Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH (17") CONGRESS
First Regular Session

House BILL No, 4088

Introduced by: Hon. Delphine Gan Lee and Hon. Orestes T. Salon

EXPLANATORY NOTE
The Constitution, Article 13, Section 5, provides:

Section 5. The State shall recognize the right of farmers,
farmworkers, and landowners, as well as cooperatives, and other
independent farmers’ organizations to participate in the planning,
organization, and management of the program, and shall provide
support to agriculture through appropriate technology and research,
and adequate financial, production, marketing, and other support
services.

Microcredit is the extension of small loans to small-scale enterprises designed to
spur entrepreneurship or for whatever worthy cause the state may designate. One such
target beneficiary of a microcredit program is the agricultural sector, where small-scale
farmers often lack access to additional funding. In times of need, they often turn to loan
sharks or informal institutions that may extend loans in return for an unfavorable interest rate,
Such issues need to be addressed due to the nature of our country's development vis-a-vis
agricultural development; we are still mainly an agricultural country. Microcredit is regarded as
an innovative financial intermediation scheme aimed to reduce the incidence of poverty
especially in the rural areas.

Based on the Philippine Statistics Authority report on Agriculutre Production for 2016
First Quarter, agricultural and fisheries posted a lower production output as compared to
previous years. The increase in output of the agricultural and fisheries sector could not offset
the damages done by natural disasters; mainly typhoons and drought. Institutionalized
microcredit would provide safeguards for farmers and fisherfolk in ensuring the continuity of
the development of the industry instead of depending on informal institutions and individuals.

This bill seeks to extend microcredit services to our farmers and fishermen through the
Land Bank of the Philippines to benefit from the bank branches and facilities that are already

available natignwide.
HQNADELPHYAE GAN LEE HON. ORESTES T. SALON
Representative, AGRI Party-List Representative, AGRI Party-List



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH (17") CONGRESS
First Regular Session

House BILL No._4088

Introduced by: Hon. Delphine Gan Lee and Hon. Orestes T. Salon

AN ACT TO INSTITUTIONALIZE MICRO-CREDIT
FINANCING FOR THE AGRICULTURAL SECTOR

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the “Agriculture Micro
Credit Act of 2016.”

SEC, 2. Declaration of Policy. - Agriculture and Aquaculture are essential for
national development and progress. The State shall give priority to those who engage in
these sectors

In line with the above, it is hereby declared the policy of the State to promote the
development of the country’s agriculture and aquaculture manpower in line with
economic development and to provide the capability required in the areas of research,
development, innovation, as well as their utilization. It is thus important that the State
provide micro-credit facilities to our farmers and fishermen.

The State shall develop a policy environment, especially in the area of savings
generation, supportive of the basic sector initiatives dedicated to serving the needs of
the poor sectors particularly the agricultural sector in terms of microfinance services.

The existing government programs for credit and guarantee shall therefore be
rationalized to promote the mechanisms needed for the implementation of
microfinance services.

SEC. 3. Micro-credit for the Agricultural Sector.—The Land Bank of the
Philippines and the Development Bank of the Philippines shall have the power to grant
loans to farmers, fishermen, and to their cooperatives and associations to facilitate the
production, marketing, delivery and/or distribution of crops and acquisition of essential


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equipment, machinery, tools, and commodities as well as to extend uncollateralized
loans of not less than five thousand pesos (P5,000.00) and not more than thirty
thousand pesos (P30,000.00) for agricultural purposes.

Production loans and loans for the purchase of work animals, tillage equipment,
seeds, fertilizers, poultry, livestock, feed and other similar items, may be extended to
small farmers, based upon their paying capacity and such securities as they can provide,
and under such terms and conditions as the Bank may impose, provided the amount
thereof does not exceed fifty thousand pesos, or such amount as may be fixed by the
President, but in no case shall the amount of loan exceed seventy per centum of the
value of the collateral pledged. In instances where credit is extended for items which are
not consumed in their use, such items may be pledged as security therefor. The Bank
shall promulgate such rules and regulations as may be necessary in the extension of the
loans herein authorized so as to assure their repayment as well as the modes of
payment: Provided, that such rules and regulations shall follow and be in accordance
with generally accepted financing practices and procedures.

SEC. 4. Report to Congress. - The Land Bank shall submit an annual report to
Congress of its Micro-lending Operations with emphasis on the number of beneficiaries,
repayment rates, reach out activities, and other relevant matters.

SEC. 5. Funding, recruitment, and information program. - The amount of
eight hundred million pesos (P800,000,000.00) is hereby appropriated to the
Department of Agriculture in coordination with the Land Bank for the establishment of
branches and the hiring of additional field personnel to conduct information and
training programs on micro-financing, proper enforcement of program policies and
procedures, and the necessary lending technology terms or mechanisms for micro-
lending as provided in this Act. Thereafter, two hundred fifty million (P250,000,000.00)
will be appropriated for the effective and continuous implementation of the provisions
of this Act shall be included in the annual General Appropriations Act.

SEC. 6. Separability Clause. - If any provision or part hereof, is held invalid or
unconstitutional, the remainder of the law or the provision not otherwise affected shall
remain valid and subsisting.

SEC, 7. Repealing Clause. - All laws, decrees, executive orders, proclamations,
and administrative regulations or parts thereof inconsistent herewith are hereby
repealed or modified accordingly.

SEC. 8. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette and at least two (2) newspapers of general circulation.

Approved,