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PALAY ng Lalawigan


PALAY ng Lalawigan is a joint program of LANDBANK and the Department of Agriculture (DA) that aims to assist provincial/city/municipal local government units (LGUs) purchase the palay produced by local farmers to help cushion the effects of the drop in the farm gate price of palay in the regions. It also aims to supplement the procurement activities that will be undertaken by the National Food Authority (NFA). Participating LGUs shall adopt a business module whereby they will operate an economic enterprise partnership with other LGUs and farmers’ cooperatives and associations. Under this scheme, they will buy the palay produced by local farmers sell/supply rice in the market/government entities, such as government hospitals, jails and other entities. The LGUs could also enter into a milling arrangement with the affected rice millers, construct a milling facility of their own or lease a milling facility.


Provincial LGUs of palay producing provinces


  • No adverse findings on the LGU;
  • With well-defined source of repayment; and
  • With net borrowing capacity per Bureau of Local Government and Finance (BLGF) certification.
  • With DA Regional Executive Director certification that the buying price of palay in the province is below P16.00/kg for wet palay and P19.00/kg for dry palay


  • Working Capital loan for palay procurement (P16/kg for wet and P19/kg for dry)
  • Acquisition of farm machineries and equipment (post-harvest facilities), provided further that these machineries, equipment are not subject of fixed asset grant received by the LGU from PHILMECH under Rice Competiveness Enhancement Fund (RCEF); and/or
  • Other rice-related activities


  • For STLL – Two (2) years from the date of approval
  • For PWC and TL – One (1) year from date of loan signing


Depending on the requirement of the LGU but should not be more than its Net Borrowing Capacity (NBC) per BLGF certification


  • For STLL - Available via 90 to 180 days Promissory Notes, renewable
  • For PWC - Three (3) years, payable monthly
  • For TL - acquisition of farm machineries/equipment (post-harvest facilities) - up to ten (10) years based on cash flow but no longer than the economic useful life of the asset, payable monthly
  • For other rice-related activities - based on the cash flow of the project, payable monthly

A grace period on principal may be allowed depending on the cash flow of the project


  • For STLL and PWC - Lump sum or staggered based on the request for availment of the LGU; loan proceeds to be credited directly to the LGU’s deposit account with LANDBANK
  • For TL - Staggered based on the financing/project requirement


  • For STLL and PWC - Fixed at two per cent per annum (2% p.a.)
  • For TL - 4.5% per annum, subject to annual re-pricing


Standard fees shall apply except for the following which shall be waived:

(i) Handling;

(ii) Commitment; and

(iii) Pre-payment fees*

A 2% pre-payment fee shall be charged on the principal loan to be pre-paid, if the loan is taken out by another bank/financial institution


Deed of Assignment of 20% Internal Revenue Allotment (IRA)


Pre-processing Requirements:

  1. Sanggunian Resolution authorizing the local chief executive (LCE) to
    1. borrow funds, negotiate and enter into a loan agreement with LANDBANK
    2. sign, endorse loan documents, agreements, notes, and other documents pertaining to the loan obtained from LBP; and
    3. Approving the projects to be financed and these are in accordance with the approved local development plan and public investment program or approved annual procurement/investment program
  2. COA Audited Financial Statements preferably for the past 3 years and latest interim FS
  3. Approved budget for the current year
  4. Ordinance approving the Local Development Plan/ Annual Investment
  5. Program which include the procurement of palay produce of small farmers, acquisition of farm machineries/ equipment and/or other rice-related activities and the establishment of economic enterprise in the province
  6. List of elected officials and key officers; and
  7. DA Regional Executive Director certification that the buying price of palay in the province is below P16.00 per kilogram for wet palay and P19.00 per kilogram for dry palay

Pre-release Requirements:

  1. Ordinance passed by the Sanggunian
    1. Approving all previous representations, acts, warranties and all the terms and conditions of the loan
    2. Authorizing the assignment of the IRA
    3. Directing the LGU Treasurer and accountant to enter the loan in the appropriate books of the LGU
    4. Designating the LANDBANK as the LGU's official depository bank for IRA and major depository bank for its other deposits, revenue and collections which designation shall not be revoked while the loan obligations remain outstanding and directing the LGU Secretary to provide a copy of this Resolution to DBM or other IRA administering office
    5. Appropriating the amount for loan repayment in the LGU's annual budget until the loan, interest and other charges are fully paid;
    6. Authorizing LANDBANK to deduct for set-off and/or deduct amounts from general funds of the LGU with LANDBANK and apply the same to the payment of the loan or any portion thereof, or interests and penalties thereon as may be deemed necessary by the LANDBANK; and
    7. Waiving the confidentiality of information on investment/bank deposit
  2. Seal of Good Housekeeping
  3. Latest BLGF Certificate of Net Borrowing Capacity
  4. Monetary Board Opinion
  5. Certification by the Budget Officer, Accountant and Treasurer noted by the LCE that:
    1. The sources of repayment are available and not restricted by law or other obligations
    2. The contractual obligations shall be or has been entered into the appropriate books of accounts of the LGU
    3. The loan shall be used exclusively to finance the procurement of palay produce of local small palay farmers within the coverage of the LGU, acquisition of farm machineries/equipment and/or other rice-related purpose
    4. The LGU shall annually submit to LANDBANK a Certification on the said appropriation
  6. Joint certification by the BAC Chair and by the LCE that the LGU has complied with R.A. 9184 as well as COA rules and regulations
  7. h. Authority to Debit Deposit Account
  8. For acquisition of farm machineries and equipment, guarantee from the dealer/supplier as to the availability of spare parts in the local market

Post-Release Requirement:

  1. Submission of the following:
    1.  Annual certification that the proposed sources of repayment are available and not restricted by law and its obligations are appropriated in their respective budget
    2. Certified list of farmer beneficiaries indicating the address, number of kilograms procured, amount paid and purchase receipt number within sixty (60) days from date of release (if the loan was used to procure the palay produced by local farmers)

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