Agricultural Loans Increase in 2022, BSP Survey Reveals

MANILA, Philippines — Agricultural loans and services in the Philippines saw an increase to 18.1 percent in 2022, up from 17.6 percent the previous year.

According to Philippines News Agency, The annual Countryside Bank Survey (CBS) highlighted that the growth was primarily in rural and cooperative banks (RCBs).

The 2022 CBS Report, produced in collaboration with the Department of Agriculture-Agricultural Credit Policy Council and the BSP, was designed to analyze lending trends and the implications for agricultural financing. It provided insights into loan products catering to a range of agricultural needs including seeds, fertilizers, farm equipment, and innovative projects such as digital farming and agri-tourism.

Survey respondents included a variety of banking institutions such as universal and commercial banks, thrift banks, RCBs, government-owned banks, and digital banks, all surveyed electronically across the nation. The report underscored the significant support from RCBs and government banks, with at least 40 percent of RCBs and 74 percent of government banks focusing on small-scale agricultural borrowers.

Despite higher interest rates for agricultural loans, which ranged from 12 percent to 18 percent compared to 7.5 percent to 16 percent for non-agricultural loans, the overall repayment rate stood at 67 percent. Government-owned banks noted a slightly higher repayment rate of 70 percent.

Challenges in agricultural lending were also noted, including risks associated with natural disasters, variable crop yields, fluctuating incomes, and demographic factors like an aging population of farmers. The report emphasized the need for banks to address information gaps to enhance confidence in lending to this sector.

Looking forward, the banks surveyed by the BSP anticipate more favorable lending conditions for agricultural borrowers in the future.