A Boholano partylist lawmaker and former agriculture secretary has called for sweeping reforms in how the Philippines executes its agricultural lending policies, arguing that persistent risk uncertainty — not lack of funding — is keeping banks from investing in the farm sector.
Rep. Arthur Yap of Murang Kuryente partylist made the remarks before the European Chamber of Commerce of the Philippines, where he outlined a government-backed financing framework he said could unlock large-scale capital flows into agriculture.
Citing Bangko Sentral ng Pilipinas data, Yap said commercial banks continue to miss mandated agricultural lending targets, frequently choosing to absorb regulatory penalties rather than extend credit to the sector.
He attributed the shortfall not to insufficient funds or weak institutions, but to unpredictable risk structures that make it difficult for lenders to accurately price exposure.
“Capital does not avoid risk — it avoids uncertainty,” Yap said. “Predictable insurance payouts, enforceable guarantees, and stable program rules are essential to restoring confidence in the sector.”
Yap, who served as Secretary of Agriculture under President Gloria Macapagal Arroyo, is advancing an integrated financing model developed in coordination with the Agricultural Credit Policy Council, the Philippine Crop Insurance Corp., PhilGuarantee, and the Maharlika Investment Fund.
The framework would require every agricultural loan to carry four embedded protections: credit provision, insurance coverage, guarantee protection, and a government-backed stabilization mechanism for catastrophic risk events.
He said advances in precision agriculture technology — including hyperlocal weather forecasting, satellite monitoring, and farm-level data analytics — now provide the tools needed to enforce lending discipline with greater transparency.
Such systems, he said, enable objective underwriting, verifiable claims processing, and continuous risk monitoring across all participating institutions.
“The Philippines does not lack policy, institutions, or funding,” Yap said. “What it lacks is consistent execution.”
The Philippines has one of Southeast Asia’s most agriculture-dependent economies, with roughly a quarter of its workforce employed in farming and fisheries.
Despite longstanding laws requiring banks to allocate a portion of their loan portfolios to the agricultural sector, compliance has remained chronically low, a gap regulators and legislators have struggled to close for decades.
Yap said strong government leadership to enforce system-wide discipline could transform agriculture into a financeable sector at scale, mobilizing private capital, protecting smallholder farmers, and securing long-term food resilience.