FOURTEENTH CONGRESS OF THE REPUBLIC ) 
First Regular Session 
1 
OF THE PHILIPPINES 
1 
7 
JLIL -3 p 3 lk) 
S E N A T E  
S No. 
818 
Introduced by Senator Ramon Bong Revilla, Jr. 
EXPLANATORY NOTE 
The NFA is guided by a policy mandate to promote the integrated growth 
and development of the entire grain sector, invariably constraining it to support 
the conflicting interests of farmers,, consumers and traders. Exercising both 
regulatory and proprietary functions over the grain sector, the NFA is responsible 
for setting import quantities while at the same time serving as the sole importer of 
the authorized volume of rice imports. This makes the NFA the biggest single 
competitor not only of rice traders but of farmers as well. 
In most of the agency's 25 years of operation, the response has been one 
a. Induces a depression in farm prices every time the NFA sells low- 
priced imported rice in the open market; 
b. Makes the government the biggest single rice trader in the country; 
and 
c. Requires billions of subsidy releases from the national government. 
There is an urgent need to re-direct and attune government policies on 
rice and corn with changing market conditions in order that the private sector can 
appropriately respond and contribute to the government's overall development 
goal of enhancing food security. Judicious use of scarce government resources 
becomes more relevant at this time when reforms towards trade liberalization call 
for higher efficiency and global competitiveness in the agricultural sector. 
that: 
This bill proposes the needed reforms to support the government's food 
security agenda. The regulatory functions of the NFA will be discharged by the 
National Grain Council, while its proprietary role will be discharged by a new 
corporation with government equity. This will allow transparency in policy-making 
and in import transactions and the maintenance of the required buffer stock for 
rice and corn. 
In view of the foregoing, early passage of this bill is earnestly requested. 


FOURTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
) 
Introduced by Senator Ramon Bong Revilla, Jr. 
AN ACT 
TO REORGANIZE THE NATIONAL FOOD AUTHORITY, SEPARATING ITS 
REGULATORY FROM ITS PROPRIETARY FUNCTIONS, CREATING THE 
NATIONAL GRAIN COUNCIL, AND THE NATIONAL GRAIN AND SUGAR 
CORPORATION AND DEFINING THEIR POWERS AND FUNCTIONS, AND 
FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Represenfafives of the 
Republic of the Philippines in Congress assembled: 
SECTION 1. Short. Title. - This Act shall be known as the “Food Security 
Rationalization Act.” 
SEC. 2. Declaration of Policies - It is hereby declared the policy of the State to 
ensure food security for all Filipinos; to protect farmers and consumers from wide 
fluctuations in the prices of agricultural products; and to encourage effective and 
efficient government intervention in sectors which produce food. 
SEC. 3. Statement of Goals and Objectives. - The goals and objectives of this 
Act are the following: 
a) To streamline the government‘s involvement in the grain and sugar sector in 
order to ensure available, adequate and accessible supply of rice, corn grits and 
sugar during lean periods especially in times of calamities or emergencies at a 
reduced budgetary cost to government; 
b) To create an environment of transparency and competitiveness in the grain and 
sugar sector that is conducive to a market-based development; 
e) To create conditions that will allow the stabilization of food prices through a 
more liberalized trade policy; 
d) To strengthen direct subsidies to producers through infrastructure and 
production support; 
e) To encourage private sector participation in the development of post-harvest 
and marketing facilities; and 
f) To provide more effective assistance to disadvantaged families through directly 
targeted food subsidies. 


SEC. 4. Definition of Terms. - The following definitions apply to the terms used in 
this Act: 
a. “Emergency” refers to a situation that deviates from the normal due to 
fortuitous events which include acts of God such as, but not limited to, 
typhoons, floods, droughts, earthquakes, fires, volcanic eruptions, lahar 
flows, and acts of man such as political andlor civil disturbances, and 
widespread civil unrest; 
b. “Grain” refers to palay, rice, white corn and corn grits; 
c. “Food security” refers to the policy objective, plan and strategy of 
substantially meeting the food requirements of the present and future 
generations of Filipinos, ensuring that food that is affordable is available to 
all, through a combination of local production and importation, and 
consistent with the overall national development objectives; 
d. “National food security reserve” is the inventory of grain to be maintained as 
a matter of national policy to ensure food security; and 
e. “Price stabilization” refers to measures which ensure that the fluctuations of 
the prices of rice and corn grits are contained within a band, the limits of 
which will be specified by the Council. 
SEC. 5. Creation of the National Grain Council. - To implement the policies 
declared in this Act, there is hereby created a policy formulating body called the 
National Grain Council, hereinafter referred to as the Council. The Secretary of 
Agriculture shall serve as chairman of the Council, with an Undersecretary the 
Department of Trade and Industry as Vice-chairman and the following as 
members: 
a. A Deputy Director General of the National Economic Development 
Authority; 
b. An Undersecretary of the Department of Interior and Local Government; 
c. An Undersecretary of the Department of Budget and Management; 
d. An Undersecretary of the Department of Social Welfare and Development; 
e. A representative from a federation of rice and corn farmer organizations; 
f. A representative from a federation of consumer organizations; and 
g. A representative from a federation of grain business organizations. 
The three (3) private sector representatives to the Council shall serve for a 
term of three (3) years and shall be appointed by the President of the Republic of 
the Philippines from a list of nominees to be submitted by their respective duly 
accreditedlregistered organizationslfederations. In the case of the farmer 
representatives, the provisions of Republic Act No. 7607 otherwise known at the 
Magna Carta of small farmers and its implementing rules and regulations shall 
have suppletory effect insofar as their nomination and selection to the council are 
concerned. The consumer group representative shall be nominated by the 
Presidential Commission for the Urban Poor (PCUP). 
Of those first appointed, the farmer representative shall serve for a term of 
three (3) years; the representative for consumer groups shall serve for a period of 
two (2) years, and the representative from grain business organizations shall serve 
for a period of one (1) year, without reappointment. 
The Council shall meet regularly at least once every quarter on any date to be 
determined by the Chairman: Provided, That the Chairman may convene special 
meetings to discuss any urgent matters needing immediate resolutions. The 
Council members shall be entitled to a per diem of Five Thousand Pesos 
(P5,OOO.OO) for each meeting actually attended by them. 


The Council shall adopt rules and regulations to govern its proceedings, call on 
any government agency or institution for assistance or support, and determine its 
official location and address. 
SEC. 6. Responsibilities, Powers and Functions of the Council. - The Council 
shall have the following responsibilities, powers and functions: 
A. To formulate and review on an annual basis, the buffer stock requirements at 
the national and local levels and to ensure that these requirements are achieved; 
B. To establish rules and regulations governing the importation of rice for the 
purpose of price stabilization and impose or collect fees and charges for said 
importation. 
C. To enter into contracts with the National Grain and Sugar Corporation created 
under this Act andlor any other private sector entity to undertake measure that 
would ensure the maintenance of proper levels of inventory including, but not 
limited to the direct importation of rice and/or the allocation of the import quotas 
among private sector entities including certified and licensed farmer cooperatives 
who are certified and licensed through the Council Secretariat, and to impose the 
necessary punitive measures and penalties against any breach in such contracts; 
D. To formulate and adopt a pricing mechanism for the stabilization of rice and 
corn grits prices; 
E. To facilitate the exportation of appropriate volumes of rice if necessary, to 
prevent producer prices from falling below a target price; 
F. To cause the procurement of palay at a predetermined support price through a 
purchase scheme requiring private sector participation; 
G. To administer a rice contingency fund that will enable the government to 
respond to area-specific emergency situations. 
H. To determine and set the parameters for targeted food subsidy programs, 
including but not limited to allocation volumes, targeted beneficiaries, required 
budget, and implementing agency(ies); 
I. To undertake such other tasks and activities as may be necessary to ensure the 
attainment of national food security. 
SEC. 7. Secretariat. - The Council shall be assisted by a Secretariat, to be 
headed by an Executive Director. The organizational structure of the Secretariat 
shall be determined by the Council, based on the recommendation of the 
Executive Director. 
SEC. 8. Transfer of functions.- The following functions of the National Food 
Authority shall be transferred to the respective agencies and instrumentalities of 
the government: 
A) The establishment and enforcement of standards in grading, sampling and 
inspection, testing 
and analysis, 
specification, nomenclature, units of 
measurement, code of measurement, code of practice and packaging, 
conservation and transport of grain and their substitutes and by-products, to the 


Bureau of Agriculture and Fisheries Product Standards (BAFPS) and the Bureau 
of Plant Industry (BPI) of the Department of Agriculture; 
B) The registration, licensing and supervision of MILLS AND warehouses, whether 
bonded or not, to the local government units in the respective localities; 
C) The development of more efficient ways, systems and facilities for harvesting, 
threshing, or shelling, drying, storage, milling, packaging, post-harvest handling, 
transporting, and/or shipping of grain and their substitutes andlor by-products, to 
the Philippine Rice Research Institute and the field operations services of the 
Department of Agriculture; 
D) The monitoring of commercial rice stocks, prices, and stock movements, and 
inspection of rice stocks stored in private warehouses for purposes of inventory 
taking, and the establishment and maintenance of marketing information 
dissemination systems in order to keep the public informed on the prevailing 
market situation of grains and their substitutes andlor their by-product end- 
products in different parts of the country, to the Bureau of Agriculture Statistics of 
the Department of Agriculture; and 
E) The coordination of research and development activities on grain to the Bureau 
of Agricultural Research or the Department of Agriculture. 
SEC. 9. Creation of the National Grain and Sugar Corporation. - To carry out 
the declared policy, there shall be created a body corporate known as the National 
Grain and Sugar Corporation, herein referred to as the Corporation. 
It shall be governed by a Board of Directors, hereinafter referred to as the Board, 
which shall be vested with the powers and functions of the Corporation, and which 
shall have overall responsibility for the formulation and coordination of strategies 
necessary to attain the avowed objective. The Board shall be composed of the DA 
Secretary as Chairman, the President of the Corporation as Vice-chairman; and 
three members from the private sector to be appointed by the President of the 
Republic of the Philippines from a list a nominees to be submitted by the Secretary 
of the Department of Agriculture. The appointed members shall be Filipino 
citizens, at least thirty five years of age, with sufficient experience in agribusiness 
management, of proven honesty, integrity, recognized competence and with 
familiarity with the Philippine market environment. The appointed members shall 
serve for a term of six (6) years: Provided, however, That of those first appointed, 
one (1) shall serve for a term of six (6) years, another for a term of four (4) years, 
and the last for a term of two (2) years, without reappointment. The Corporation 
Code shall govern all matters regarding the Corporation that are not specifically 
governed by this law. 
SEC. I O .  Powers and Functions of the Corporation. - In order to effectively 
carry out its responsibilities, the Corporation shall have the following powers and 
functions: 
a) In case a contract is executed between the Corporation and the 
Council, the Corporation may maintain and manage a national food 
security reserve of rice and corn grits equivalent to fifteen (15) days 
of national consumption at any time each year. Subject to the terms 
of the contract, the Council may determine the location and manner 
of distribution of such stock nationwide. The reserve shall be 
augmented by July 1 of each year to a total reserve equivalent to 
thirty (30) days of national rice consumption; 


b) To engage in the business of trading, marketing, importing and 
exporting of grain; 
c) To own, lease, as well as acquire ownership by purchase or 
otherwise, or to invest in, hold, sell or otherwise dispose of stocks or 
bonds or any interest in either, or any obligation or evidence of 
indebtedness of any person, partnership, firm or corporation; 
d) To own, lease, operate or otherwise hold land, buildings, equipment 
and such other immovable properties as may be necessary to carry 
out its functions; 
e) To enter into, make, perform and carry out contracts otherwise not 
prohibited by law as may be required in the performance of its 
functions; 
f) To establish and restructure its own internal organization as the need 
arises and to fix the remuneration, emoluments, allowances and 
other fringe benefits of its officers and employees as the Board may 
deem fit, subject to the Salary Standardization Law, the Civil Service 
Code and the Government Service insurance System. 
g) To sue and be sued; and 
h) To exercise all the rights and powers of a domestic corporation duly 
organized and registered with the Securities and Exchange 
Commission not otherwise prohibited by law. 
SEC. 11. Administration and Capitalization. - The Corporation shall have an 
authorized capital stock of Ten Billion Pesos (PlO,OOO,OOO,OOO.OO) divided into 
One Hundred Million shares (100,000,000) with par value of One Hundred Pesos 
(PI 00.00) each. Government Equity in the Corporation shall be wholly subscribed 
and paid by the national government, The properties of the present NFA, suitable 
to the operations of the Corporation, shall be exchanged for shares of stock of the 
Corporation. Said properties shall represent the equity investment of the 
government. The existing accumulated capital stocks and surpluses of the 
National Food Authority shall be evaluated and shall be additional paid-in capital of 
the Corporation. 
SEC. 12. Transitory provisions. - 
a) Within two (2) months after the approval of this Act, the President shall appoint 
the members of the Board; 
b) Within six (6) months after the approval of this Act, the Council shall likewise 
determine the organizational structure and staffing pattern of its Secretariat; 
c) The personnel of the National Food Authority shall, in a holdover capacity, 
continue to perform their respective duties and responsibilities and receive their 
corresponding salaries and benefits until such time when the organizational 
structures and staffing patterns of the Corporation and the Secretariat shall have 
been approved by the Board and the Council, respectively: Provided, That the 
preparation and approval of the said new organizational structures and staffing 
patterns shall, as far as practicable respect and ensure the security of tenure and 
seniority rights of affected government employees; 
d) Those personnel whose positions are not included in the new staffing pattern or 
who are not re-appointed or who choose to be separated as a result of the 
reorganization shall be paid their separation or retirement benefits under existing 
laws: Provided, That in no case shall the separation pay be less than one and one- 
fourth (1 %) months’ salary for every year of service; 


E. The Food Terminal Incorporated, a wholly owned subsidiary of the NFA shall be 
PLACED under the jurisdiction of the Department of Agriculture as an attached 
Corporation, with the Secretary as the Chairman of the Board of Directors. 
F. The present properties, assets, records and unexpended appropriations of the 
National Food Authority are transferred to the Corporation, including imported 
grain already in the country and such other stocks thereof that may arrive as a 
result of the current importation of the National Food Authority. Said stocks may be 
disposed of in accordance with the policy of the Corporation; and 
G. All obligations of the National Food Authority upon the approval of this Act shall 
be transferred to and absorbed by the national government. 
SEC. 13. Appropriations for the Council and its Secretariat. - The amount 
necessary to finance the initial implementation of this Act insofar as the Council 
and its Secretariat are concerned, including the Rice Contingency Fund shall be 
charged against the existing appropriations of the National Food Authority. 
Thereafter, such sums as may be needed for their operation and maintenance 
shall be included as part of the appropriations of the Department of Agriculture in 
the annual General Appropriations Act, including the service fees to be paid to the 
Corporation for the implementation of the national food security reserve and the 
grain price stabilization program of government. 
SEC. 14. Repealing Clause. - All laws, decrees, executive orders, rules and 
regulations, issuances or parts thereof inconsistent with the provisions of this Act 
are hereby repealed or modified accordingly. 
SEC. 15. Separability Clause. -The provisions of this Act are hereby declared to 
be separable, and in the event one or more such provisions are held 
unconstitutional, the validity of the other provisions shall not be affected thereby. 
SEC. 16. Effecfivity Clause. - This Act shall take effect fifteen (15) days 2 after its 
complete publication in at least two (2) national newspapers of general circulation. 
Approved,