The Agri-Fishery Microfinance Program (AFMP) is a joint program of the Department of Agriculture (DA), the Agricultural Credit Policy Council (ACPC), and the Land Bank of the Philippines (LBP) to support farmers/fisherfolk engaged in the priority commodities of the DA. Created by virtue of ACPC Resolution No. 31-01 Series of 2007, the AFMP provides agri-fishery loans to qualified institutional borrowers and to small farmers and fishing households.

The AFMP is one of the lending programs under the Agro-industry Modernization Credit and Financing Program (AMCFP) – the government’s umbrella financing program for agriculture and fisheries.

Program Objective: To improve the incomes of small farm and fishing households through improved access to financial services that can help enable them to diversify income sources and/or improve the profitability of their main agricultural or fishing activities.

Program Scheme:
Under the AFMP, the DA renders technical advice as to the appropriate technologies and production costs and returns of farm/fishing activities to be given assistance by the Program.

The Land Bank of the Philippines (LBP) provides portfolio rediscounting, working capital and term loans to qualified borrower organizations/institutions. Borrower organizations/institutions may be (a) organizations with farmer/fisherfolk members that will utilize the credit funds to finance value chain activities of small farmers/fisherfolks or (b) credit retailers that will extend agri-fishery microfinance loans to small farming/ fishing households.

The ACPC reviews, approves and conducts validation of loans charged against the DA-ACPC Agri Micro Fund.

Program Features:

A. ELIGIBLE BORROWER ORGANIZATIONS/INSTITUTIONS:

* Bank-Accredited Cooperatives (BACs) and other Accredited Conduits of LBP (Type 1). These are institutions that are currently accredited with LBP and have passed the Risk Asset Acceptance Criteria (RAAC) for microfinance.

Security/Collateral
* Assignment of sub-borrower Promissory Notes (PN) including underlying collaterals
* Other securities as may be required by LBP

Mode of Payment
* Portfolio Rediscounting: Principal and interest payable upon PN maturity
* Working Capital Loan: Upon PN maturity but with interest paid monthly or quarterly
* Term Loan: Amortized quarterly on principal + interest (with grace period on principal of 6 months)

B. ELIGIBLE SUB-BORROWERS

Eligible Sub-borrowers – Eligible sub-borrowers are the spouses, household heads or adult working members of small farming/fishing households. Only one member per household is allowed to borrow at a time.

Types of Loan Facilities:
* Microfinancing – Micro loans to support any or a combination of farm, off-farm/non-farm activities.
* Value Chain Financing – Loans to finance any of the value chain activities (production, processing and marketing) with direct forward or backward link with small farmers/fisherfolk.

Financing Terms:

Credit Limits
* Microfinancing Facility: The amount of sub-loan shall be computed based on the assessed repayment capacity of the household’s cash flow but not to exceed PhP 50,000.
* Value Chain Financing: Amount shall not exceed PhP 100,000.
Interest Rate – The applicable interest rate for sub-borrowers shall bebased on the prevailing interest rates of the chosen conduit organizations/ institutions.

Loan Maturity and Mode of Payment
* Microfinancing: Not to exceed one year and the amortization schedule shall be based on the household’s cashflow. At least 30% of the loan should be amortized, frequency of which shall be at the shortest interval possible, but should not be longer than monthly.
* Value Chain Financing: Loan maturity shall be based on the sub-borrower’s capacity to pay but not to exceed one year.

Security/Collateral – The chosen conduit organization/institution may require securities on the sub-loans as it may deem necessary. These may include deed of assignment of personal assets (e.g. equipment, vehicles, etc) or issuance of post-dated checks.