THE Department of Agriculture announced that the national government may contribute an additional P7 billion to an agricultural guarantee fund pool currently being administered by the Land Bank of the Philippines.

During the midyear Philippine Economic Briefing in Makati City on Wednesday, Agriculture Secretary Arthur Yap said the P7 billion would be sourced from the royalties of the natural gas obtained from Malampaya totaling P4 billion and the P3 billion in possible revenues from the expanded value-added tax (VAT) scheme.

“The P3 billion Katas ng VAT is still tentative [as] it would depend on the prices of fuel,” Yap clarified in a text message.

In recent days, the price of fuel has declined to around $100 per barrel from a high of $147 per barrel in July, prompting local oil companies to slash their pump prices.

Yap noted that propping up the Agricultural Credit Guarantee Fund Pool will help ease the credit squeeze confronting most farmers in the countryside.

The amount will prop up the Agricultural Guarantee Fund Pool (AGFP) estimated at P588 million, of which P479 million has already been remitted to LandBank.

Aside from LandBank, 11 other GOCCs and GFIs, including the Development Bank of the Philippines and the Philippine National Oil Co., have remitted money to the fund pool.

The AGFP was established in compliance with Malacañang’s Administrative Order 225-A, which mandates all government-owned and -controlled corporations (GOCCs) and government financial institutions (GFIs) to turn over 5 percent of their net incomes to the credit facility.

AGFP funds could be availed of by rural banks, thrift banks, irrigators’ associations, rice millers and grains traders to guarantee loans of farmers engaged in rice production against typhoons, floods, pests and other risks.

While loans have been extended to farmers in the past, nongovernment organizations like the Centro Saka Inc. have lamented that small farmers encounter difficulties obtaining production loans and that available microloans were mostly intended for investing in alternative livelihoods.

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THE Department of Agriculture announced that the national government may contribute an additional P7 billion to an agricultural guarantee fund pool currently being administered by the Land Bank of the Philippines.

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