” Access of Small Farmers and Fisherfolks to Formal Credit Improves thru PLEA Program “

 

Small farmers and fisherfolk (SFF) who were able to avail themselves of credit from formal lending sources increased through the implementation of the Department of Agriculture (DA) – Agricultural Credit Policy Council’s (ACPC) Production Loan Easy Access (PLEA) Program. This is confirmed through ACPC’s monitoring and field validation report.

Out of a total of 742 randomly selected PLEA borrowers from 24 partner lending conduits (LC) in 12 provinces, the validation result shows that 83% are first-time borrowers of LCs and 56% are first-time borrowers from formal sources. Consequently, LCs have been able to increase their loan portfolio in agriculture as well as their outreach in poor farming communities.

“The results show the increased confidence of rural financial institutions to lend to SFF as indicated by the number of first time borrowers,” said Director Ma. Cristina G. Lopez of the Monitoring and Evaluation (M & E) Group. “It means that the PLEA Program is hitting the target of providing easy, convenient, and affordable credit access to small farmers and fishers especially in the unbanked areas,” Director Lopez added.

This is a welcome development for the DA and ACPC in ensuring that marginal farmers become active participants in the formal credit system especially since informal lenders usually charge usurious rates to the disadvantage of the borrowers. Apart from increasing their income due to very low interest rate, the PLEA program also aims to reduce and eventually eliminate the dependency of farmers on government subsidies and dole outs and contribute to the administration’s target of reducing national poverty by end of 2022.

The ACPC M & E Group, led by Director Lopez and Division Chief Annalyn R. Garay, conducted field validations in the provinces of Nueva Ecija, Laguna, Benguet, Iloilo, Negros Oriental, Northern, Eastern and Western Samar, North Cotabato, Surigao del Norte, Saranggani and Zamboanga del Norte.

The validations, conducted from March 2017 to November 2017, show that 98% of the respondents were from agri-fishing households while 97% are SFF. To address the remaining 2% non-agri household and 3% non-SFF, the M & E Group called the attention of the concerned LCs and reported the findings to the ACPC’s Program Development Division for appropriate action.

The respondents, who registered an average loan of P 31,800 per borrower, claimed that the low interest rate and easy documentary requirements of the program make the loans more accessible to them. Furthermore, around 65% of borrower-respondents indicated that the loans availed are adequate.

On the part of the partner LCs, 100% were able to comply with the interest rate provision of the program which is only 6% per annum.

On-Field Experience

“During the field validations, a lot of the beneficiaries told us that DA-ACPC’s PLEA program helped them increase their incomes due to additional capital”, Ms. Garay said. According to Ms. Garay the validation process is challenging but also very rewarding especially when small farmers and fishers personally tell them how happy they are since the PLEA program helped them increase their income.

One of the major challenges encountered by the M & E Group during the field validations is the remoteness of some of the SFF’s locations which are sometimes infested by armed rebel groups.

Another difficulty the group encountered are respondents who were reluctant to share information they deem personal. “We have to be persistent, patient and creative in asking questions to extract important data from them,” said Ms. Garay.

According to Ms. Garay, small farmers and fisherfolk welcome field validations from ACPC because these are moments they feel that the government values them by checking their actual living conditions. “Field validations also instill credit discipline by sending a message to the borrowers that they need to pay back their loans so they can borrow again to finance their production needs,” she further added.

Looking Forward

For this year, the M & E Group is setting its sight on improving its database to produce consolidated ACPC reports and also strengthening its monitoring activities to ensure that ACPC’s programs are properly implemented. “We hope to cover at least 50 areas including rice processing centers for 2018”, Ms. Garay said.

The field validation of loan releases to farmer borrowers is a regular and continuing activity of the ACPC M & E Group in order to ensure that credit policies and programs are synchronized and that they reach and truly serve the small farmers and fisherfolk.

The ACPC Monitoring and Evaluation (M & E) Group led by Director Ma. Cristina Lopez (standing, 2nd from left) and composed of (sitting, from left) Normando De Leon, Rachel Bustamante, Annalayn Garay, Arlyn Bancud, (standing, from left) Rufino Estrada, Jr., Lordyxon de los Reyes, and Gregoria Guce conducted field validation of the PLEA program to determine whether the loans reached the intended target clients and were used for the declared purposes, and whether the terms were implemented in accordance with the program guidelines.