional lenders. When the country was sent into enhanced community quarantine last year, the national firm reduced the guarantee fee to 0.5% and increased the guarantee coverage to 90% for AGFP-credited palay farmers.

Last year, this national corporation guaranteed P4.25 billion in loans for the agriculture industry.