VIII

• Strengthen the CALF guarantee institutions.
• Co-opt the informal lender.
• The government issued Executive Order 113 which terminated the direct lending programs by nonfinancial government agencies and consolidated 20 agricultural credit programs into the CALF (Comprehensive Agricultural Loan Fund).
• The credit subsidies were withdrawn and the government adopted a market-oriented rural credit policy.
• The Agricultural Guarantee Fund Pool (AGFP) started on 26 May 2008 with the following objectives: mitigate the risks involved in agricultural lending thereby facilitating the provision of credit in the agriculture sector and encourage partner financial institutions and other lending entities to lend unsecured agricultural food commodity production loans to small farmers and fisherfolk.
• The guarantee fee in the Agricultural Guarantee Fund Pool (AGFP) is 2% per year.
• Market-oriented financial policies eliminated excess demand for credit and induced banks to be more efficient in their intermediation function.
• Savings mobilization is now emphasized.
• Dairy, Broiler Contract Growing Program (BCGP), and Tree Plantation Financing Program are examples of agricultural credit programs.
• With the presence of these guarantees, formal financial institutions such as banks are relatively more inclined to lend to farmers as the guarantee could cover the farmers’ loans.
• Formal financial institutions often require that farmer borrowers have agricultural insurance from the Philippine Crop Insurance Corporation before loans are granted to them.
• An example of a credit guarantee program implemented by the Department of Agriculture- Agricultural Credit and Policy Council (DA-ACPC) is the Agricultural Guarantee Fund Pool (AGFP).
• The financial reforms introduced more efficiency in the rural financial markets.
• For fisherfolk, the eligibility requirements in the Agricultural Guarantee Fund Pool (AGFP) include fish cage operator – loan amount up to PhP 250,000 per operator, fishpond operator – up to 5 hectares, coastal (municipal) fisherman – up to 3 gross tons fishing boat, and aquaculture – up to 5 hectares.
• Various agents in the rural financial markets innovate to access the rural surplus in view of the strong message that the era of cheap money is over.
• The risks faced by lenders due to possible loan default by farmer borrowers can be addressed by credit guarantee.
• Proposed policy reforms include creating an environment of greater competition in rural financial markets, promoting vigorous resource mobilization, terminating direct lending by nonfinancial government institutions, and moving away from loan quotas as a strategy to ensure loans to target groups.
• The eligibility requirements for farmers in the Agricultural Guarantee Fund Pool (AGFP) are: crop production - tillers of not more than 7 hectares; poultry and livestock production – up to 2,000 layers or 5,000 broilers, up to 10 sow level or 50 fatteners, up to 50 heads of goat or sheep, up to 5 cattle breeders or 10 cattle fatteners, and up to 10 milking cows.
• Agricultural credit is tied to other financial services, particularly, guarantees and insurances.
• Since farmers could claim their agricultural insurance benefits (indemnity claims) when faced with losses due to natural disasters, perils, and other events covered by the insurance, lenders are relatively more included to lend to insured farmers.
• Corn Crop Insurance provides coverage for a standing corn crop planted on the farmland specified in the insurance application and which the assured farmer has an insurable interest on.
• The amount of cover under Corn Crop Insurance is calculated as the cost of production inputs per Farm Plan and Budget plus an additional amount of cover of up to a maximum of 20% to cover the portion of the expected yield.
• Corn Crop Insurance offers two types of insurance cover: multi-risk cover which provides comprehensive coverage against crop loss caused by natural disasters and pest infestation and plant diseases, and natural disaster cover which provides limited coverage against crop loss due to natural disasters.
• The period of cover for Corn Crop Insurance is from planting up to harvesting, with coverage commencing from the date of issuance of the Certificate of Insurance Cover (CIC) or the date of emergence of the first leaf of the corn plant, whichever is later.
• Corn Crop Insurance insurable corn varieties include all varieties accredited by the National Seed Industry Council.
• The premium rate for Corn Crop Insurance is variable per region, per season and per risk classification, shared by the farmer, lending institution and the government.
• Borrower farmers under Corn Crop Insurance are classified into low risk, medium risk, and high risk, with the government contributing 10.62% for low risk, 10.62% for medium risk, and 22.10% for high risk.
• Self-finance farmers under Corn Crop Insurance are classified into low risk, medium risk, and high risk, with the government contributing 10.62% for low risk, 10.62% for medium risk, and 22.10% for high risk.
• Covered risks under Corn Crop Insurance include natural disasters, plant diseases, and pest infestation.
• Excluded risks under Corn Crop Insurance include fire, theft and robbery, sequestration, strikes or other commotion, war, invasion, acts of foreign enemies, hostilities, civil war, rebellion, revolution, insurrection, military or usurped power, and radioactive contamination.
• Excluded risks under Corn Crop Insurance also include avoidable risks emanating from or due to neglect of the assured/non-compliance with the accepted farm management practices by the assured or person authorized by him to work and care for the insured crop.
• Excluded risks under Corn Crop Insurance also include losses occurring prior to the effectivity of insurance, prior to the emergence of first leaf, beyond the scheduled dates of harvest as appearing in the FPB and CIC unless reported in writing to the PCIC at least 10 days before the actual harvest, and after harvest.
• Farm eligibility for Corn Crop Insurance requires that the farm must not be part of a riverbed, lakebed, marshland, shoreline or riverbank, must have an effective irrigation and drainage system, and must be accessible to regular means of transportation.
• Documents required in applying for cover under Corn Crop Insurance include an application for Production Loan (APL) which also serves as application for crop insurance, Farm Plan and Budget (FPB), and Location Sketch Plan (LSP)/Control Map (C).
• Loan Repayment Protection Plan guarantees the payment of the face value or the amount of the approved agricultural loan upon the death or total permanent disability of the insured due to accident, natural causes, and murder or assault.
• Accident and Dismemberment Security Scheme provides death or dismemberment or disablement of the insured due to accident.
• A claim not acted upon within 60 calendar days in Corn Crop Insurance is considered approved.
• Corn Crop Insurance requires documents such as the List of Borrowers (LOB), Standard Farm Plan and Budget (SFPB), and Control Map (CM) in the application process.
• Self-financed farmers file their applications for cover with the Lending institution where farmers obtained their production loans, PCIC regional offices/PCIC authorized underwriting agents.
• No claim benefit in Corn Crop Insurance is a benefit provided under Section 14 of RA 8175 (Amending the Charter of PCIC) equal to 10% of the net premium share paid for the immediately preceding 3 insured crop seasons not subject to any claim.