Understanding Local Farmers’ Perceptions for their Farm Financing using Loans from Informal Creditors

In this study, we will be going to analyze the perception of our local farmers associated with this financing through the informal creditors, lenders and financiers. This qualitative research through one-on-one interviews used an adopted survey from the research study of Ms. Lolita Poliquit entitled “Accessibility of Rural Credit Among Small Farmers in the Philippines” and also used open-ended questions for other important details and real problems they encountered. The local farmers in the specifically identified areas for this study will capture firsthand the reasons, the anticipated risks, and their future plans that are associated with these informal financiers. This will help us understand the farmers’ point of view on why this scheme still persists and why they are still engaging in this kind of scheme despite the efforts of our government to help our small-scale farmers. The researchers will be limited only by the number of respondents in General Santos City and Alabel, Sarangani Province, who are currently engaged with these informal financiers. The study revealed that despite 100% of the respondents trying to take a loan from government banks, all of the applications were denied due to lacking documents and collateral that are needed by the banks. This scenario leads our local farmers to take credit from the informal creditors, specifically their buyers or the middlemen. They grabbed this kind of scheme due to easy application, fast processing, and no needed collateral despite the perceived risks that their crops will be bought at a lower standard market price, high interest rates, and most of the time at a discounted price. The study highlights the gap between the implementation of government projects and aid to the local and small farmers. Institutional and government banks lack understanding of the real situation of our respondents.