MANILA — Secretary of Finance Benjamin Diokno has welcomed the enactment of Republic Act No. 11901 (RA 11901), also known as the Strengthening Agriculture, Fisheries, and Agriculture Finance Act of 2022. rural development, which became law on Thursday, July 28, 2022.
“The enactment of the Agri-Agra Amendments is a welcome development for our agricultural sector – a priority area of the Marcos administration and one of the key drivers of our economic growth,” Secretary Diokno said.
Secretary Diokno said RA 11901, which repealed Republic Act No. 10000 or the Farm Credit Reform Act of 2009, institutionalized a framework that better meets the financing needs of farmers, fishers and micro, small, and medium-sized enterprises (MSMEs).
The new law is in line with the reassessment of the Agri-Agra Act, which is part of the Philippine Roadmap for Sustainable Finance.
RA 11901 mandates a system of agriculture, fisheries and rural development finance to improve the productivity, incomes, competitiveness and welfare of farmers, fishers, agricultural workers and organizations and others beneficiaries of target rural communities.
The financing will take the form of loans and investments to support programs, projects or activities to improve productivity, encourage competitiveness and promote the sustainable development of rural communities.
A menu of activities that can be supported includes, among others, agricultural mechanization, agrotourism, entrepreneurial activities, green projects, digitalization of agriculture, fisheries and agro-industry, and acquisition of land permitted under the Land Reform Code of the Philippines and its amendments.
Post-harvest activities, such as processing, storage, marketing, distribution and logistics, are also eligible for funding under the law.
Other projects that can be entered into the funding system are public rural infrastructure and programs that promote the health and well-being of farmers and fishers.
Funding will be available for beneficiaries in rural communities, cooperatives, associations, MSMEs or organizations in good standing, regardless of their capitalization. Recipients will be assessed based on project feasibility, estimated production, and ability to pay, among other criteria.
Secretary Diokno said RA 11901 expands the role of the banking sector and facilitates its compliance with Agri-Agra requirements, enabling banks to further support the entire agribusiness value chain.
Under the law, banking institutions are expected to design and offer financial products and services tailored to the specific needs of their agricultural clients, taking into account their cash flow and the gestation and harvest period of the agricultural product, the funded activity or project.
All banking institutions, whether public or private, with the exception of newly created banks, must provide for a credit quota or a compulsory minimum requirement for financing agriculture and fisheries of at least 25% of their total loanable funds.
Meanwhile, the total loanable funds generated by banking institutions will be defined by the Bangko Sentral ng Pilipinas (BSP).
The BSP is also responsible for monitoring compliance with the law and imposing administrative sanctions and penalties on credit institutions in the event of violations.
Secretary Diokno, who was governor of the BSP when the law was drafted, said the new funding system will build the capacity of the country’s farmers and fishers.
“Strong financial support to the country’s agricultural sector will build the capacity of our farmers and fishers, improve productivity through modernization, and mobilize resources towards profitable domestic and exporting enterprises,” said Secretary Diokno. (DOF)