Republic of the Philippines f
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL No. _ 4292

INTRODUCED BY ANAKPAWIS PARTY-LIST REPRESENTATIVE
FERNANDO L. HICAP

EXPLANATORY NOTE

Agriculture is an important aspect of the Philippine economy. Majority of
Filipinos depend on agriculture for a living. Based on the figures from the
Bureau of Agriculture Statistics (BAS), the agriculture sector contributed a total
of 11% in the country’s Gross Domestic Product in 2011. Moreover, it employed
12.27 million persons and they represented 33% of the country’s total
employment on the same period.

Being an agricultural country, rice is one of the most important
commodities in the Philippines. It is the staple food of almost 90% of the
population. Likewise, rice is produced extensively nationwide. In 2012, crop
production which accounted for 51.46% of total agricultural output increased
by 4.14%. The main source of growth came from the palay industry where
output is at 18.03 million metric tons or 8.08% higher than the previous year
level. Palay grossed at 14.89% more in this period as a result of increases in
production and prices (BAS, 2012). Moreover, rice provides livelihood to many
households engaged in rice-based farming along with millions of farm laborers
and thousands of merchants and traders.

Inspite of the contributions of agriculture sector in the economy, the local
rice industry continues to suffer from underdevelopment and unsustainability
because of landlessness, backward condition of agricultural production,
exploitation of small rice farmers and lack of necessary infrastructures such as
irrigation, post-harvest facilities and farm-to-market roads. The industry
remains small-scale and labor-intensive.

Consequently, rice productivity is low over the years, Data from BAS
revealed that palay production has fallen for two straight years, from 16.8
million metric tons in 2008 down to 16.3 million metric tons in 2009. It actually
fell 3.0% or by 494,098 metric tons and then further to 15.8 million metric tons
in 2010. Palay yield dropped from 3.79 metric tons per hectare in 2009 to 3.64
metric tons per hectare in 2010. In addition, farm-to-market roads are poorly
developed which makes distribution and marketing difficult and costly aside
from the fact that palay distribution and marketing are mostly dominated by
private traders. The networks of middle men all over the country control the


trading of palay at low farm gate prices that prevents the rice farmers to recover
their high production costs.

The present condition of agricultural backwardness was aggravated by
previous policies in the rice industry. In the 1970s, the Marcos regime
implemented the Green Revolution that drastically restructured the local
agriculture, Based on the study of IBON Foundation, the program aimed to
supposedly modernize traditional subsistence rice and corn farms through the
use of high yielding varieties (HYVs). These varieties are heavily dependent on
well-irrigated farms, importation of modern technology and inputs that farmers
could not afford. It also launched a credit program for small farmers but they
are required to choose from ten (10) HYVs and to purchase fertilizer and
pesticides. It also bankrolled the establishment of the International Rice
Research Institute (IRRI) in 1960 which developed the rice HYVs promoted by
the Green Revolution.

During this period, Marcos created the Fertilizer and Pesticide Authority
(FPA) through Presidential Decree No. 1144 “to assure adequate supply of
fertilizer and pesticide in the country at reasonable prices, regulate fertilizer
importation, manufacturing and marketing, and protect the public from the
hazards of using pesticides.” It also marked the planting of Miracle Rice. Miracle
Rice is officially the IR8 variety developed by American scientists from IRRI.
From 1965 to 1980, Miracle Rice expanded to irrigated lands, and increases the
use of commercial farm inputs such as fertilizers and pesticides in the process.

As a result, Filipino farmers lost control over the seeds and were
completely dependent on transnational agribusiness corporations and private
seed traders. Rice HYVs and their inputs have thrown the farmers into
indebtedness as they found themselves in perpetual bondage to high production
costs amidst decreasing income and mounting debt obligations. Eventually, the
credit program was phased out, irrigation slowed down and production costs
soared. After posting a positive growth in the initial years of implementation,
average growth dropped to a 4% contraction in 1983 and rice productivity
started to slow down.

The Marcos dictatorship also ushered the neoliberal restructuring of the
local agriculture. In 1980, an International Monetary Fund-World Bank (IMF-
WB) structural adjustment program (SAP) for the Philippines intensified the
export-oriented production in agriculture. The latter was then heightened by the
implementation of agriculture liberalization in the 1990s,

During the Uruguay Round of Negotiation of the General Agreement on
Tariffs and Trade (GATT) that began in 1986 and ended in 1994, agriculture was
one the contentious issues. In 1995, when the World Trade Organization (WTO)
was established, rules governing international trade in agriculture and food
were introduced. Following the Uruguay Round negotiations, all agricultural
products were brought under multilateral trade rules by the WTO's Agreement
on Agriculture (AoA). The country’s formal accession to WTO and its principles
of globalization and free trade has led to the increasing reliance of the
Philippines on imported food and agricultural products while catering to the
export market and production of cash-crops for the market requirements or raw


material needs of capitalist countries, thereby strengthening the economy’s
export-oriented and import-dependent orientation.

Philippine agriculture has not shown any sign of remarkable growth
under the liberalized trading regime. The WTO-AoA period also recorded
increasing volume of imported agricultural products. Since 1995, the country
became a net importer of rice and posted negative figures in the balance of
trade. In fact, rice became the top imported agricultural product in 1998. Since
1995, the country imported an annual average of 12.5% of the country’s total
rice consumption ~ the highest being in 1998 at 28.5% and in 2008 at 18.4%.
From 1980 to 1998, it recorded a zero to more than 2 million metric tons of
imported rice. Since 1995, from 257,262 metric tons of rice imports, it soared to
1.8 million metric ton in 2005, marking 700% increase. Since 1996, the country
has been importing over 600,000 metric tons of rice.

The development of local rice industry was neglected by the government.
The government created more structures for foreign investments and later
drawn to build up so called “growth areas”, “regional industrial centers” and
“special economic zones.” This led to the reclassification, conversion and
designation of vast areas of our agricultural lands which constricted and
strangled the development of our basic food production. These have also closed
the door for any real expansion in rice and other food production that could
erode the capability of our food production to meet increasing demands. This
situation highly endangers the country’s food security. It also caused
displacement of farmers on lands they have long tilled

Not only was our rice industry left out in government priorities, unbridled
liberalization is onset once quantitative restrictions (QRs) on rice is lifted. The
QRs on rice under the WTO allows the country to limit the volume of rice that
can be imported by the Philippine government through the National Food
Authority (NFA). The protection ended last June 30, 2012. The government filed
the request with the WTO on November 18, 2011 for an extension for another 3
to 5 years. During the negotiations for extending the QR in 2012, the
Philippines agreed to increase its minimum access volume (MAV) for rice to
350,000 metric tons (MT) as a concession. According to latest reports, the WTO
temporarily waived the lifting of rice QRs so that the country could conduct
bilateral talks with other countries. The retention of QRs is necessary in
protecting the local farmers and preventing the deluge of imported rice in the
local market. Lifting of QRs will further intensify the surge of agricultural
imports in the local market which will lead to bankruptcy of farmers and the
country’s food insecurity.

For a country with rice as its staple food, the government’s neglect on the
Philippine agriculture and food producers is highlighted, while the supposed
goal of “rice self-sufficiency” in its Food Staples Sufficiency Program and food
security become more unattainable.

The cross-country study made by South East Asia Regional Initiatives
and Community Empowerment (SEARICE), a non-government organization
working towards agricultural sustainability through harnessing local practices
and knowledge, stressed the robust government intervention spelled in different


countries in attaining successful rice industry development programs among
Asia’s top rice producers.

According to the study, ‘intervention by the state invariably played a
critical role in ensuring the continued viability of rice production and
guaranteeing farmers in sufficient numbers would continue to plant enough rice
to feed the population. it [government] played a largely positive role in ensuring
the goals of producing enough rice for a growing population and guaranteeing
favorable income levels are met. State intervention was not only desirable but in
most cases necessary.” The study that stressed the different experiences of
Asia’s rice-producing countries shows that when government support was
removed or reduced, the impact on production was immediate and later led to
the reinstitution of support.

Moreover, the recent hikes in rice prices underscore the need for the
country to comprehensively develop the rice industry centered on strengthening
the capability of the productive forces, the Filipino rice farmers, and pave the
way for the ending of rice import-dependency and monopoly of rice traders,

This bill seeks to create a policy environment of strong State intervention
that would institutionalize the core programs that will ensure development and
protection of our rice industry into a self-reliant and sustainable economic
element of our national development and will veer away the country from
import-dependency and food insecurity. The bill’s core programs include:

a) direct credit for rice farmers;

b) sustained subsidy for production inputs;

c) development of irrigation systems and post harvest facilities;

) strengthening the palay procurement capability of the National Food
Authority (NFA) and upgrading the distribution and marketing of rice;
and

¢) provision of extension services.

In addition, this bill will institutionalize measures that will protect the
country’s rice lands from land use conversion and ensures the production of our
main staple at levels required for our food security.

In view of the foregoing, the immediate deliberation and approval of this

measure is earnestly sought.
ah Ca
[ANDO L. HICAP


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

4252

HOUSE BILL NO.

INTRODUCED BY ANAKPAWIS PARTY-LIST REPRESENTATIVE
FERNANDO L. HICAP

RICE INDUSTRY DEVELOPMENT ACT OF 2014

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

SECTION 1. Title. - This Act shall be known and cited as the “Rice Industry
Development Act of 2014”.

SECTION 2. State Policies and Principles. - It is the policy of the State to
develop the local rice industry to enhance to the fullest its productive capability,
upgrade its distribution and marketing linkages, increase the income and
improve the living conditions of local rice farmers, upgrade its distribution and
marketing linkages, make the local rice industry sustainable, ensure the
accessibility and affordability of rice to the consuming population, and ensure,
through sustainable self-sufficiency, the food security of the country.

It is also the policy of the State to stop its dependence on rice importation and
to rely primarily on domestic production in attaining rice self-sufficiency and
food security in its main staple.

Finally, it is the policy of the State to implement a development strategy for the
tice industry that optimizes the use of its actual and potential natural, human
and technological resources to the best interest of the country and local rice
farmers. Toward this end, the State shall promote and support strategic
research development program for the sustainable development of the local rice
industry that shall make optimal use of indigenous resources and knowledge
and nationally-available materials in order to make a self-reliant local rice
industry.

SECTION 3. Objectives. - This Act aims to achieve the following:
a) increase the productivity of the local rice industry;

b) increase the income and improve the living standards of local rice
farmers, especially the small rice farmers;


©) transform the rice sector into a self-reliant industry and to attain rice
self-sufficiency as the main pillar of the food security of the country;

d) upgrade the rice distribution and marketing system and network of the
country to ensure a decent economic return for local rice farmers and
achieve an affordable and accessible rice supply for the consuming
population; and

¢) strengthen the role of rice farmers in the development of the local rice
industry through the promotion of cooperatives and other forms of
institutional and capability-building measures for rice farmers.

SECTION 4. Definitions. - For the purpose of this Act, unless the context
indicates otherwise:

1) Agrarian reform beneficiaries are farmers who qualified as beneficiaries of
the agrarian reform program as mandated by Republic Act 6657
otherwise known as the “Comprehensive Agrarian Reform Law of 1988”.

2} Collateral-free refers to a loan condition which does not require the
putting up of fixed assets as collateral for the grant of the loan.

3) Credit auxiliaries refers to farmers’ organizations, rural loan associations
or rural credit cooperatives designated and authorized to act as
structural arms to help the government extend its credit facility to rice
farmers.

4) Credit cooperatives refers to credit cooperatives the majority of whose
members are rice farmers or whose clienteles are rural-based.

5) Department refers to the Department of Agriculture (DA).

6) Farmers’ organizations refer to rice farmers’ organizations consisting of
farmers who have associated or organized themselves to achieve a
common purpose or serve their common interest.

7) Farm inputs include seeds, fertilizers, herbicides, and pesticides which
are used for rice production.

8) Farm machines and equipment are mechanized tools such as hand
tractors, power tillers, sprayers, mini-harvesters, and threshers used in
the various processes of rice production and harvesting;

9) Farmers’ marketing cooperatives are farmers’ cooperatives which
specialize in marketing their palay produce.

10)Farm production cooperatives are farmers’ associations or cooperatives
whose membership is based on the labor contribution of their members.

11)Food security refers to a situation in which the food requirements of
people or country are secured and sustained by continuous sufficient
supply from local production.


12)Land reclassification refers to the act or process of changing the
classification of lands by the local government units (LGUs)

13) Land use conversion refers to the process of changing the use of the land.

14) Leaseholder is a farmer who works on the land and pays the landowner
a fixed lease rate

15) Minimum access volume (MAV) refers to the minimum volume of foreign
agricultural products which a member-country must allow access to its
domestic market, the volume constituting the minimum share of foreign
agricultural products in the domestic market based on certain proportion
of the domestic consumption requirements under the rules of the World
Trade Organization (WTO).

16) Post-harvest facilities refer to farm facilities used in treating and handling
palay after the harvest; these include threshers, dryers, palay silos,
warehouses and mills.

17) Private commercial banks are commercial banks owned and operated by
the private sector.

18) Production enhancement loan refers to the loan of the credit facility to be
exclusively applied for enhancing rice production.

19) Production inputs refer to farm inputs.

20) Production support refers to government support to rice farmers to enable
them to procure farm inputs for rice production.

21)Research Program refers to Rice Industry Development Research
Program

22) Rice farmer refers to a farmer who plant or produce rice.

23) Rural loan associations refer to associations of farmers or rural residents
who contribute equity share and loan the shares to its members.

24) Small-scale rice farmers refer to rice farmers who own no lands or whose
land or produce is not enough to meet the requirements of maintaining
their families.

25) Subsiclized pricing refers to a pricing mechanism in which a portion of the
price of goods and services is paid for by the government.

SECTION 5. Core programs. - The following are the core programs of this Act:
a) direct credit for rice farmers;
b) sustained subsidy for production inputs;
c) development of irrigation systems and post-harvest facilities;
d) strengthening the palay procurement capability of the National
Food Authority (NFA) and upgrading the distribution and
marketing of rice; and


¢) provision for extension services.

SECTION 6. Time frame of Core Programs. - The institutionalization of the
core programs of this Act shall be implemented within a period of three (3) years
from the effectivity of this Act. After the institutionalization period, Congress
shall enact appropriate legislations to ensure the continuity and sustainability
of the core programs.

SECTION 7. Targets. - At the end of the three-year period of implementation,
this Act shall have accomplished the following specific targets:

a) The infrastructure build-up program of this Act, namely the
construction of required irrigation systems and the development of
post-harvest facilities shall have been finished and completed one
hundred per cent (100%);

b) The productivity of the local rice industry shall have been
increased from its current level to at least six (6) to eight (8) metric
tons per hectare;

©) The palay procurement capability of the government shall have
been increased from its current level to twenty five per cent (25 %)
of the total palay production;

d) The poverty incidence among rice farmers shall have been reduced
by sixty per cent (60 %) from the present level; and

e) A sustainable full self-sufficiency and self-reliance in rice shall
have been attained for the country, thereby putting an end to our
dependence on rice imports,

SECTION 8. Beneficiaries. - The beneficiaries under this Act are the small-
scale rice farmers, rice farmers with annual income below the rural poverty
threshold as determined by periodic census of the National Statistics Office
(NSO), agrarian reform beneficiaries and their organizations.

Within three (3) months after the effectivity of this Act, the National Statistics
Office (NSO), in coordination with the Department of Agriculture (DA), shall
conduct a census of farmers referred to in the preceding paragraph to enable
the Department to locate the beneficiaries under this Act. After the conduct of
the census, the NSO shall submit its report to the Department. The census
shall include the following items of information:

a) Size of farm unit;

b) Type of soil of the rice farm;

¢) Irrigation condition (whether irrigated or not; if irrigated, whether
man-made or rain-fed);

4) Source of capitalization;

€) Seed variety used and sources;

f) Volume of fertilizer used per hectare each cropping;

g) Volume of herbicide used per hectare per cropping;

h) Number of children (including children who participate in the
labor force);

i) Output per hectare;

j) Cash conversion of their product;

) Monthly family expenditure; and


1) Net income.

SECTION 9. Data base of beneficiaries for monitoring. - The Department
shall make and maintain a data base of the information gathered from the
census. The information and data base from the census shall serve as basis for
the emphasis of the core programs under this Act as well as for monitoring,
during the implementation of this Act, the trends of income of the primary
beneficiaries.

SECTION 10. Socialized Credit Program. - A Socialized Credit Program (SCP)
is hereby established to enable rice farmers to have access to economic
resources that are necessary for increasing their productivity and income

‘The program shall have a fund which shall be called Socialized Credit Fund
(SCF) that shall be made available to farmers and farmers’ organizations or farm
production cooperatives as loans for the exclusive purpose of rice production
and rice production-related undertakings. The rice production-related
undertakings include the following:

a) purchase of seeds and other farm inputs;

b) purchase of draft animals;

©} purchase of farm equipment and machineries necessary for rice
production such as power tillers, hand-held harvesters, threshers
and other similar equipment;

d) purchase of irrigation equipment such as water pumps and tube
wells; and

€) construction of dryers or purchase of drying machines.

In case of farmers’ organizations and farm production cooperatives, the loans
may also be applied to the following:

a) purchase of farm machinery for cooperative use;

b) construction of water impounding systems for irrigating rice farms;

©) construction of drying facilities;

d) construction of cooperative warehouse for palay;

€) seed capital for establishing cooperatives for marketing of palay;

f) purchase of vehicle for palay marketing;

8) construction of communal compost pit for making organic
fertilizers; and

h) financing the putting up of industries that produce palay-
derivative products.

The Socialized Credit Fund (SCF) shall be deposited with the Land Bank of the
Philippines (LBP). All interest earnings on the deposit shall accrue to the
Socialized Credit Fund (SCF) .

SECTION 11. Interest Rate on Loan. - The interest rate for the loan availed of
under the Socialized Credit Program (SCP) shall not be more than five percent
(5%) of the principal loan.


SECTION 12. Collateral-free loan and provision against foreclosure. ~ The
loans availed of under the Socialized Credit Program (SCP) shall be collateral-
free,

SECTION 13. Farmers’ organizations, rural loan associations, and credit
cooperatives as credit auxiliaries of the Socialized Credit Fund (SCF). -
The Department shall have the authority to accredit farmers’ organizations,
rural loan associations or credit cooperatives as credit auxiliaries of the
Socialized Credit Fund (SCF): Provided, That such farmers’ organizations, rural
loan associations, and credit cooperatives are duly registered with the
Cooperative Development Authority (CDA). Farmers’ organizations, rural loan
associations and credit cooperatives accredited as credit auxiliaries of the
Socialized Credit Fund (SCF) can access the Socialized Credit Fund (SCF) at the
maximum amount of One Million Pesos (PIM) at zero percent (0%) interest rate
for extending credit to their members who are rice farmers: Provided, further,
That all loan applications with accredited credit auxiliaries shall be approved by
the Department.

‘The Department, in consultation with the Landbank of the Philippines (LBP)
and representatives of farmers’ organizations, rural loan associations and credit
cooperatives, shall formulate the criteria, standards and procedures for the
accreditation and participation of farmers’ organizations, rural loan associations
and credit cooperatives as credit auxiliaries of the Socialized Credit Fund (SCF).

The interest collected from the loanable funds shall accrue to the Socialized
Credit Fund (SCF) and not to the capital fund of the accredited credit
auxiliaries.

Farmers’ organizations, rural loan associations and credit cooperatives
accredited as credit auxiliaries of the Socialized Credit Fund (SCF) may extend
loans under the Socialized Credit Fund to non-members as long as the
applicants are rice farmers.

SECTION 14. Simplifying the procedure for loan dispensation. — The
Department, in consultation with the LBP, shall formulate the guidelines for
simplifying the procedure for the filing, processing and approval of loan
applications of rice farmers to make Socialized Credit Program (SCP) more
accessible, facilitating quick approval and minimizing the administrative and
documentary costs that may be incurred by farmer-applicants.

SECTION 15. Incentives for participating private commercial banks. ~
Private commercial banks which extend production loans to rice farmers with
interest rate provided in Section 11 of this Act shall be entitled to tax credits of
fifteen per cent (15%) of the amount of their capital that has been devoted to
rice production loans. Private commercial banks which continue to extend
production loans to rice farmers after the three (3) years from the effectivity of
this Act shall continue enjoying tax credits at ten per cent (10%) of the amount
of their capital that has been devoted to rice production loans of the
beneficiaries mentioned in Section 8 of this Act.

SECTION 16. Non-payment of loans. ~ In case of failure to pay the loan, the
Landbank of the Philippines (LBP) or the credit auxiliaries from which the

10


farmer incurred the loan shall renegotiate or restructure the loan of the
indebted farmer until the loan is fully paid. The Department shall formulate
guidelines for this purpose: Provided, That in no case shall the restructuring of
loan operate to effect the loss or foreclosure of the land of the indebted farmer
nor shall it give effect to the blacklisting or disqualification of the indebted
farmer from being a beneficiary of the Socialized Credit Program (SCP).

Credit auxiliaries from which the farmer incurred the loan may also extend
assistance to the indebted farmer that will increase his income and productivity
in order to pay the loan incurred. The assistance shall include, but shall not be
limited to, permitting the indebted farmer to use the farm implements, working
animals and farm inputs belonging to the credit auxiliaries.

In times of natural and man-made calamities, the Landbank of the Philippines
(LBP) or the credit auxiliaries shall automatically impose a three (3)-month
moratorium on the payment of loans, their interests, penalties and other
charges.

SECTION 17. Subsidized price of seeds and other farm inputs. - The seeds
and other farm inputs procured by the Department shall be sold to the farmers
in accordance with the following:

a) to rice farmers mentioned in Section 8 of this Act - fifty percent
(50%) of their purchase price;

b) to all other farmers - twenty five per cent (25%) of their purchase
price

SECTION 18. Distribution of seeds and other farm inputs. - The
Department shall ensure that the distribution of seeds, fertilizers, and
herbicides to rice farmers shall be made one (1) month before the start of
production season.

The Department shall coordinate with the local government units (LGUs),
farmers’ organizations and farm production cooperatives to facilitate the
distribution of seeds and other farm inputs to rice farmers.

SECTION 19. Seed selection. - In the purchase and distribution of seeds, the
Department shall ensure that rice farmers shall have a wide selection of seed
varieties in accordance with the knowledge and farm practices developed or
existing in their communities,

‘The Department shall make full use of its data base and mapping of soil types
as basis in distributing fertilizers to rice farmers. As much as practicable and
according to adaptability to the knowledge and farm practices prevalent in
different areas of the country, the distribution shall be based on the best
applicability to the soil types in the area.

SECTION 20. Incentives for use of traditional varieties, organic farming
and indigenous rice farming practices . ~The Department shall formulate an
incentives scheme for farmers who shall use traditional varieties, organic
farming, and indigenous rice farming practices.

11


SECTION 21. Irrigation. - The National Irrigation Authority (NIA) shall prepare
and implement a Three-Year Program of Work for the construction and
development of irrigation systems necessary to satisfy the irrigation
requirements for optimizing the production potential of the rice industry. In
implementing the program of work, the NIA shall give priority to the
development of irrigation systems in the remaining irrigable areas or potential
areas for irrigation development. It shall pursue the construction of communal
irrigation systems and such other irrigation systems that are appropriate for
existing conditions of rice farms of the country. It shall take into account the
preservation and rehabilitation of watersheds

SECTION 22. Special privilege for the primary beneficiaries. ~ The
irrigation systems constructed under this Act shall be available at no cost to
rice farmers mentioned in Section 8 of this Act.

SECTION 23. Monitoring of Irrigation Systems. - The NIA shall submit to the
Department an annual status and monitoring report of irrigation systems
established under this Act. The agency shall also submit to the Department an
annual report on irrigation systems maintained and operated by private
irrigators associations and local government units (LGUs). For this purpose, the
NIA may employ the services of independent experts to help the agency in
determining the status of irrigation systems.

The NIA shall submit every three (3) years to the Congressional Oversight
Committee under this Act an inventory and monitoring report on the state of
existing irrigation systems to enable the Legislature to review the appropriation
for repair and maintenance of irrigation systems.

‘The local government units (LGUs) which operate and maintain irrigation
systems may turn over such irrigation systems to farmers’ organizations and
production cooperatives in their jurisdiction and may allocate funds for their
operation and maintenance.

SECTION 24. Regulation of irrigation fees. - The payment of fees for the use
of irrigation systems maintained or operated by private irrigators associations
and local government units (LGUs) shall be regulated by the NIA. No schedule of
payment rates or any increase thereof shall be imposed by any local government
unit unless the same have been submitted for approval by the NIA through a
resolution of the local government council: Provided, That such a resolution
shall not be issued without consultation with farmers or farmers’ associations
and production cooperatives.

Within three (3) months after the effectivity of this Act, NIA shall issue the
guidelines and mechanism for regulating the payment of fees for the use of
irrigation systems maintained or operated by private irrigators associations and
local government units (LGUs).

SECTION 25. Maintenance of irrigation systems. - Upon the completion of

the construction of post-harvest facilities, the Department shall turn over for
maintenance the post-harvest facilities:

12


a)to the National Food Authority — all provincial multi-purpose
dryers and warehouses after which these shall form part of the
warehouses operated by the National Food Authority (NFA); and

b) to the municipalities where the facilities are located - all barrio
and municipal multi-purpose dryers and warehouses.

SECTION 26. Development of post harvest facilities. — In coordination with
the National Food Authority (NFA), the Department of Public Works and
Highways (DPWH), and local government units (LGUs), the Department, through
its Bureau of Post-Harvest for Research and Extension, shall draw up a Three-
Year Program of Work for the construction of multi-purpose dryers, warchouses
and other post-harvest facilities in municipalities, provinces and other areas,
that are centers of rice production. The construction plan shall use the
clustering of barrios and municipalities in designating the location of multi-
purpose dryers, warehouses and other post-harvest facilities at a ratio to be
determined on the basis of distance, population, and volume of rice crops
produced and traded. The program of work shall include the repair and
rehabilitation of existing dryers and warehouses of the NFA.

SECTION 27. Mechanisms for Maintenance of Post Harvest Facilities. -To
help defray the maintenance costs of post-harvest facilities, the agencies and
local government units (LGUs) responsible for their maintenance shall be
allowed to collect reasonable fees for the use of the facilities: Provided, That no
collection or increase of service fees shall be imposed unless mandated by a
resolution of the local government council after consultation with farmers and
farmers’ organizations. The fees on the use of multi-purpose dryers and other
post harvest facilities shall be used exclusively for the maintenance, repair or
expansion of these facilities.

SECTION 28. Lease of post-harvest facilities to farmers by the Local
Government Units (LGUs). - Local government units (LGUs) shall have the
authority to lease out their post harvest facilities to farmers’ organizations, farm
production cooperatives or farmers’ marketing cooperatives. Provided, That the
lease rentals paid by the farmers’ organizations and farm production
cooperatives or farmers’ marketing cooperatives shall be used for the
maintenance, repair or expansion of these facilities.

‘They can enter into agreements in which the ownership of the facilities shall be
transferred to farmers’ organizations, farm production cooperatives or farmers’
marketing cooperatives after fifteen (15) years or when the cost of construction
has been returned, whichever comes first.

SECTION 29. Inventory of post-harvest facilities. ~ Within three (3) months
after the effectivity of this Act, the National Food Authority (NFA) shall make an
inventory of its dryers and warehouses and ensure that they are operational
and viable. If the National Food Authority (NFA) decides to sell or lease out these
facilities, it shall make the offer first to farmers and farmers’ organizations and
cooperatives.

SECTION 30. Regulating dryer and warehouse fees. - Dryers and
warehouses operated by private entities, including farmers’ cooperatives which

13


rent out their facilities to non-members, shall be regulated by the local
government units (LGUs) in the area

SECTION 31. Responsibility of Local Government Units (LGUs) - For a
period of three (3) years, municipal governments in centers of rice production
shall set aside one percent (1%) of their budget as contribution for the
construction of post-harvest facilities;

Provincial governments in centers of rice production shall set aside two percent
(2%) of their budget.

SECTION 32. Procurement of Palay at Farm Gate. - The National Food
Authority (NFA), in consultation with farmers’ organizations, shall formulate
guidelines to strengthen the procurement of palay at the farm gate. The budget
of the agency shall be exclusively used for the procurement of palay from local
tice farmers. The agency shall also submit to the Department an annual
comprehensive report on the procurement of palay from local rice farmers.

SECTION 33. Mechanism to reach out rice farmers at the farm gate. - In
coordination with the local government units (LGUs), the National Food
Authority (NFA) shall undertake to maximize the funnel system in the
construction of post harvest facilities for its use as buying stations to buy the
palay of rice farmers at farm gate prices.

SECTION 34. Farmers’ organizations and marketing cooperatives as
marketing arms; incentives scheme for cooperative marketing. - In
purchasing palay from rice farmers at farm gate prices, the National Food
Authority (NFA) shall promote the cooperative marketing of palay among rice
farmers, particularly small scale rice farmers. For this purpose, the National
Food Authority (NFA) shall devise a scheme for enrolling farmers’ organizations
or their marketing cooperatives as its procurement arms. The scheme shall have
an incentives package for farmers who sell their palay to the National Food
Authority (NFA) through their farmers’ organizations or their marketing
cooperatives,

SECTION 35. Extension Services Program. ~The Department, in coordination
with the local government units (LGUs) and state colleges and universities, and
in consultation with farmers and their farmers’ organizations and production
Cooperatives, shall formulate an extension services program focused on
enhancing the production skills and knowledge of rice farmers and in building
their capability through their farmers’ organizations, production and marketing
cooperatives. The program shall strengthen the direct complementary role of the
national government in the delivery of extension services by local government
units (LGUs) to rice farmers.

SECTION 36. Areas of Extension Services - The extension services program
shall have the following major areas of services:

a) training and education services;

This shall include the provision of trainings to help rice farmers
establish cooperatives and other forms of mutual-aid and self-reliant

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societies, including trainings on cooperative management, project
management and monitoring, finance administration, accounting,
capability building, project feasibility analysis and fund sourcing

b) production technology consultancy and advisory;

¢} consultancy and advisory on cooperative development and related
matters; and

d) marketing information and communication.

The extension services shall include the periodic upgrading of the
technical skills, knowledge, and professional competence of extension service
workers.

SECTION 37. Pooling and networking of extension services - The
Department shall establish linkages with the agricultural extension programs of
state colleges and universities and private schools with rural development
extension programs, to harness their extension service capabilities and
programs for rice farmers. The Department shall use the programs for recruiting
agricultural students for volunteer extension service, programmed rural
immersion, and apprenticeship in the major areas of services mentioned in the
preceding section.

The Department shall also tap non-government agricultural resource centers
and institutions in the rice areas of the country and establish linkages with
them to avail their resource and extension services and programs.

Upon the approval of concerned state colleges and universities and private
schools with rural development extension programs, an agricultural or
community development student who has rendered a one-year volunteer
extension service, immersion or apprenticeship in any of the major areas of
extension services mentioned in this Act shall be credited with having completed
the thesis requirement of his/her course.

SECTION 38. Capability-building for rice farmers. ~ The Department shall
ensure the participation of rice farmers and their organizations in extension
services. It shall ensure through education, trainings and seminar workshops
the formation of technicians and production advisers from among rice farmers
and members of farmers’ organizations. It shall complement the training and
seminar workshops with a program for the periodic and continuous upgrading
of their technical skills and knowledge.

SECTION 39. Information network for rice farmers. - The Department in
coordination with the Department of Science and Technology (DOST), National
Food Authority (NFA), local government units (LGUs), and other appropriate
government agencies, shall establish a computerized national network of
information from the national to the provincial and municipal levels. The
information network shall serve as resource procurement and marketing
support services for rice farmers. It shall include, but not limited to, the
following:

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a) directory of non-government organizations and institutions that
provide resource dissemination, technical, organizational or legal
services to rice farmers;

b) supply and price trends, including comparative price trends, of
rice production inputs;

c) rice demand data;

4d) rice supply data;

¢) timely advisory and forecasts on palay prices (National Food
Authority (NFA) prices and prices of private traders); and

f) directory of trading centers, including listing of traders and
farmers marketing cooperatives.

‘The Department shall make the information network available on government
websites.

SECTION 40. Promoting computer literacy among rice farmers. - The
Department shall promote the computerization of the operation of farmers’
organizations and their production cooperatives, rural loan associations and
credit cooperatives. Its training and education services shall include basic
computer literacy for rice farmers.

SECTION 41. Promoting cooperatives among rice farmers. - The
Department shall promote the formation of cooperatives of rice farmers, giving
emphasis on the formation of cooperatives of small-scale rice farmers or rice
farmers with annual income below the rural poverty threshold.

SECTION 42. Types of cooperatives to be promoted. ~ The Department shall
promote the following types of cooperatives:

a)farm resources cooperatives or resources _ procurement
cooperatives (seeds, farm tools, draft animals or agricultural
inputs);

b) rice production cooperatives;

6) irrigation cooperatives;

d) warehouse cooperatives;

e) marketing cooperatives; and

4) credit cooperatives for loaning out capital for rice production.

SECTION 43. Promotion of Self-reliant Organizations. - Farmers’
organizations engaged in cooperative marketing of palay are encouraged to form
self-reliant organizations to strengthen their bargaining power in the pricing of
the produce of their members. The Department, in coordination with farmers’
organizations, shall help the farmers’ marketing cooperatives in establishing
self-reliant organizations of their line of cooperatives.

SECTION 44. Promotion of Farmers’ Marketing Cooperatives. - To promote
the formation of cooperatives of rice farmers in the marketing of palay, the
Department shall promote farmers’ marketing cooperatives whose membership,
admission and share contribution are based on the volume of palay sold to the
farmers’ marketing cooperative instead of cash payment. After consultation with
the National Food Authority (NFA) and farmers’ organizations, the Department

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shall issue the guidelines that will govern their creation and membership
admission.

SECTION 45. Prohibition on conversion of rice lands into other uses or
crops. - The conversion into other uses or crops of rice lands is strictly
prohibited.

SECTION 46. Prohibition on destruction of rice lands and diminishing
their sustainability, economic viability or ecological soundness. ~ It is
likewise strictly prohibited of any person to perform such acts that cause the
diminution of the economic viability or productivity of existing rice lands, or
such acts that destroy or undermine the sustainability of rice production in rice
lands, including the destruction of their ecological soundness. Such acts
include the following:

a) destroying water systems, whether natural or man-made, or
diverting or impeding their flow that causes rice lands to lose their
sources of irrigation, making it appear that the affected rice lands
are no longer economically viable;

b) large-scale cutting of trees that destroys the biodiversity of rice
lands;

©) quarrying that will have the same effect of destroying the
biodiversity of rice lands;

d) contaminating rice paddies or water systems that irrigate rice
fields with mercury and similar harmful elements or chemicals;
and

¢) failure to prevent the spill of mine wastes to rice lands;

SECTION 47. Regulation on land reclassification by Local Government
Units (LGUs) -No reclassification of agricultural lands devoted to rice shall be
made by the local government units (LGUs) without consultation with farmers
and farmers’ organizations, and the recommendation of the Department and the
Department of Agrarian Reform (DAR): Provided, That such reclassification shall
not exceed five per cent (5%) of the total rice lands of the municipality: Provided,
further, That no reclassification of irrigated lands, rice lands with funding
commitment for irrigation, and rice lands with metric ton per hectare
productivity equal to the national average shall be made: Provided, finally, That
no reclassification of rice lands shall be made within seven (7) years from the
last reclassification.

SECTION 48. Land reclassification review mechanism - When a local
government unit (LGU) reclassifies rice lands, it shall create a Task Force for the
purpose of reviewing the proposed reclassification. The Task Force shall be
composed of the following:

a) representative from the rice farmers’ sector;

b) representative from the Barangay Agrarian Reform Council;
c) representative from the irrigators’ association;

d) representative from the local government unit;

¢) representative from the NIA;

f) representative from the National Food Authority (NFA); and
g) representative from the private sector.

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The Task Force shall ensure the consultation with farmers and their
organizations. No reclassification of rice lands shall be made by local
government units (LGUs) without the recommendation of the Task Force

SECTION 49. Appropriations. - The amount of Forty-Eight Billion Pesos (P48B)
is hereby appropriated to fund the three-year implementation of this Act. Such
amount shall be apportioned according to the following:

a) Eighteen Billion Pesos (P15B) for Production Enhancement Credit
Program to be released at Five Billion Pesos (P5B) annually;

b) Three Billion Pesos (P3B) for Production subsidy such as seeds and
other farm inputs for rice farmers to be released at One Billion
Pesos (P1B) annually;

¢) Fifteen Billion Pesos (P15B) for the construction of irrigation
systems. Five Hundred Million Pesos (P500M) from the
appropriated Fifteen Billion Pesos (P15B) shall be allocated for the
repair and maintenance of existing irrigation systems;

Upon the completion of the Three-Year program of work, the
National Government shall appropriate at least One Billion Pesos (P1B) in
the annual national budget for the maintenance and repair of established
irrigation systems.

d) Seven Billion and Five Hundred Million Pesos (P7.5B) for the
construction of post harvest facilities;

¢} Seven Billion and Five Hundred Million Pesos (P7.5B) for extension
and other support services; and

At the end of the three-year period, the National Government shall
appropriate the amount of not lower than Five Billion Pesos (PSB) for the
remaining core programs of this Act. Such amount shall be apportioned
according to the following program of expenditures:

a) forty per cent (40 %) for the continuation of the production
enhancement credit program;

b) twenty per cent (20 %) for production subsidy;

c) twenty per cent (20 %) for maintenance of built-up irrigation
systems; and

d) twenty per cent (20 %) for research and development, extension
and other support services.

SECTION 50. Exemption from election ban ~ The construction of the
infrastructures mentioned in this Act such as irrigation systems, multi-purpose
dryers and warehouses, as well as the repair and rehabilitation of these
facilities, and their maintenance shall be exempted from the election ban on
public works.

SECTION 51. Penalties ~

A. Any person who violates Section 46 of this Act shall be punished as
follows:

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A.1 For land use conversion of rice lands - imprisonment of not less
than twelve (12) years and one (1) day but not exceeding fifteen
(15) years and a fine of not less than Two Hundred Fifty
Thousand pesos (P 250,000) but not exceeding Ten Million Pesos
(P10M).

A.2 For crop conversion ~ a fine of not less than One Hundred
Thousand Pesos (P100,000) but not exceeding Two Hundred Fifty
Thousand Pesos (P250,000)

B. Any person who violates Section 47 of this Act shall be punished as
follows:

B.1 If the rice lands affected exceeds twenty five (25) hectares and the
prohibited acts inflicted damages to fifty percent (50%) of the
ecological area ~ imprisonment of not less than twelve (12) years
and one (1) day but not exceeding fifteen (15) years and a fine of
not less than Two Hundred Fifty Thousand pesos (P 250,000) but
not exceeding Ten Million Pesos (P10M).

B.2 In all other cases, the imprisonment shall be for a period of not
less than six (6) years and one (1) day but not more than twelve
(12) years and the fine shall be not less than One Hundred
Thousand pesos (P100,000) but not more than Five Hundred
‘Thousand pesos (500,000.00)

SECTION 52. Congressional Oversight Committee. - A Congressional
Oversight Committee is hereby created to oversee and monitor the
implementation of this Act. It shall be composed of the Chairpersons of the
Committee on Agriculture and Food of both Houses of Congress, three (3)
Members of the House of Representatives, and three (3) Members of the Senate
of the Philippines, to be designated respectively by the Speaker of the House of
Representatives and the President of the Senate of the Philippines.

The Chairpersons of the Committees on Agriculture and Food of the House of
Representatives and of the Senate of the Philippines shall be the Chairpersons
of the Oversight Committee. The Members shall receive no compensation;
however, traveling and other necessary expenses shall be allowed.

‘The Oversight Committee shall meet once a year or as often as necessary to
review and recommend policy directions for the effective implementation of this
Act. The Oversight Committee shall submit to the Speaker of the House of
Representatives and to the President of the Senate of the Philippines periodic
reports on its findings and recommendations on actions to be undertaken by
both Houses of Congress and the Department of Agriculture (DA).

SECTION 53. Implementing Rules and Regulations. - The Department of
Agriculture (DA) shall issue the Implementing Rules and Regulations of this Act
within fifteen (15) days from its effectivity.

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SECTION 54. Repealing Clause. ~ All previous or existing laws, decrees,
executive orders, rules and regulations or parts thereof inconsistent with this
Act are hereby repealed or amended accordingly.

SECTION 55. Separability Clause. - If, for any reason, any section or
provision of this Act is declared null and void, no other sections, provision, or
part hereof shall be affected and the same shall remain in full force and effect.

SECTION 56. Effectivity Clause. - This Act shall take effect immediately after
publication in at least two (2) newspapers of general circulation

Approved.

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