To protect the country's farmers from usurious lenders, marked by excessive loan interest rates and unauthorized lending practices, Davao City First Congressional District Representative Paolo Duterte has filed a bill intended for the institutionalization of the accepted interest rates on the loans of farmers and providing sanctions for those who will violate the measure.
"It is disheartening that regardless of the invaluable contribution of the farmers to the country's food security, they remain to be living below the poverty line," Duterte said.
The lawmaker added that the lack of access to formal credit facilities and excessive interest rates charged by predatory and opportunistic lenders remain as one of the primordial issues faced by the agricultural sector.
House Bill 9094 or the Anti-Usury Against Farmers Act of 2023 aims to safeguard farmers not to become victims of usurious lenders and to their unauthorized lending practices.
Duterte stressed that several factors have forced the poor farmers to the brink of debt, which include natural calamities, worsening climate change, fluctuating economic forces and unforeseen global pandemic that resulted in the ballooning prices of farming capital and the exposure of agricultural lands to dilapidation.
"As a result, the country's farmers are faced with unabated losses and financial burden which results in their increased financial vulnerability. It left them with no other choice but to obtain more and more credit from loan sharks in order to secure short term relief with the hopes of mitigating their losses from the effects of devastating calamities, disrupted economies, and exorbitant farming capital," said Duterte.
He also cited reports from the Philippine Institute of Development Studies showing that despite the availability of government-directed credit programs and the significant amount of government funds spent for its implementation, farmers or the intended target beneficiaries still do not have access to credit and are still dependent on informal lenders who charge unreasonable interest rates due to lack of collateral to secure loans and lack of awareness or familiarity with the processes and requirements needed.
Under the proposed measure, interest on loans to farmers whose landholding does not exceed seven hectares, whether with collateral or without, shall not exceed an effective interest rate of six per cent per annum.
The same rate will likewise apply to forbearance of any money, good or credit, and in judgments. Any figure above this shall be considered usurious and illegal. Violators would be fined or penalized with imprisonment.