MANILA, Philippines — In a bid to boost domestic food security and lower production costs, the Land Bank of the Philippines (Landbank) and the Agricultural Credit Policy Council (ACPC) have officially rolled out a new credit facility targeting the modernization of the country’s rice sector. The Rice Modernization Loan Facility (RMLF) is designed to provide accessible, low-interest financing for farmers and agribusinesses looking to adopt mechanization.
The joint initiative aims to cushion smallholder farmers from the twin strains of high operational costs and climate vulnerabilities.
The credit facility addresses long-standing complaints from the agricultural sector regarding the high cost of upgrading farm machinery.
- Low Interest Rates: The RMLF offers a highly subsidized, fixed interest rate of 2% to 4% per annum, significantly lower than standard commercial loan rates.
- Flexible Repayment: Loan terms are structured around the country’s two main cropping seasons, allowing farmers to align their repayments with actual harvest income.
- Collateral-Free Option: For qualified individual smallholder farmers and members of registered cooperatives, the facility waives traditional hard collateral requirements, relying instead on crop insurance and cooperative guarantees.
The financing can be utilized for a broad range of post-harvest and pre-harvest technological upgrades, including:
- Mechanization Equipment: Purchase of high-yield combine harvesters, mechanical transplanters, tractors, and smart drone technology for fertilizer application.
- Post-Harvest Facilities: Establishment or upgrading of solar bubble dryers, modern rice mills, and temperature-controlled storage warehouses to reduce post-harvest waste.
- Climate-Smart Infrastructure: Investments in solar-powered irrigation systems to counter the recurring water shortages and high diesel costs associated with traditional pumps.
The launch comes as the Department of Agriculture scrambles to lower the production cost of local palay (unhusked rice), which remains uncompetitive compared to cheaper imports from Vietnam and Thailand.
- Reducing Wastage: Philippine rice production currently suffers an estimated 15% to 20% loss during the post-harvest stage due to inadequate drying and milling facilities. The RMLF aims to cut this waste in half by 2028.
- Lowering Per-Kilo Costs: By shifting manually intensive processes to mechanized solutions, the program projects a ₱2 to ₱3 reduction in the production cost per kilogram of palay.
“Modernization is no longer a luxury for our agricultural sector; it is a necessity for survival. Through this facility, Landbank and ACPC are ensuring that even smallholder farmers can access the technology needed to increase their yields, reduce post-harvest losses, and ultimately secure their livelihoods.” — Landbank Representative
