PROJECT PROPOSAL

FINANCIAL AND LOAN ASSISTANCE FOR TOBACCO FARMERS

(FLATF)

I. SUMMARY
a) Project Title : Financial & Loan Assistance for
Tobacco Farmers (FLATF)
b) Project Proponent/s : Provincial Government of Isabela
c) Number of Beneficiaries : 861 tobacco farmers
d) Location of Beneficiaries : Various Municipalities/Cities
e) Date of Implementation/Duration :
f) Area of Project Implementation : Province of Isabela
g) Budget Requirement : P56,135,699.00
h) Budget Source : Supplemental Budget(w/ AIP) from
Tobacco Excise Tax
II. RATIONALE

The Provincial Government of Isabela (PGI) has been granted a share from
excise tax from Burley and Native tobacco pursuant to RA no. 7170 and RA no.
8240 amounting to P56,135,699.00 as of September 30, 2017. The PGI is proposing
to utilize the fund to provide financial and loan assistance to tobacco farmers in
the province.

Since the imposition of Sin Taxes different financing entity has reduced
considerably their loan portfolio to tobacco farmers and specifically identified big
targets in the industry as their controlled market. This strict credit policy had
compelled the tobacco farmers to turn to loan sharks and avail of their financing
services which is very disadvantageous as the interest are very high and
sometimes usurious.

To address the matter, PGI will be providing a one- time financial and loan
assistance to tobacco farmers for their capital outlay in the present cropping with
roll over provision over the next cropping season. This scheme will allow farmers
to turn away from these opportunistic loan sharks and as a remedy we will provide
them enough financial support for the growing of their crops.

III. GOALS AND OBJECTIVES

GOAL: To improve tobacco farm operations through the delivery of

interest-free financial and loan assistance to tobacco farmers; Decrease farmers’
dependency on loan sharks; increase profits
 OBJECTIVE: By the end of year one, __ tobacco farmers have already
availed of the financial and loan assistance

IV. EXPECTED BENEFICIARIES

The target allocation for every farmer is P65,000.00. Thus, the 56 million-
peso fund can accommodate up to 861 tobacco farmers in the province.

V. EXPECTED BENEFITS

The availability of funds will address the financial problems of tobacco

farmers specifically in the areas of;

a. Adequate and ready source of funding and financing that is interest

free to Tobacco Farmers to support their livelihood;

b. Avoidance of usurious loan availment from opportunist creditors

thereby shielding them from financial exploitation through the
coverage of FLATF;

c. The continuing trust of the government to uplift the welfare of the

marginalized and poor Filipinos specially our small farmers under the
context of “ Walang dapat maiwan sa laylayan”.

The weighted benefits are designed specifically so that Tobacco Farmers can
recover from their financial burden due to lack of appropriate financing institution
that will cater to them particularly.

VI. DESCRIPTION AND METHODOLOGY

The National Tobacco Authority (NTA) forwarded a list bearing the names
of identified Tobacco farmers in the Province of Isabela numbering to 4,549(see
Annex 1). These farmers will be the target beneficiaries of the loan assistance of
the PGI as well as those who have shifted to other crops but originally (and
historically) were tobacco farmers.

The PGI shall lend an amount of P65,000.00, interest-free, to each farmer

with at least 1 hectare farmland to be used to purchase farm inputs, e.g. seedlings,
fertilizer, pesticides and other materials needed for the propagation of their crops.
The one-time payment shall be paid to the PGI after harvest.

This loan will be automatically renewed on the next cropping season with
this following provision;
 a. If the area maintained is still the same area tilled last cropping,
loanable amount shall be reduced by 20%. This is to presume that the
farmer had already gained profit through the use of this fund. Hence, a
reduction of the loan amount will also reduce his debt service.

b. If the area being used is increased to 2 Hectares or more, loanable

amount shall be increased by 20%. This is to presume that additional
land to till requires additional capital outlay, hence, extra funding is
needed.

The borrower shall agree to the terms and conditions set forth by the PGI.
The loan shall be covered by duly executed promissory note (the same PN used in
BRO program).

VII. RECOMMENDATION

For immediate approval and funding.

Prepared by: Approved by:

_________________________ FAUSTINO G. DY III

Governor