The Free Farmers Group Federation (FFF) has published its analysis and identified ‘gaps’ in either version of the proposed amendments to Republic Act (RA) 10000 or the Agri-Agra Credit Reform Act of 2009 .
It comes as Congress prepares to create a bicameral committee to reconcile Senate and House bills to change the law as soon as possible.
RA 10000 requires banks and other formal credit institutions to allocate at least 25% of their loanable funds to agricultural credit and land reform, with at least 10% reserved for land reform beneficiaries (ARBs).
Both House Bill 6134 and Senate Bill 2494 seek to “promote rural development by improving access of rural communities and farming and fishing households to financial services and programs.”
“Unfortunately, the two versions do not really address the causes of low compliance by banks with Agri-Agra mandates. They also do not guarantee that ARBs and smallholder farmers will have easier access to formal credit” , the FFF said in a statement on Friday.
Instead, the group said the proposed changes to RA 10000 will make it easier for banks to “compliance” with mandatory credit allocations, while avoiding penalties and not significantly increasing their already very low exposure to credit. loans to small farmers.
The proposed changes include that banks will still be required to allocate 25% of their loanable funds to agriculture, but they will get an expanded menu of compliance options.
The two bills also remove the mandatory 10% allowance for ARBs, potentially allowing banks not to lend to small farmers while still complying with the law, the FFF said.
“In particular, the proposed amendments will count loans to small farmers at 10 times their value for the purposes of crediting bank compliance. This could actually discourage, rather than promote, rural credit,” he added.
HB 6134 will establish an agriculture and fisheries finance and capacity building committee to oversee the use of penalties after deducting 10% of Bangko Sentral ng Pilipinas overhead.
However, the FFF pointed out that the bill does not mention anything specific, except for capacity building programs for smallholder farmers’ organizations and beneficiaries.
SB 2494 is more problematic, the group said. In addition to compensating the central bank also with a 10% administrative fee, it rewards the national government with 25% of all collections, “for doing nothing”, he noted.
Of the remainder, 35 percent will be “allocated to the Department of Agrarian Reform (DAR) for the titling and severance of land holdings covered by the collective certificates of land ownership”. “Even though it is a regular function of the DAR that should be funded as part of its annual budget by Congress.”