The same is true for farmers. Giving them land is important, but they also need money, training, equipment, and support to make their farms productive.
That is what Republic Act No. 11901, or the Agriculture, Fisheries and Rural Development Financing Enhancement Act of 2022, tries to do. It helps farmers, fisherfolk, and agrarian reform beneficiaries (ARBs) gain better access to loans and financial services so they can improve their livelihoods.
What does the law require?
Banks are encouraged and required to support agriculture, fisheries, and rural development by providing financing for:
- Farming and fishing activities
- Farm machinery and equipment
- Food processing and marketing
- Rural businesses
- Modern technologies and digital agriculture
- Environmental and climate-friendly projects
What happens if banks do not comply?
If banks fail to meet the required financing targets, they must pay penalties. Instead of letting the money sit idle, the law creates a Special Fund from these penalties.
Why does DAR receive 35% of the Special Fund?
Many farmers under agrarian reform were given land through a Collective Certificate of Land Ownership Award (Collective CLOA). This means a large piece of land was awarded to a group of farmers. Think of it like five siblings inheriting one big cake without clearly marking each person's slice.
This can create problems:
- Unclear boundaries
- Disagreements among owners
- Difficulty obtaining loans
- Complicated land records
To solve this, DAR divides the land into clearly defined individual parcels and issues individual titles to each farmer. This process is called parcelization and titling.
Because this work is expensive, RA 11901 provides that 35% of the Special Fund shall be allocated to DAR for the titling and parcelization of landholdings covered by collective CLOAs.
With individual titles:
- Farmers know exactly which land is theirs.
- Land disputes are reduced.
- Government services are easier to deliver.
- Farmers may find it easier to access formal financing.
- The 25% Quota: All banking institutions must allocate at least 25% of their total loanable funds to agriculture, fisheries, and rural development.
- Flexibility for Banks: It removes the rigid split from the old law (10% agrarian reform, 15% agricultural credit). Banks can now invest across the whole value chain, including agri-tourism, rural infrastructure, and green finance.
- Penalty Reallocation: Banks that fail to meet the 25% credit quota face penalties from the BSP. A portion of these collected penalty funds is legally channeled to help fund DAR's land titling programs.
- Parcelization: It breaks down Collective Certificates of Land Ownership Award (CCLOAs). In the past, groups of farmers were given a single shared title; Project SPLIT subdivides this land so each farmer gets an individual electronic title (e-Title).
- Economic Security: Holding an individual title provides ARBs clear property rights. This eliminates boundary disputes and gives farmers total control over their plot.
- Collateral Creation: Landowners cannot easily use a collective title to secure credit. Individual titles turn land into a legal asset that can be leveraged for production support.
- SPLIT gives the asset: Through DAR Project SPLIT, a farmer transitions from co-owning a massive block of land to holding an individual, legal e-Title.
- RA 11901 unlocks the capital: With an individual land title in hand, the farmer becomes a viable, low-risk borrower for banks looking to fulfill their mandatory 25% lending quota under RA 11901.
- Funding the pipeline: The operational costs of running Project SPLIT's extensive mapping and surveying are supported in part by the bank compliance penalties collected through RA 11901.
