AGRICULTURE PROGRAMS

Administrative Order No. 225-A provides that government-owned and controlled corporations and government financial institutions shall allocate five percent (5%) of their 2007 surplus for palay and food production projects, and as contribution to the Agricultural Guarantee Fund Pool (AGFP). The AGFP shall be used to encourage partner lending institutions (PLIs) to lend to small farmers and fishers (SFF) or their organizations by providing guarantee coverage to their unsecured loans thereby mitigating the risks involved in lending to agri-agra sector.

SALIENT FEATURES OF THE GUARANTEE

I - ELIGIBLE ACTIVITIES

Agri-Agra credit shall refer to loans granted for the following activities:

  1. Agriculture and fisheries production including processing of fisheries and agri-based products and farm inputs;
  2. Acquisition of work animals, farm and fishery equipment and machinery;
  3. Acquisition of seeds, fertilizers, poultry, livestock, feeds and other similar items;
  4. Rehabilitation of farms resulting from calamities; and
  5. Agricultural and fish production including processing of agri and aqua-based products, farm inputs and/or processes across the food commodity value chain.

II - ELIGIBLE BORROWERS

Small farmers-refer to small crop growers and small livestock and poultry raisers as defined below:

  1. Small Crop Growers-refer to owner-cultivator, tenants, leaseholders, etc. who are tilling not more than five (5) hectares of agricultural lands (RA 6657).
  2. Small Poultry and Livestock Raisers-refer to those having the following maximum hog, poultry and livestock inventory at the time of accreditation by the PLI:
    • Poultry – 2,000 layers or 5,000 broilers;
    • Swine – 10 sows or 50 fatteners;
    • Goat/Sheep – up to 50 heads for meat and/or dairy;
    • Cattle – 10 fatteners or 5 breeders;
    • Dairy – 10 milking cows/carabaos

Small Fishers-refer to the following:

  1. Coastal Fishermen – own or operate a fishing boat, including paraphernalia with total weight of not more than three (3) gross tons and conduct fishing activities within fifteen (15) kilometers from the shoreline.
  2. Fishpond Operators – owner/operator of fishpond(s) of not more than five (5) hectares including those under fishpond lease agreement (FLA).
  3. Fishcage Operators – owner/operator of fish cage(s) with total area of not more than 400 square meters.
  4. Those engaged in aquaculture, which covers all forms of raising and culturing fish, shellfish, seaweed production, and other fishery species in brackish and marine areas of not more than five (5) hectares.
III - ELIGIBLE LOANS FOR GUARANTEE COVERAGE

Unsecured loans of eligible borrowers. If secured partly by real estate mortgage (REM) or chattel mortgage (CM) or deposit hold-out in favor of the partner lending institution, only the unsecured portion which shall be not less than 50% of the loan shall be eligible for guarantee coverage.

IV - ELIGIBLE LENDING INSTITUTIONS
  1. BANKS (Universal Banks, Commercial Banks, Rural Banks, Cooperative Banks, Thrift Banks)
    1. Satisfactory credit standing with creditors, if any
    2. CAMELS Rating of at least “3”
    3. Past Due Ratio net of valuation reserve, of not more than 15%
    4. At least two-year track record in lending
    5. Capital Adequacy Ratio of at least 10%
    6. Adequate Reserve Requirement
    7. Profitable on the year preceding the application and as of the time of application for guarantee line

  2. COOPERATIVES
    1. Registered with Cooperative Development Authority (CDA)
    2. Satisfactory credit standing with creditors, if any
    3. Past Due Ratio net of valuation reserve of not more than 25%
    4. At least two-year track record in lending
    5. Risk-asset ratio (for credit cooperative) of not less than 10%
    6. Complete part or full-time core management team
    7. Profitable on the year preceding the application and as of the time of application for guarantee line.

  3. FARMERS’/PEOPLE’S ORGANIZATIONS OTHER THAN COOPERATIVES
    1. Registered with a registering entity (e.g. SEC, NIA, etc.);
    2. Operational and with satisfactory credit standing with its creditors, if any or with supervising government agencies/ entities such as NIA, DOLE, DAR, etc;
    3. With functioning Board of Directors or its equivalent, and presence of core management team (e.g. manager, bookkeeper and treasurer or officially designated officers to manage the lending program);
    4. Positive net worth on the year preceding the application and as of the time of application for guarantee line;
    5. With lending policies and guidelines and with basic recording system (e.g. loan disbursement and collection systems, etc.);
    6. At least two-year track record in lending;
    7. Past due ratio net of valuation reserve, of not more than 25%.

  4. NON-GOVERNMENT ORGANIZATIONS
    1. Registered with Securities and Exchange Commission (SEC)
    2. Satisfactory credit standing with creditors, if any
    3. Past Due Ratio net of valuation reserve of not more than 25%
    4. At least two-year track record in lending
    5. Complete core management team
    6. Net surplus on the year preceding the application and as of the time of application for guarantee line.

  5. CORPORATIONS THAT LEND TO SFF
    1. Registered with the Securities and Exchange Commission (SEC)
    2. Must have authority to engage in lending activity from appropriate government authority
    3. Certificate of No Derogatory Record from SEC
    4. No ownership and/or labor dispute for the past three (3) years
    5. Past due ratio net of valuation reserve, of not more than 15%
    6. Profitable on the year preceding the application and as of the time of application for guarantee line
    7. At least 60% Filipino-owned
    8. Debt-equity of not more than 80:20
    9. At least two-year track record in lending
V - DOCUMENTARY REQUIREMENTS FOR GUARANTEE LINE APPLICATION

CHECKLIST OF REQUIREMENTS

  1. Request for Guarantee Line1 (1 Original Copy)
  2. Board Resolution indicating the requested amount of guarantee line and authorized signatories1 (1 Original Copy)
  3. Three-year Audited Financial Statements (1 Photocopy)
  4. Latest Interim Financial Statement (shall not be more than six months old as of date of proposal) (1 Photocopy)
  5. Schedule 11a1, for banks (1 Photocopy)
  6. Declaration of Loan Portfolio for the past three years and interim period1 (1 Photocopy)
  7. Basic Business Information1 (Business Profile) and/or General Information Sheet (1 Original/Photocopy)
  8. Registration with appropriate authority (i.e. SEC, CDA, etc.) (1 Photocopy)
  9. Certification of No Derogatory Record from SEC, for corporation (1 Original/Photocopy)
  10. Certification of Authority to Engage in Lending Activity issued by SEC, for corporation (1 Original/Photocopy
  11. Certificate of CAMELS Rating signed by the President and Compliance Officer1, for banks (1 Original Copy)
  12. Authorization to confirm CAMELS Rating with BSP1, for banks (1 Original Copy)
    *11 and 12 may be merged in 1 document
  13. Authorization, authorizing AGFP to secure relevant information from creditor1 (1 Original Copy)
  14. Complete report on the Computation of Risk-based Capital Adequacy Ratio, for banks (1 Photocopy)
  15. Projected Loan Releases1 (1 Original Copy)


Note:1
Pro-forma available at the Agriculture Business Group

VI - PERCENTAGE OF GUARANTEE COVERAGE
The guarantee cover shall be up to 85% of the principal balance of the loan at the time of claim but not to exceed the amount of credit ceiling per commodity.
VII - GUARANTEE FEE AND GUARANTEE PERIOD

The PLI shall pay the guarantee fee based on the amount of the loan as indicated in the PN. The guarantee fee rates are provided herein, taking into consideration the following:

  1. If the loan is covered by PCIC insurance – 50% discount
  2. If the loan is granted to an agrarian reform beneficiary (ARB) – 50% discount
  3. If the loan is PCIC insured and the borrower is an ARB – 75% discount

ACTIVITY GUARANTEE
PERIOD
GUARANTEE
FEE
Palay Production 6 months 1.00%
Pineapple (Plant) 23 months 3.85%
Pineapple (Ratoon) 20 months 3.35%
Sugarcane (Plant) 14 months 2.35%
Sugarcane (Ratoon) 12 months 2.00%
Corn 6 months 1.00%
Cassava 14 months 2.35%
Black Pepper 12 months 2.00%
Fishpond/fishcage
operations
Bangus 8 months 1.35%
Tilapia 7 months 1.20%
Prawn 8 months 1.35%
Crab 8 months 1.35%
Catfish 8 months 1.35%
Poultry Layer 20 months 3.35%
Broiler 3 months 0.50%
Livestock

Note:
*Milk Production
Goat (breeding) 12 months 2.00%
Goat (fattening) 7 months 1.20%
Hog (breeding) 14 months 2.35%
Hog (fattening) 6 months 1.00%
Cattle (fattening) 8 months 1.35%
Cattle (breeding) 11 months 1.85%
Carabao (breeding) 15 months 2.50%
Carabao (dairy)* 11 months 1.85%
Goat (dairy)* 6 months 1.00%
Cattle (dairy)* 11 months 1.85%
Other short term crops/commodities
(e.g. garlic, onion, sayote, tomato, etc.)
7 months 1.20%
Cacao1 1 year 2.00%
Coffee1 1 year 2.00%
Mango1
    Per hectare*
    Per tree
*100 trees per hectare

6 months
6 months

1.00%
1.00%
Banana1 1 year 2.00%
Coconut1 1 year 2.00%
Oil Palm1 1 year 2.00%


1Enrolment for guarantee coverage of short-term loans extended for long gestating crops production such as coconut, banana, coffee, cocoa, mango and oil palm shall be allowed provided that:

  1. The object/s of financing are existing and mature (fruit-bearing trees/plants); and
  2. Loan maturity is not more than one (1) year.

VIII - MAXIMUM LOAN AMOUNT TO BE GUARANTEED

COMMODITY AMOUNT UNIT
A. Crop Production:
Ampalaya 130,000.00 Per hectare
Baguio Beans 60,000.00 Per hectare
Black Pepper 30,000.00 Per hectare
Brocolli 86,000.00 Per hectare
Cabbage 140,000.00 Per hectare
Carrots 80,000.00 Per hectare
Cassava 50,000.00 Per hectare
Cauliflower 90,000.00 Per hectare
Celery 90,000.00 Per hectare
Corn 50,000.00 Per hectare
Cucumber 100,000.00 Per hectare
Eggplant 105,000.00 Per hectare
Garlic 115,000.00 Per hectare
Ginger 70,000.00 Per hectare
Honeydew 60,000.00 Per hectare
Lettuce 75,000.00 Per hectare
Malunggay
     Direct Seeding
     Cuttings

64,000.00
70,000.00
Per hectare
Melon 60,000.00 Per hectare
Mongo 22,000.00 Per hectare
Mushroom 40.00 Per fruiting bag
Okra 68,000.00 Per hectare
Onion (Red) 152,000.00 Per hectare
Onion (White) 151,000.00 Per hectare
Palay
     Inbred
     Hybrid
     Inbred – Seed Production
     Hybrid – Seed Production

50,000.00
60,000.00
50,000.00
65,000.00
Per hectare
Papaya 112,000.00 Per hectare
Patani 40,000.00 Per hectare
Patola 46,000.00 Per hectare
Peanut 30,000.00 Per hectare
Pechay 30,000.00 Per hectare
Pineapple
     Plant
     Ratoon

298,000.00
230,000.00
Per hectare
Pole Sitao (Stringbean) 120,000.00 Per hectare
Potato 150,000.00 Per hectare
Radish 50,000.00 Per hectare
Sayote 150,000.00 Per hectare
Shallot 35,000.00 Per hectare
Snap beans 46,000.00 Per hectare
Sorghum 35,000.00 Per hectare
Soybeans 40,000.00 Per hectare
Squash 60,000.00 Per hectare
Sugarcane
     Plant
     Ratoon

100,000.00
70,000.00
Per hectare
Sunflower 33,000.00 Per hectare
Sweet Peas 100,000.00 Per hectare
Sweet Potato 50,000.00 Per hectare
Sweet/Hot/Bell Pepper 260,000.00 Per hectare
Taro (Gabi) 35,000.00 Per hectare
Tomato 140,000.00 Per hectare
Turnips 40,000.00 Per hectare
Upo 40,000.00 Per hectare
Watermelon 48,000.00 Per hectare
Yam (Ube) 310,000.00 Per hectare
B. Poultry Production:
Poultry
     Broiler
     Layer

10,000.00
86,000.00
Per 100 birds
Livestock Production:
Cattle Breeding/Fattening 50,000.00 Per Animal
Goat/Sheep
     Breeding
     Fattening

20,000.00
1,000.00
Per Animal
Hog
     Breeding
     Fattening

80,000.00
8,000.00
Per Animal
C. Fisheries Production:
Milkfish
     In Fishpond
     In Cages

100,000.00
250,000.00

Per hectare
Per 400 sq.m.
Tilapia
     In Fishpond
     In Cages

310,000.00
250,000.00

Per hectare
Per 400 sq.m.
Seaweed
     Fixed-bottom Monoline
     Floating Long-line

52,000.00
65,000.00
Per hectare
D. Multicrop/Other Short Term Crops or Commodities
Multicrop/ Other Short-term Crops or commodities (e.g. vegetables, integrated farming, etc.) 100,000.00 Per hectare

IX - RISK WEIGHT
All loans extended by partner-banks that are guaranteed by AGFP shall carry zero percent (0%) risk weight pursuant to BSP Circular 1084, Series 2020.
X - RISKS AND EVENTS OF DEFAULT COVERED BY THE GUARANTEE

The guarantee shall cover all risks, from losses due to non-payment of loans including those that are caused by the following, but not limited to:

  • natural calamities (such as typhoons, floods, etc.)
  • pests and diseases
  • market aberrations

However, fraud or wilful misrepresentation on the guarantee coverage and guarantee claims on the part of the PLI shall not be covered and which may be used as basis for termination or revocation of guarantee line.