QuestionsQuestions (ADMINISTRATIVE ORDER NO. 04, S. 2018)
The text cites Administrative Order (A.O.) No. 225-A (issued May 26, 2008) as the basis for the AGFP mechanics and arrangements, and RA 10000 (Agri-Agra Reform Act of 2009) as the statute directing allocation of 90% of penalties collected for non-compliance between AGFP and PCIC.
It includes loans for agriculture and fisheries production (including processing of fisheries and agri-based products and farm inputs); acquisition of work animals and farm/fishery equipment and machinery; acquisition of seeds, fertilizers, poultry, livestock, feeds and similar items; and rehabilitation of farms resulting from natural calamities.
It refers to agricultural and fish production including processing of agri and aqua-based products and farm inputs/processes across the food commodity value chain. It is relevant because the text states the AGFP expanded coverage includes livestock, fisheries, and other food crops.
“Amount to be guaranteed” is eighty five percent (85%) of the principal loan disbursed to borrowers by the PLI, subject to the credit ceiling per commodity.
A Collection Agreement binds the PLI/collecting agent to collect from borrowers on behalf of AGFP. A Guarantee Agreement provides that AGFP pays the borrower’s loan obligation to the PLI if the borrower fails to pay after maturity; the PLI subrogates/transfers its claim rights to AGFP; and the PLI remains bound to collect on AGFP’s behalf.
Eligible borrowers are small farmers and fisherfolk (SFF) or farmers/fisherfolk organizations whose majority of members are SFF.
It must be an unsecured loan not covered by REM/CM/deposit hold-out (or only the unsecured portion is eligible if partly secured, and that unsecured portion must be at least 50%); the loan purpose must be for eligible agriculture/food commodity production-related activities; and the loan must have been released by the PLI not more than 60 calendar days prior to enrollment, with no damage to the crop/object of financing at enrollment.
The PLI pays a guarantee fee based on the amount of the loan indicated in the promissory note (PN) and the guarantee fee rate of the crop/commodity. The text states a guarantee fee rate of 2% per annum, depending on the production cycle; the GB may review/adjust rates, loan ceilings, and guarantee period per crop/commodity.
The GB sets policy directions and oversees implementation, including approving organizational structure and staffing of the PMO, policies and procedural guidelines, approving authorities, annual work and financial plans, guarantee line limits/fees/credit ceilings, investment and utilization of funds, and delegating approvals or confirming delegated approvals.
LANDBANK acts as PIM. It administers the PMO, provides office space and facilities, books and disburses operational expenses per GB-approved plan, enters into approved agreements, and issues instructions to withdraw from AGFP accounts as approved by the GB.
The SGL is twenty five percent (25%) of the seed fund. A PLI’s guarantee line and its related interests must not exceed the SGL; approving authorities for related interests depend on the aggregate amount of the group.
It becomes effective if the guarantee fee is paid within 60 days; there is no damage to the crop/object at enrollment; and the masterlist of eligible accounts for guarantee is submitted. Non-submission of the masterlist makes the coverage null and void.
Fraud or willful misrepresentation by the PLI in guarantee coverage and/or guarantee claims is not covered and may be grounds for termination or revocation of the guarantee line.
A guarantee claim must be filed by the PLI to the AGFP PMO within 60 calendar days after maturity of the PN, supported by items such as list of accounts being claimed, copy of duly accomplished PNs, Disclosure Statement (for Banks), PLI affidavit of non-payment, demand/collection letter, borrower statement of account, and proof/reason for occurrence of calamity/pest/disease if applicable.
Claims are paid in tranches: for less than 300 borrowers, 80% after validation of enrollment and documents and 20% final payment after field validation; for more than 300 borrowers, 50% after validation, 30% after invalid netting, and 20% final after field validation. There is also a one-time payment of the guaranteed 85% under specified validation/sampling conditions.
A penalty of eighteen percent (18%) per annum is charged for late/non-remittance.
The PLI must remit 85% of any collection from individual subrogated accounts to AGFP until the borrower’s total obligation to AGFP is fully settled.
The allowable leveraging ratio is three (3) times the amount of the seed fund, subject to potential review by the GB.
The guidelines take effect upon approval. Practically, coverage and processes governed by the IRR should be implemented only after approval, unless transitional arrangements are otherwise stated.