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Land Bank, dedicated to financing rural development

Article - July 20, 2011
CEO and president of Land Bank of the Philippines, Gilda Elepano Pico shares the ins and outs of this government bank entrusted with boosting agricultural and rural sectors
Ranked among the top five commercial banks in the country, Land Bank of the Philippines is a government institution that plays a unique role promoting countryside development while remaining financially viable. The bank has grown into the largest formal credit institution in the rural areas and today offers a full range of banking services.

Gilda Elepano Pico, CEO and president of Land Bank of the Philippines since November 2006 and vice-chairman since August 2005, has worked in various departments in Land Bank since 1981. Here Ms. Pico discusses Land Bank’s role in the country’s sustained growth.

Agriculture is the backbone of the Philippines’ economy. How does Land Bank support the sector?

The agriculture sector plays a very crucial role in shaping the country’s overall economic growth and development. It remains as one of the most economically significant and promising industries in the Philippines in terms of its vast potential and opportunities for expansion and growth.

This is primarily why Land Bank is helping the farmers and fisher folk sector through financial and technical assistance. We want to reach as many farmers and fisher folk as we can, and we tap rural banks and cooperatives which serve as conduits in extending the much-needed credit support to our mandated sector. We are working with about 500 rural banks and their branches and over a thousand cooperatives in order to serve farmers and fisher folk across the country.

Preparation is very important when lending to farmers and fishermen. We have established a group in Land Bank called the Development Assistance Center which focuses on the institutional and capability building of these cooperatives.

The success of the bank depends on the strength of the conduits. Before we lend to them, we make sure that they are prepared technically in terms of bookkeeping and in other areas of managing their business.

Another basic thing we require from them is equity. If they do not have a stake in the business, they can easily abandon the project. So for every one peso that they put in the cooperative, we give them six pesos in loans. They use these loans for relending to the small farmers and fisher folk.

The other priority sectors of Land Bank are the micro small and medium enterprises, livelihood, agribusiness and agri-infrastructure, renewable energy and water.

Are you developing any more products to target even more farmers?



CEO and President
of Land Bank
Yes, we developed a synergy program called the Food Supply Chain Program, which is in support of the national government’s thrust of promoting food security. The objective is to increase farmers’ income by providing financial and technical support along the value-added chain of a commodity or industry.

We launched this last year where we allocated P50 billion ($1.15 billion) for the program, particularly to support the financial requirements for crop, livestock and fishery production, working capital and acquisition of processing and other fixed assets.

Land Bank provides financing to all the players along the value chain system, consisting of a full range of activities that are undertaken in turning a particular product into a form that is sold and consumed.

At the outset, a cooperative and a processor will establish production, technical and marketing contracts, where the cooperative through its farmer members commits to supply the processor with their produce based on the latter’s product requirement.

The processor, on the other hand, commits to buy the produce of the cooperatives at a competitive price; and may also commit to provide the necessary inputs and technical assistance if only to ensure product quality and standards. The processor then makes use of the produce to convert it into a product that will again be an input to another activity.

It is really a complete chain from farm production to processing to marketing. Farmers will now be assured that their products will be bought. The problem in the past was that there was no market for their produce, so we are now addressing that situation.

In line with that, Land Bank is also investing in research. We have linked up with universities and state colleges in the provinces and the countryside so they can study and research how farmers can increase their production and profitability. We will pilot test their findings and if successful, the idea will be marketed to the farmers so they can adapt the technology. We then pilot test their recommendation and, if successful, encourage farmers to adopt these new technologies.

Speaking specifically about your institutional investments, what avenues do you like to go down, besides agriculture obviously?

Our priority sectors are not just the small farmers and fisher folk. We also support SMEs and we finance local government units for infrastructure projects. We also support renewable energy and water projects as well as the requirements of government agencies and corporations because we are a government bank. For example, if the NFA (National Food Authority) requires financing for domestic rice procurement, then we lend to them.

Local government units are crucial in the food supply chain and in the development of the rural economies. We need infrastructure so that the produce of the farmers can be brought to the trading center at the least cost possible. Sometimes it takes them a long time to transport from the farm to the trading areas, so transport costs are high. We finance local governments so they can build farm to market roads and rural infrastructure.

Land Bank cannot do this alone; it needs the support of the other units and local governments.

Land Bank has adopted an integrated countryside development philosophy. This synergistic framework is the most effective approach. Adopting a silo approach towards countryside development has a higher risk of failure.

What final message would you like to send to the readers?

Well, for one, we’d like to invite them to visit our country not only to behold the many natural wonders in the Philippines, but also to explore possible investment options.

On our part at Land Bank, we will continue to do our share in promoting economic growth, especially in the countryside where potential areas for development are endless. Ultimately, we would like to see Land Bank fulfill its mission and be able to touch and make a difference in the lives of the people we serve.