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It is a common sight in the Philippines
vast rice fields, wide greenery, fresh smelling
fruit bearing trees. All these are
product of agriculture. However, some of them, usually
the farmers, at one point in time or sometimes their
usual practice is to get a loan intended for the benefit
of this agriculture. This loan is called agricultural
loan.
Agricultural loan is also called farm loan. Agricultural
loan is a type of a secured loan. Agricultural loan’s
primary purpose is to finance the processes involved in
farming that needs vast amount of investment; planting,
harvesting, gathering and other common processes.
This loan is provided to farmers and other individuals
who engage in agriculture business to help them uplift
their lives as well as the nation by producing food.
Agricultural loan may be used for financing a land
purchase, farm machines and equipments, supplies like
fertilizers and seeds, poultry, livestock, even work
animals, and other similar items. |
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Agricultural loan is catered mostly and
primarily to tillers, farmers, owners, cooperatives,
compact farms, and to settle their agricultural losses.
However, corporations, single proprietorships,
partnerships that engage in agricultural industries may
also avail an agricultural loan.
As per Central Bank’s memorandum, agricultural loans
should be backed up or secured by real estate property,
poultry stored in warehouse, and other agricultural
collaterals such as crops, livestocks and work animals.
Agricultural loan is very helpful in our country. Not
only it provides food for the people, it also increase
the country’s income, thus contributes to the
government’s expenditure. However, agriculture is ever
decreasing in the country. The rice shortage is an
evidence of the country’s negligence in promoting and
boosting its agriculture.
In fact, on the contrary, according to the Philippines’
Bureau of Agricultural Statistics (BAS), agricultural
loan has remained its low share on the government’s
expenditure. Which means that the government is not that
benefited with our agriculture. Considering that the
Philippines possess various agricultural sources that
may be helpful for its growth.
This is maybe because suppliers or lenders of
agricultural loans are limited. Although banks and other
non-rural financial institutions also offer this loan,
the rural markets are the primary area where farmers go.
Only few rural banks are existent in the provinces and
rural areas. Their funds are minimal, so they can only
provide loans to those who will give most benefit to the
economy. Hence, biases arise from these lenders, as they
prioritize exportation than local trade. This is
noticeable by the declining proportion of agricultural
loans to the total bank loan.
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