DA Assistant Secretary Segfredo Serrano said current bills pending in both the House of Representatives and the Senate calling for the amendment of CARP should enable beneficiaries of the law to have greater access to formal credit such as commercial banks.
"This is one way of liberating farmers in the land market," said Serrano, adding that if approved, farmers will have greater flexibility in all the markets such as land and credit.
Currently, banks have not opened up financing facilities that would accept certificates of land ownership (CLOs) as collateral.
The DA’s position is similar to the DAR which earlier expressed support moves by Congress to amend CARP.
"We want to provide farmers access to legitimate credit and prevent them from depending on usurers who lend money at excessive interest rates," Department of Agrarian Reform (DAR) Secretary Roberto Pagdanganan said, adding "the law will protect farmers from falling easy prey to usurers and ending up losing their lands."
Pagdangangan said the proposal to use CARP-acquired lands as collateral for bank loans will also address farmers’ complaints that even while they were named beneficiaries, they could not maximize the productivity of their land because they do not have enough capital.
As a result, many circumvent the law and end up turning over their property to their former landowners or new buyers.
"This defeats the purpose of the program because farmers remain poor and indebted," Pagdanganan said.
On criticisms the banks could end up with more non-performing loans with farmers’ inability to pay their loans, Pagdanganan said safeguards should be established to ensure borrowers meet their obligations.
Earlier, Congress submitted to the Senate its own version, House Bill 5511 or the "Enhanced Collateral Value of Farm Lands Act of 2002" which permits farmlands acquired under CARP as loan collateral guaranteed by the government.
HB 5511 proposed the creation of a P5-billion guarantee fund and the legal framework that provides farmers access to financing institutions such as the Land Bank of the Philippines (Landbank) and other commercial banks.
At the Senate, Senator Sergio Osmeña is pushing SB 167 or "An Act Allowing the Sale, Transfer, Mortgage, Lease, Usurfruct, Conveyance of Lands Awarded under the CARP."
Osmeña said CARP focused too much on land redistribution and neglected putting up infrastructures that would have replaced their dependence on former landowners, such as credit and other support services.
Under CARP, agricultural lands covered by CARP are not eligible as collateral for bank loans.
Smallholder farms created under CARP have no access to credit that would finance the working capital requirements of production. Thus, the flow of financial resources for agricultural production has virtually trickled to a stop.