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MICRO AGRI PRODUCT Module 1, Session 1 Designing a Rural Finance Product: Getting a Handle of our Agricultural Lending Introduction Knowledge of the existing condition of the agricultural sector of the country as well as greater understanding of the credit needs of the farmers are crucial in the design and implementation of an agricultural loan product. Session Objective By the end of the session, the participant will be able to: • Write the policies and procedures of the participants’ traditional agricultural lending product (regular agri loan); • Answer questions on whether the bank has reached the farmers and has effectively served them with the bank’s existing agricultural loan product. Agricultural Sector in the Philippines • The Philippines is still a predominantly agricultural country. – Agriculture and fishery sector contributed 15% of the GDP in 2002. – One-third of the labor force is in agriculture. • In 2002, the Philippines registered a total of 4.8 million agricultural farms, covering 9.7 million hectares. The total agricultural land area constituted 32.2% of the country’s total land area. Agricultural Sector in the Philippines • Most farms are small. Average farm size is 2 hectares. • Under CARP, 1.4 million hectares had been distributed to 751.9 thousand farmers. Is your bank able to efficiently and effectively reach out to this market? Does your agricultural loan product properly address the need/s of the farmers in your area without sacrificing the welfare of the bank? Is it time for you to see the farmers using a different set of lenses? Workshop 1 Regular Agricultural Lending Policies & Practices Group by bank Supply information in Module 1 Workshop 1 handout Discuss among your group mates answers to the 3 questions in the handout. Time: 45 minutes Traditional Agricultural Lending POLICIES Loan Purpose Loan Amount Eligibility Criteria Collateral Loan Term Mode of Payment Interest rates Savings TRADITIONAL AGRI LOAN Traditional Agricultural Lending Loan Analysis Loan Approval Loan Disbursement Follow up & Collection What percent of your loan portfolio is in agri loan?