The Senate should help look for ways to protect farmers rendered vulnerable by calamities from predatory informal lenders, to ensure they would not fall into a debt trap that would further worsen their situation, according to Sen. Sonny Angara.
Angara filed a resolution seeking an inquiry on the plight of farmers affected by typhoons who fall prey to shadow bankers that charge high interest rates for loans.
He also urged the government and financial institutions to lay down measures to make them less vulnerable to loan sharks.
He made the call after typhoon ”Lando” wiped out fields of crops, causing P9.8 billion worth of damage to agriculture and to infrastructure. It is the most destructive typhoon to hit the country this year.
He noted that after the typhoon damaged crops that were nearly ready for harvest, many land tillers had to resort to loan sharks to try to recover their means of livelihood. They were charged exorbitant interest rates of up to 25 percent per month, or 20 percent per day in some instances.
“The lack of access to formal credit facilities and excessive interest rates charged by predatory lenders are some of the lingering problems in the agricultural sector,” he said.
“The paradox of our time is that these farmers who produce food often go hungry. They support our country through agricultural production while seemingly little support goes to them especially in terms of available and accessible credit facilities. Something has to be done. We should not let our farmers be trapped in debt until death,” he added.
He noted that the Department of Agriculture, through the Agricultural Credit Policy Council. has an existing credit facility— the Agriculture and Fisheries Financing Program— for 40,000 farmers and fisherfolk from the poorest provinces.
The Land Bank of the Philippines also has the Agricultural Credit Support Project, which provides credit and non-credit support to agriculture and agri-related projects that need additional capital.
However, many poor farmers do not benefit from these programs for various reasons, including lack of collateral or non-awareness of the processes, said Angara.
“Notwithstanding existing government facilities for low-cost credit to small farmers, many of them do not take advantage of these credit facilities due to various reasons which include lack of collateral to secure loans, and lack of awareness or familiarity with the processes and requirements needed,” he said.
He also cited a study by the Philippine Institute for Development Studies showing that despite the existence of government directed credit programs, the poor farmers and other targeted beneficiaries still fail to get access to credit and turn to informal lenders.
“With an increasing population and limited agricultural land resources compounded by climate change, the small farmers continue to be vital stakeholders in our country’s development and pursuit for food security. There is an urgent need to address this debt trap that plague the Filipino farmers who remain one of the poorest in the country,” he said. AU