NINETEENTH CONGRESS.
First Regular Session

Batasan Hills, Quezon City TIME 4:57pm
e Rai
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House Bill No.__ 1944 _

Introduced by

HON. YEDDA MARIE K. ROMUALDEZ
and
HON. JUDE A. ACIDRE

AN ACT
PROMOTING CORPORATIVE FARMING AND PROVIDING INCENTIVES
FOR ITS EFFECTIVE IMPLEMENTATION

EXPLANATORY NOTE

The 1987 Philippine Constitution recognizes the indispensable role of
the private sector, encourages private enterprise, and provides incentives to
needed investments. Against this mandate, this bill seeks to engage the private
sector to participate in contributing to food security by participating in
corporative farming.

This bill seeks to encourage private corporations that report earnings for
the past four (4) years to voluntarily venture into the production of rice/corn for
their employees’ requirements. Corporate participation may be through existing
agricultural landholdings of the corporation, long-term lease or purchase of
agricultural lands, and by any form of contractual arrangements with farmers’
organization and cooperatives who can simultaneously manage the
landholding.


In ensuring private participation and securing the financial viability of the
corporations, this bill seeks to grant incentive packages in the form of customs
exemption for import of agricultural products, value-added tax (VAT) exemption
on importation of agricultural inputs, capital gains tax exemption, and income
tax holidays. Private corporations may likewise sell to the local market produce
in excess of their employees’ consumption requirements.

This proposed legislation aims to augment additional agricultural food
‘source to address the food security needs of the country.

In view of the foregoing, approval of this bill is earnestly sought.

Rep. YEDDA MARIE K. ROMUALDEZ
Representative ¥Tingog Sinirangan

Rep. JUDE. ACIDRE
Representative, Tingog Sinirangan


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

NINETEENTH CONGRESS
First Regular Session

House Bill No.__1944 _

Introduced by

HON. YEDDA MARIE K. ROMUALDEZ
and
HON. JUDE A. ACIDRE

AN ACT
PROMOTING CORPORATIVE FARMING AND PROVIDING INCENTIVES FOR ITS
EFFECTIVE IMPLEMENTATION

Be it enacted by the Senate and the House of the Representatives of the
Philippines in Congress assembled:

Section 1. Domestic Corporations and Partnerships. - For the purpose of
this Act, domestic corporations and partnerships shall refer to all corporations and
partnerships organized and existing under Philippine laws, operating for profit:
Provided, That said corporations and partnerships report earnings over the last four
(4) years that allow them to engage in the production of rice/ corn for their employees’
requirements without adversely affecting their financial viability. Appropriate guidelines
shall be issued to determine the corporations and partnerships that are to be covered
by this Act.

Section 2. Corporative Farming Arrangements. - Participation in Corporative
Farming programs shall be on a voluntary basis. For the purpose of this Act,

corporations/partnerships may engage in the following Corporative Farming programs:

(a) Corporations/partnerships with existing landholdings suitable for rice/corn


production may manage the land and produce the rice/corn or may enter
into a management/contractual arrangement with farmers’ groups such as
farmers’ associations, cooperatives, and agrarian reform communities
(ARCS);

(b) Corporations/partnerships may purchase or lease, on a long term basis,
public or private agricultural land suitable for rice/corn production, whereby
the corporations/partnerships are given full management and production
control over the purchased or leased lands or may enter into contractual
arrangements, or joint ventures with landowners, farmers’ organizations and
ARCS.

Agricultural land purchased or leased for the purpose cannot be converted
to other uses. Should the Corporative Farming venture cease to be
financially viable and the partners declare bankruptcy or insolvency, land
ownership shall automatically revert to the agrarian reform beneficiaries
within a period of three (3) years in the case of public agriculture lands and
private lands originally distributed under the Comprehensive Agrarian
Reform Program. Fifty percent (50%) of the land should have been
developed within a period of three (3) years, and ninety percent (90%) within
a period of five (5) years.

(c) Corporations/partnerships may enter into contractual arrangements with
farmers’ organizations/ ARCS, whereby the corporations and partnerships
will provide the production inputs and technical and related services, then
buy back the produce. Provided, that the farm inputs that shall be utilized
shall subscribe to the requirements set forth by Republic Act 10068 or the
"Organic Agriculture Act of 2010."

Local Government Units (LGUs) shall be required to identity appropriate
land areas for Corporative Farming in consonance with their comprehensive
land-use plan and ordinances. The LGU shall require the participating


corporations/partnerships to provide livelihood projects/opportunities to
families who will not be hired by the said entities.

Further, the LGUs may also identify local taxes that may be offered as
incentives for Corporative Farming

(d) Corporations/partnerships may enter into contractual arrangements with
farmers’ organizations/ARCs, whereby farmers’ organization shall be
responsible for the production of raw agricultural materials while the
corporations/partnerships shall perform the agro-processing / value-addition
and look for domestic and international markets.

(e) Farmers or other agricultural cooperatives with existing landholdings and
sufficient capitalization to undertake a "corporative" farming scheme for
rice/corn.

Section 3. Disposition of Excess Production. - The corporations or
partnerships shall be required to provide a minimum of six hundred (600) kilograms of
rice/corn per employee per year or fifty (50) kilograms per employee per month.
Production in excess of the employees’ consumption requirements may be sold in the
local markets: Provided, that such will be reported to the National Food Authority
(NFA).

Section 4. /mplementing Agencies and Implementing Rules and
Regulations (IRR). - The Department of Agriculture (DA) and the Department of
Agrarian Reform (DAR) shall be the lead agencies to institute measures to ensure
higher rice/corn productivity through Corporative Farming schemes.

Moreover, the DA and the DAR shall facilitate with the appropriate government
agencies, the processing of management contracts between the corporations/
partnerships and farmers' groups. Further, the DA and the DAR shall oversee and
monitor the IRR and guidelines of this Act. The DA and the DAR shall exercise the
following functions:


(a) Develop eligibility criteria for both corporations/partnerships and farmers’
groups, cooperatives and/or ARCs for consideration under this Act and to
institute their accreditation: Provided, that the farmers’ group criteria should
include management capabilities, technical and production skills critical to
the effective operation of the Corporative farm.

(b) Identify suitable private and public-owned rice/ corn production areas for
Corporative farming and determine the maximum ceiling of landholdings for
Corporative Farming arrangements: Provided, that the DA and the DAR
shall periodically determine the need to expand/reduce rice/corn production
areas for Corporative Farming schemes on the basis of rice/corn demand-
supply gaps;

(c) Facilitate and promote grassroots cooperation to access agricultural
services such as information, inputs, and technical assistance;

(d) Initiate and develop periodic rural/arm assembly markets to provide
avenues to showcase their produce;

(e) Exercise regulatory functions with respect to the adherence to the provisions
of contracts and arrangements entered into by both corporations/
partnerships and farmers’ groups, cooperatives and/or ARCs and to develop
mechanism to facilitate negotiations and mediate in disputes between
stakeholders on matters of contract enforcement;

(f) Coordinate with the appropriate government agencies to ensure the timely
establishment of support services such as credit, infrastructure, extension
services, and others;

(g) In consultation with other concerned government agencies, non-
government organizations, private sectors, and farmers’ groups involved in
rice/corn production, formulate the Implementing Rules and Regulations
(IRR) necessary to operationalize the provisions of this Act within ninety (90)
days from approval; and

(h) Facilitate the registration of the participating corporations/partnerships with
the NFA.


Section 5. Incentive package - Corporations/partnerships which shall
participate in the Corporative Farming Act shall be entitled to tax incentives covering
all aspects of the operation germane to Corporative Farming activities.

These include the following:

(a) Exemption from the payment of customs duties on the importation of all
types of agricultural Inputs, particularly seeds, fertilizers, agricultural
machinery, and other agricultural implements as provided under Republic
Act No. 9281, which amends Republic Act No. 8435 or the Agriculture and
Fisheries Modernization Act;

(b) Exemption from the value-added tax (VAT) on the importation of agricultural
inputs in accordance with Section 109(d) of the National Internal Revenue
Code, as amended; Provided, that the importation requirement shall be in
accordance with the provisions of Republic Act No. 10068 or the “Organic
Agriculture Act of 2010";

(c) Exemption from the payment of capital gain tax for a person either natural
or juridical, who sells and or transfers idle agricultural land to corporations
and partnerships engaged in Corporative Farming; and

(d) Tax incentives, including income tax holiday, in accordance with the
provisions of Executive Order No. 226 or the Omnibus Investment
Incentives Code, as amended.

Section 6. Other Incentives. - Loans extended by banks, both government
and private, to participating corporations/partnerships shall be treated as compliance
to Republic Act No. 10000 or "The Agri-Agra Reform Credit Act of 2009."

Section 7. Duration. - Participating corporations/partnerships with existing
landholdings may engage in rice/corn production within a period of time to be
determined by this Act. However, those corporations/partnerships which purchased
agricultural lands for the purpose cannot convert the land to other uses and must
relinquish land ownership in favor of agrarian reform beneficiaries within a period of
three (3) years in the case of public agricultural lands and for private lands originally


distributed under the Comprehensive Agrarian Reform Program should they wish to
terminate the Corporative Farming agreement.

Arrangements/negotiations for leased public or idle private agricultural lands
‘shall be for a period not less than ten (10) years.

Section 8. Automatic review. - The DA and the DAR, being the lead
government agencies in the Corporative Farming Program, shall submit periodic

reports to both Houses of Congress on the accomplishments of the Program.

A review on the viability of the program shall be made by the concerned
agencies after five (5) years of its implementation.

Section 9. Effectivity. - This act shall take effect after (15) days following its
publication in the Official Gazette or in a national newspaper of general circulation.

Approved,