Philippine coconut sector expects higher government bank borrowing as El Niño pressures farm incomes

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Coconut sector eyes government loans

Highlights

Over 50% of funds allocated by Development Bank of the Philippines and Land Bank of the Philippines are expected to be utilized by coconut farmers next year amid El Niño.
DBP and LANDBANK offer loans at a 2% per annum interest rate, with LANDBANK's minimum at P50,000 and DBP's up to 90% of project cost or P15 million.
El Niño-driven agricultural damage reached P8.57 billion as of Oct. 21, impacting 288,058 farmers, intensifying reliance on government-backed lending and subsidies.

Credit programs positioned for higher demand

As reported by BusinessWorld, Philippine Coconut Authority Department Manager Aldrin A. Darilag said more than 50% of the funds allocated by Development Bank of the Philippines and Land Bank of the Philippines are likely to be utilized next year as farmers respond to El Niño risks.

He said farmers are expected to borrow for irrigation, to support other income sources and to strengthen output from shared processing facilities. He also said the number of borrowers will most probably increase, compared with previous years when uptake of the credit facility was limited.

Government-backed lending programs financed through the Coconut Farmers and Industry Trust Fund under Republic Act No. 11524 allow farmers to borrow for planting needs. LANDBANK offers its Coconut Farmers and Industry Development Lending Program to eligible farmers, cooperatives and associations, with credit access starting at P50,000 for production, working capital, machinery and equipment, among other uses.

DBP’s special credit facility focuses on capacity expansion, farm integration and enterprise diversification to raise production and incomes. Its loanable amount ranges from P15 million up to 90% of total project cost, while DBP and LANDBANK loan assistance programs carry a direct lending interest rate of 2% per annum.

Cooperative relending and subsidies support resilience

Darilag said cooperatives’ relending mechanisms are also expected to lift loan utilization during the dry spell, especially for individual coconut farmers who struggle to meet bank documentary requirements. He expects cooperative lending to center on production loans, irrigation and seedlings.

He also encouraged farmers to maximize other coconut levy trust fund programs, including free seedlings, college scholarships, crop insurance, medical support, community-based coconut processing centers and farm mechanization tools. He said these measures are government-subsidized and are meant to cushion the impact of extreme weather on livelihoods.

The broader agricultural toll from El Niño is already significant. The Department of Agriculture says 288,058 farmers nationwide are affected as of Oct. 21, while agricultural damage from extreme heat has reached P8.57 billion, up from P6.87 billion reported in September.

In our earlier article, we covered the Philippines’ planned reforms for peso-denominated government bonds, including a new pricing convention and expected index inclusion aimed at broadening the investor base and improving liquidity. We also noted that these market upgrades alone may not translate into stronger investment and productivity unless supported by fiscal credibility, deeper domestic capital markets, and broader structural reforms that improve financing access for businesses.

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