Philippine banks’ lending to agriculture sector tops mandated minimum
Philippine banks met their mandatory lending quota for the agriculture sector by the close of 2025. But lenders’ caution in the coming months will likely deepen as the conflict in the Middle East threatens to disrupt global supplies of fertilizer and crude oil.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that lending to the farm sector reached P2.8 trillion as of end-2025. This was nearly a 40-percent surge from the previous year.
The amount represents roughly 85 percent of the P3.3 trillion in total loanable funds that Philippine banks hold.
Under Philippine law, banks are required to earmark 25 percent of their loanable funds for agriculture, fisheries and rural development. However, newly established institutions are granted a five-year grace period.
But while current lending levels comfortably exceed that minimum, the latest figure represents the lowest since the second quarter of 2023. Back then, agricultural credit accounted for more than 36 percent of the pool.
Analysts believe the smaller proportion largely reflected faster credit expansion in other sectors rather than a sharp pullback from farm lending.
“Stronger growth in services, infrastructure, and consumer-related loans has expanded the overall loan base, mechanically lowering agriculture’s share even as nominal lending to the sector continues,” said Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines.
Historically, agriculture accounted for about a tenth of gross domestic product and employed around a quarter of Filipino workers.
Yet, decades of underinvestment and the rapid growth of other industries have left the sector struggling to modernize and expand.
According to the BSP and the Department of Agriculture, vulnerabilities to natural calamities and harvesting uncertainties remain the most common problems that banks face when extending credit to agriculture.
