Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Congress
First Regular Session

House Bill No.__ 8292

Introduced by HON. PRYDE RENRY A. TEVES AND HON. KARLO
ALEXEI B. NOGRALES

EXPLANATORY NOTE

e of rice and the increasingly tight global supply of rice
have been raising fears of food crisis in mai s of Asia where rice is a staple. Trend in
international rice prices has been on the cise since 200). On the average, rice prices for the first
ten months of 2007 was 35% higher at US $297/ton compared to the same period last year at
USS221/ton. International price of rice continued to rise early 2008. For instance, the high
quality Thai 100%-B was quoted at US$546/ton in March 2008, up by 13% compared to
February of the same year.

Recent surges in the world

Many experts believe that the price trend in the global market for rice will be sustained.
‘The high costs of oil and fuel-based chemical fertilizers, the prevalence of crop diseases, the
emergence of chemically resistant pests, and the growing impact of climate change have been
largely blamed for the price spikes in the world market.

‘The Philippines’ vulnerability to Nuctuations in the supply and price of rice in the global
market has been underscored by its dependence on importation to fill domestic production
shortfalls. Already, the country has been one of the largest importers of rice, accounting for 6%
of total rice imports in 2006-2007 (FAO,2008). This is partly due to production efficiency
disparities between domestic and foreign rice producers in addition to spiraling costs of
production inputs.

On the local front, forementioned factors in addition to market speculations of local
rice traders have fueled retail price increases. For 2008, a comparison of the January and April



rend for regular-milled rice and
al Statistics, 2008).

domestic average retail rice price-leve
31.72% price increase for weil-milled rice (Bureau

d subsequently redefine its short-run and
improving rice productivity. The formidable
ice) security in lieu of

Thus, the govertment needs to re-evalu:

fong-icrm priorities and resources aimed
chal confronting the goverment
food sufficiency.

A pragmatic and effe problem is by encouraging more private sector
participation in agricultural production. Deeper private sector involvement will bring in the most
productive inputs and technologies available to help improve farm business structures in the
country. It must be noted that about ) of landholdings in the country are
occupiedileased by small farmers wi the necessary resources and skills to
increase farm yields.

Toward this end, this ‘orporate farming” scheme with the
private sector taking the lead role 0 promote food security. Specifically, this requires the
country’s most profitable corporations to engage in agricvltural production to feed their own
employees. In addition, corporations and other business entities shall be required to engage in
corporate farming with rice as their primary crop. Vast tracts of unused public lands can be
tapped for such corporate farms. Corpor also enter into joint venture agreements with
farmer beneficiaries of agrarian reform communities. As such , employers will not be able to
feed their own employees but also ensure the provision of adequate supply to local consumers.

want to corporate/contract farming
nsaction costs of contractual

One involves regulatory regime adjestme:
arrangements, The other involves providing
farming.

With the aforementioned effective
the chain of middlemen and bring
leads to better allocative efficiency, induces
in higher outputs, income and exports.

face. In the he long: ain, it
in agriculture, and results

ivate invesiment

PRYDE HWWRY A. TEVES KARLO ALEXEI B. NOGRALES



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

15" Congress
‘st Regular Session

House Bill No. 3292

Introduced by HON. PRYDE RENRY A. TEVES AND HON. KARLO
ALEXEI B. NOGRALES.

AN ACT PROMOTING CORPORATE FARMING
AND PROVIDING INCENTIVES THEREOF

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

Section 1. Domestic Corporation and Partnerships. For the purpose of this Act, domestic
corporations and partnerships shall refer ¢o all corporations and parinerships organized and
existing under Philippine laws, operating for profit, provided that said corporations and
partnerships report earnings over the last four (4) years that will 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. Corporate Farming Arrangements. Participation to the Corporate Farming Program
shall be on a voluntary basis. For the purpose of this Act, the following are the corporate farming
schemes that the corporations’partnerships may engage into:

a. Corporations! partnerships with existing landholdings suitable for rice/corn
production may manage the land and produce the rice/com or may enter into a
management! contractual arvangement/s with farmers’ groups such as farmers’
association, cooperatives, and Agrarian Reform Communities (ARCs);

b. Corporations! partnerships may purchase or tease on a long term basis public or
private agricultural fand suitable ior rice/corn production whereby the
corporations/partnerships are given full inanagement and production control over the
purchased or leased lands or may enter imo contractual arrangements or joint ventures
with landowners, farmers’ organizations und agrarian reform communities;



Agricultural lands purchased or leased for the purpose cannot be converted to other
uses within a period of seven (2) years. Fifty percent (50%) of the land should have
been developed within « period of three (3) years, and ninety percent (90%) within a
period of five (5) years.

For purchased lands, the government Has the right to offer the said lands to other
interested parties based on the original acquisition cost and initial development if any,
10 be refunded to the corporation/partnership, in case the land has not been developed
as intended.

Corporations/partnerships may enter into contractual arrangements with farmers?
organizations/agrarian reform communities whereby the corporations and
partnerships will provide the production inputs and technical and related services,
then buy back the produce;

dl. Corporations/partnerships may enter into joint ventures/contractual arrangements
with timber licensees and pasture lessees for the cultivation of lands found suitable
for rice/corn production in the timber concessions or leased pastures; through the
Department of Environment and Natural Resources.

The Local Government Units (LGUs) shall_be required to identify appropriate Jand
areas for corporate farming in consonance with their comprehensive land use plan and
ordinances. ‘The LGUs shall require the participating corporations/partnerships to
provide livelihood projects/opportunities to families who will not be offered as
incentives for corporate farming

Section 3. Disposition of Excess Production. The Corporations/partnerships shall be required to
provide a minimum of 600 kilograms of rice/corn per employee per year or 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, Implementing Agencies and Implementing Rules and Regulations (IRR). ‘The
Department of Agriculture (DA) and the Department of Agrarian Reform (DAR) shall be the
Jead agencies to institute measures to ensure higher rice/corn productivity through corporate
farming schemes . Moreover, DA and DAR shall facilitate with the appropriate government
agencies the processing of management contracts between the corporations/parinerships and the
farmers groups, Further, DA and DAR shall oversee and monitor the IRR and guidelines of this
Act. DA and DAR shall exercise the following functions:

a Develop eligibility criteria for both corporations/partnerships and farmer groups,
Cooperatives, and/or agrarian reform communities for consideration under this Act
and to institute their accreditation; Provided that, the farmers group criteria shouid

include management capabilities. technical and production skills critical to the
etfective operation of the corporate farn:



d

Section 5

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

Facilitate and promote grassroots cooperation 10 access agricultural services such as
information, inputs and technical assistance;

Initiate and develop periodic rural/farm assembly markets to provide avenues to
showease their produce;

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 agrarian reform communities and to develop
mechanisms to facilitate negotiations and mediate in disputes between stakeholders
on matters of contract enforceme!

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

In consultation with other concerned government agencies, non-government
organizations, private sector and farmer groups involved in rice/corn produetion,
formulate the IRR necessary to operationalize the provisions of this Act within ninety
(90) days from its approval.

Facilitate the registration of the participating corporations/partnerships with the
National Food Authority (NFA).

Incentive Package. Corporations/partnerships, which will participate in the Corporate

Farming Act, shall be entitled to tax incentives covering all aspects of the operation germane {0
corporate farming activities. These include the following:

a

d,

Exemption from the payment of tariff and Customs duties for the importation of all
types of agricultural inputs particularly seeds, fertilizers, agricultural machinery, and
other agricultural implements as provided under RA 9281 which amends RA 8435 or
the Agricultural and Fisheries and Modernization Act.

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,

Exemption from the payment of capital gains tax for a person, either natural or
juridical, who sells and/or transfers idle agricultural land to corporations and
partnerships engaged in coxporate farming; and

Tax incentives, inctuding income tax holiday, in accordance with the provisions of
E.O. 226 or the Omnibus Investment Incentives Code, as amended.

Section 6, Other Incentives. Loans extended by barks, both government and private, to

participati
Law.

2 corporations/partnerships shall be treated as compliance-to PD 727 or the Agri-Agra

Section 7. Duration. Participating corporations/pistacrships with existing landholdings may

engage in rice/con production witht

He. period oF

imgiis be determined by this Act. However,


lands for the purpose cannot

those corporations/partnerships_ which ‘pur
Arrangements! negotiations for
a period not less than seven (7) years

convert the land to other uses within a period o

leased public or idle private a

ne Department of Agencia
Farming Program, shall submit
of the Program. A review on
cies afier five (3) years of its

Section 8. Automatic Review, The De
Reform, being the lead yovernment

periodic reports to both Houses of Cong

the viability of the prog
mplementation

Section 9. [iffeetivity. This Act shall take effect

Approved