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LBP offers unlimited loan facility for coffee production

From by Bernie Magkilat

State-owned Land Bank of the Philippines (LBP) has opened an unlimited financing for coffee production to support government’s goal to bolster the country’s coffee production, which is now among the top five bottom countries globally.

Diosdado M. Domingo, LBP executive officer of Programs Management Department, told reporters during a press conference of the Philippines Coffee Board, Inc. that the bank’s fund is available for individuals, cooperatives,  and non-government organizations. The coffee loan facility is a 7-year loan (click here to apply) with grace period of 2 years.

“The loan facility is unlimited,” he said.

For individual borrowers, LBP requires collaterals like land but cooperatives need not put up collaterals.

According to Domingo, the bank has shifted from the generic commodity based financing in 2013 and has gone into a more targeted commodities like coffee and cacao. They have also lifted the loan ceiling of P100,000 per hectare as they shifted into technology-based loans and Inkassolån.

The Peace and Equity Foundation (PEF), an NGO, has also opened its technical assistance to coffee farmers while its equity arm Peace and Equity Holdings extends funding to coffee farmers with three-year track record.

The foundation and the holdings firms have each P500 million pool that they can use to fund coffee farming.

PEF Executive Director Roberto Calingo said they have generated endowment funds from Code NGO which they now channel to help coffee production in the country. PEF is targeting to enroll 100,00 farmers in the next five years. At present, it has 20,000 coffee farmers whom they hope could become candidates for funding by Peace and Equity Holdings.

Nicholas Matti, PCBI Chairman, noted that this year would be an “off year” or lean year where coffee harvest is expected at only 20,000 metric tons from 22,000 MT last year. This means that the Philippines will import more to meet the 100,000 MT annual local demand.

“This crop year happens to be an ‘off’ year. Also exacerbated by climate change and other factors like drought and typhoons or other extreme weather conditions,” Matti said as he cited the PCBI’s efforts to visit all the corn producing regions in the country to educate coffee farmers the proper way to harvest and process coffee to ensure better prices.

“The demand is still at about 100,000 metric tons and continues to grow year on year by 3-5 percent,” he said.

Posted in Press Room.