Land Bank’s lending role

Reprinted below is a copy of the entire press statement issued and signed by Julio D. Climaco Jr., executive vice president of the Land Bank of the Philippines reacting to my Sept. 30 column about the reported lack of action on funding application for an agriculture-related venture project in Maguindanao. As a result of which, more than 600 former Muslim secessionist rebels in Mindanao have lost their jobs after the expansion of the banana plantation project of a local company that employed them did not push through.

The principal loan applicant, John Perrine, president and chief executive officer of AI Sahar Agri Ventures Inc. (ASAVI), applied for this loan to expand an existing 1,500-hectare banana plantation on which the company invested a little over P500 million in starting the project last November 2014. Previously involved in the peace process in Mindanao representing the business sector in the Peace Council in 2015, Perrine initially tried to avail of the funding assistance from the Japanese International Cooperation Agency (JICA) that provided the Philippine government $125 million as official development assistance (ODA) during the Aquino administration.

Dubbed as “Harvest Fund” to serve as financing facility to encourage private sector investment in the Bangsamoro provinces that included Maguinanao, Perrine applied with the Land Bank for this JICA loan facility that was the designated implementing agency. But when President Rodrigo Duterte came into office in 2016, Land Bank informed Al Sahar that the “Harvest Fund” would no longer be available for his project. Instead, they offered Al Sahar to secure the financing needed for the project from its regular commercial window in lieu of the “Harvest Fund” loan facility.

On Feb. 7, 2017, the Land Bank Board of Directors approved a P1.6-billion loan for 1,333 hectares that bear standard conditions for commercial loans. However, Al Sahar found the loan facility too restrictive for their development-oriented project. Perrine sought out a meeting with then Land Bank president Alex Buenaventura in Oct. last year to discuss the viability of the project. However, for undisclosed reason, Al Sahar received subsequently through verbal and informal advice of regrets that LBP will no longer proceed to extend any financing to the project.

So Perrine came out with media statements on the unexplained turnaround of Land Bank to this project in support of the Philippine government’s peace agreements with the Moro Islamic Liberation Front (MILF) as well as with the Moro National Liberation Front (MNLF).

So this space is given to air the side of Land Bank on the matter at hand:

“This is in response to news articles regarding the loan application of AI Sahar Agri Ventures Inc. (ASAVI) with Land Bank of the Philippines (Land Bank) amounting to P1.6 billion for the development of its 1,333 hectares of Cavendish Banana corporate farm in Maguindanao.

Land Bank approved the loan on January 10, 2017 under the Bank’s “Harnessing Agribusiness Opportunities through Robust and Vibrant Entrepreneurship Supportive of Peaceful Transformation” or HARVEST Program for the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), funded by the JICA to boost the agriculture sector in and around the BARMM, and promote lasting peace and development in Mindanao.

On February 7, 2017, the Bank sent ASAVI a Notice of Loan Approval (NOLA), with a Loan Agreement. However, ASAVI did not sign the agreement because it was unable to comply with the submission of a Cross Surety, which is part of the reasonable pre-requisites for a clean loan.

The banana company only reverted back to Land Bank in August 2018 or a year after, and only to inform the Bank that they are already working on the compliance of the requirements. Land Bank has been vigorously pursuing programs in the BARMM area that contribute to the local economy and in empowering farmers in the region in response to the directive of President Duterte to help uplift the lives of small farmers in the countryside.

As of August 31, 2019, seventy-seven (77) accounts of farmers’ cooperatives and small and medium enterprises (SMEs) are already enrolled under the HARVEST Program amounting to P215.83 million, while a total of thirty-seven (37) accounts which amounts to P506.79 million are awaiting concurrence from JlCA for enrolment to the HARVEST Program.

Moreover, Land Bank also assisted a total of 16,108 farmers in Maguindano and Lanao del Sur. As of August 31, 2019, outstanding loans in Maguindanao reached P1.9 billion, while in Lanao del Sur, P243.29 million. These supported SMEs, large agri-corporations, countryside financial institutions (CA) and cooperatives, as well as individual farmers under the Bank’s various loan programs, namely, the Agricultural Competitiveness Enhancement Fund (ACEF), Empowering Barangays in remote areas through Credit and Enterprise (EMBRACE), and the Sikat Saka Programs, among others.

It is unfortunate that farmers employed in ASAVI have been affected by this development. We recognize their dilemma and understand their concerns.

In fact, Land Bank, through our local Lending Center, has been in touch with the Ministry of Agriculture, Fisheries and Agrarian Reform (MAFAR) and the Ministry of Local Government (MLG) in BARMM to set a meeting on Wednesday, October 9, to further discuss how we can extend our assistance to affected farmers through the bank’s direct lending programs for individual farmers.”

Well and good to know if indeed the Land Bank lives up to its lending role to serve the financing needs of our Filipino farmers.

During his state of the nation address in July this year, President Duterte called the attention of Land Bank for losing sight of its original mandate to provide low cost financing most needed by Filipino farmers to help push agriculture production.

This would certainly make the job less messy for Agriculture Secretary William Dar in trying to address the problems he inherited in office that have dragged down the Philippine economy in the last few years.