Landbank can't survive on farmers' loans alone, DOF says

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Metro Manila (CNN Philippines, July 23) — President Rodrigo Duterte threatened to abolish the Land Bank of the Philippines (Landbank) on Monday, saying that the state-owned bank has done little to help out farmers and coconut planters.

During his State of the Nation Address, Duterte gave Landbank until next week to provide a "viable plan" to help out Filipino farmers, warning that he will ask Congress to reconfigure the bank's structure and charter.

"Landbank should go back to land. Why are you mired in so many commercial transactions? Bumalik kayo where you were created for, and that is to help the farmers," Duterte said in his one and a half hour speech at the Batasang Pambansa. "I will give you until the end of July to give me a plan or else I will ask Congress to reconfigure you and whatnot. If there is no viable plan for the farmer then it is all commercial transaction, I plan to abolish it."

However, Finance Secretary Carlos Dominguez III said it was not that simple, as Landbank also makes profits from commercial borrowings.

"I'm in regular contact with the executives of Land Bank and have been assured that they are making every effort to finance projects in the agriculture sector. The size of the resources of the bank as the main depository of government accounts makes it necessary for them to deploy their funds to commercial and industrial projects as well as agriculture projects," Dominguez said in text message to CNN Philippines.

Dominguez sits as a member of Landbank's board of directors. The bank is led by Cecilia Borromeo, who was appointed by Duterte as president and chief executive officer last March.

Landbank is the third-biggest bank in the country, and is the largest one controlled by government. The lender is mandated to help farmers, fisherfolk, and their cooperatives by providing access to funding, which has remained elusive for them without any collateral to post.

The bank made ₱4.75 billion from January-March, drawn mainly from ₱778.8 billion in total loans, according to the bank's latest financial report. Landbank said it has released ₱13 billion loans to small farmers and fisherfolk during the first three months of 2019, while total credit lines extended to agriculture and fisheries rose to ₱172 billion, accounting for 22 percent of the bank's loan portfolio.

Landbank also counts communications, transportation, housing, education, health care, environment-related projects, tourism, and utilities as "priority sectors" for lending.

The government bank added that they have ₱45.3 billion outstanding loans to small farmers and fishers, ₱111.7 billion outstanding from startups and small businesses, and ₱50 billion to be settled by local government units as of March.

Duterte made his Monday remark in relation to the Coconut Levy Fund, as he urged Congress to file bills to disburse the long-withheld taxes taken from coconut farmers during the Marcos administration which were allegedly siphoned to corporations of the late strongman's cronies.

"What the heck is happening to you? You are supposed to finance agricultural enterprises and endeavours. Bakit wala? Why can't you just buy a few wagons or whatever, go to the countryside, and ask the people if there are cooperatives?," Duterte told Landbank.

However, Dominguez clarified that Landbank also performs "critical functions" on behalf of government, such as the distribution of cash transfers to beneficiaries of the Pantawid Pamilyang Pilipino Program for the poorest households, as well as the Pantawid Pasada fuel subsidies to jeepney drivers.

To help the plight of farmers, the Finance chief added that the state-run bank is also fast-tracking the distribution of individual land titles to beneficiaries, which in turn will make them credit-worthy.