This is a reaction paper to the view that Senate Bill 2553, otherwise known as the Senate version of the Farmland as Collateral Bill, will only set back the implementation of the Comprehensive Agrarian Reform Program (CARP) and result in agrarian reform beneficiaries losing their land. The Farmland as Collateral Bill finds its basis in the policy pronouncement of PGMA for the enactment of "a law making farmland acceptable as loan collateral in order to reduce deterrents to investments in agriculture." The policy statement is by no means lacking in basis. Economic analysts have suggested that one of the factors limiting the availability of credit for more agricultural investments is the eroded collateral value of agricultural land. Farmlands particularly those covered by the CARP generally fail to measure up with the basic prerequisites for the acceptability of collateral namely: (a) Seniority - or the existence of a legal, enforceable priority claim over the collateral; (b) Protection - or the capacity of the collateral to sufficiently repay the lender's exposure; and (c) Marketability - or the easy convertibility of the collateral into cash.
