Republic of the Philippines

HOUSE OF REPRESENTATIVES
Quezon City 3:0 JUL 2013
SIXTEENTH CONGRESS \ =e

First Regular Session

2049

House Bill No.

Introduced by Hon. Delphine Gan Lee

EXPLANATORY NOTE

To provide funding to agricultural development programs is critical in achieving the
Millennium Development Goals. Programs that are focused on farmers and are knowledge-
and-science-based must be pursued so that the full potential of farmers, both men and
women, including small-holder and commercial farmers, can be harnessed in pursuing food
security and sustainable development a reality.

State intervention in rural markets must address the urgent need for institutionalizing
the ways of packaging factor inputs in agriculture in order to bring about innovative, efficient
and competitive modes of production and marketing, This bill rationalizes and restructures
the existing government organizations in order to establish harmony and coordination
between policymaking and implementation, and market-development programs geared
towards supporting the farmer as he transforms himself into an entrepreneur. This bill also
creates several attached agencies to serve as proprietary roles in market development and
intervention. This bill provides for market development. It also establishes terminal markets
all over the country and maintains the country's buffer stocks of food grain and other food
commodities. Lastly, it will also provide credit assistance and guarantee cover on project
loans and inventory financing for commodities.

HON DE GAN LEE
Representative, AGRI Party-List



Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City
SIXTEENTH CONGRESS
First Regular Session

House BillNo.__- 2049

Introduced by Hon. Delphine Gan Lee

AN ACT
PROMOTING THE AGRICULTURAL SECTOR, STABILIZING PRICES OF
AGRICULTURAL PRODUCTS AND ENHANCING FOOD SECURITY
THROUGH THE EFFECTIVE PRODUCTION, PROCESSING, MARKETING
AND DISTRIBUTION OF AGRICULTURAL PRODUCTS, RATIONALIZING AND
RESTRUCTURING ALL EXISTING GOVERNMENT RESOURCES IN
AGRICULTURAL PRODUCTION, DISTRIBUTION, AND MARKETING

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

SECTION. 1. Title. - This Act shall be known as the "Integrated Agricultural
Marketing Development Act of 2013."

SEC. 2. Declaration of Policy. - ‘The State recognizes that the agriculture and fisheries
sector provides food and vital raw materials for the rest of the economy;

The State also recognizes that rising productivity and efficiency in the sector are
critical in maintaining the affordability of food and purchasing power, especially among the
poor;

It is hereby declared to be the policy of the State to ensure the general welfare of
farmers, who constitute a majority of the national population, and are key to the production of
sufficient food supplies all over the country. It shall also be the policy of the state to ensure
the attainment of food security at all times as an essential element of national security and a
ctitical element of national development. For purposes of this Act, “food security” shall be
defined as the availability and stability of food supply in a manner accessible to every
Filipino of any economic and social standing, given any change in the country's climatic,

social, political and economic condition. The State recognizes that the goal of food security is

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best served through the operation of competitive markets that will provide sufficient
incentives to farmers and producers to increase the productivity levels of their farms.

For the above purposes, the state hereby rationalizes and restructures existing
government structures and programs on the production, processing, marketing and

distribution of agricultural products,

SEC. 3. Creation of the National Agricultural Marketing Council. - There is hereby
created a policy-making and implementing body corporate called the National Agricultural
Marketing Council, which shall have the general powers and attributes of a corporation as set
forth in the Corporation Law and the particular mandate to perform the following functions,
powers and responsibilities:

(a) To formulate policies, plans and programs on food production, post-harvest
handling, storage, milling, distribution and credit support, including the coordination of its
implementation among the various agencies and institutions of the government and the
private sector;

(b) To ensure the best administration of market development programs for agricultural
commodities and food products;

(c) To ensure an adequate flow of these products to consumers as well as a fair return
to producers and prevent inefficient and wasteful methods of distribution;

(d) To foster the empowerment of agricultural producers into effective associations or
corporations under their own control for greater unity of effort in marketing;

(©) To promote the establishment and financing of a farm marketing systems of

producer- owned and producer-controlled cooperative associations and other agencie:

(£) To set and review annually the government's buffer grain stock requirements at the
national and local levels and to ensure that these requirements are achieved;

(g) To effect, with the Regional Agricultural Marketing Councils and/or other
government entities as implementing agents, the domestic procurement of the government's
buffer grain stock through purchases of warehouse receipts or quedans of grain deposits in
government, farmer-cooperatives and private warehouses and/or by buying grain produce
directly from farmer cooperatives;

(h) To cause the direct importation of rice and allocation of import quotas among

private entities, especially certified and licensed farmer cooperatives;


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(i) To promulgate the government's "stabilization price" for grains to assure farmers
with a reasonable mark-up on their production cost and participation in the profits that may
be realized from the sale of the government's buffer grain stock;

(To reorient the country's food production policies, plans and programs in such a
way that the thrust of increasing the productivity of farmers is not only in terms of yield per
unit area but more so in the aggregate income from farming enterprises;

(k) To promote and coordinate plans and programs of assistance to producers through
input supplies, purchases, payments and other operations, including low or no interest loans
in partnership with available financial sources or institutions;

(1) To institutionalize and actively promote the adoption of sustainable agricultural
practices at all farm levels so that steady production of various food commodities to cope
with the demands of a growing population is achieved in a way that maintains the
productivity of the soil and diminishes any adverse impact to the immediate environment;
and

(m) To undertake other tasks and activities as may be necessary to ensure the

stems and food security.

attainment of efficient agricultural marketin,

Ss
be exercised and directed by a governing council to be chaired by the Secretary of

4, Governing Council. - The powers, functions and affairs of the Council shall

Agriculture and with the following members:
(a) The Secretary of the Department of Agrarian Reform;
(b) The Secretary of the Department of Finance;
(c) The Secretary of the Department of Trade and Industry;
(d) The Secretary of the Departm~nt of Public Works and Highways;
(c) The Secretary of the Department of the Interior and Local
Government;
(£) The Secretary of the Department of Budget Management;
(g) The Secretary of the Department of Social Welfare and Development;
(h) The Secretary of the Department of Transportation and Communications; and

(i) The Secretary of the Department of Environment and Natural Resources.

The governing council shall meet regularly at least every month on any date to be
determined by the Chair; Provided, that the Chair may convene special meetings to discuss

urgent matters needing immediate resolution. The council members shall be entitled to per


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diem for every meeting actually attended by them and other remunerations as may be
determined by them. It shall prescribe the rules and regulations to govern its deliberations and

other official actions.

SEC. 5, Organization and Staff: - The management of the day-today operations of the
Council shall be vested in an executive director who shall be appointed with the rank of an

undersecretary by the President of the Philippines.

The Council shall set up. the
organizational. structure, staffing pattern, qualification standard, compensation scale,
functions and authorities of their officers and employees pursuant to pertinent laws, rules and
regulations being implemented by the Civil Service Commission and the Department of

Budget and Management.

SEC. 6. Regional Agricultural Marketing Councils. - To operate and serve as the
branch offices of the National Agricultural Marketing Council at the regional level, there are
hereby instituted Regional Agricultural Marketing Councils in all administrative regions of
the country.

‘The Regional Agricultural Marketing Councils shall be under the administrative
supervision and control of the National Agricultural Marketing Council and shall implement

in the region the policies, plans and programs of the latter.

SEC. 7. Composition of the Regional Agricultural Marketing Council, - The Regional

Agricultural Marketing Council shall be composed of:

(a) All the provincial governors of the region;

(b) The regional directors of the Department of Agriculture;

(c) A representative from the farming/fisheries sector;

(d) A representative from the agricultural marketing and.trading sector; and

(e) A representative from the consumer sector

All provincial governors with the Department of Agriculture Regional Director shall
by majority vote choose the sectoral representatives from among nominees respectively
submitted by recognized sectoral associations in the region. Thereafter, the council members

shall elect their Chair, Vice-Chair and other officers.


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SEC. 8. Support Staff. - The Regional Agricultural Marketing Council shall appoint,
from among its members or qualified outsider, a regional director who shall manage and
direct the day-to-day operations of the regional council. The concomitant organizational
structure and plantilla of personnel shall be set up by the regional council subject to the

approval of the national council.

SEC. 9. Creation of the NATCOR. - There is hereby created a body corporate to be
known as the National Agricultural Trading Corporation (NATCOR) an attached agency to
the Council hereinafter referred to as the NATCOR which shall evolve the most efficient,

dependable economical and equitable marketing systems for agricultural products.

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10. General Powers and Functions of the NATCOR. - The NATCOR shall have
the following powers and functions:

(a) To formulate a medium term agricultural market development plan which shall be
updated every year;

(b) To provide farmers and fisher folks an up-to-date market information by the

establishment of an integrated and efficient nationwide information access system that will

guide producers and other stakeholders to make decisions on what and how much to plant
and where and when to market;
(c) To gather, analyze and disseminate market information on various foreign

s and other

countries' food supply, domestic and export demand, local and export pri
relevant data;

(d) To identify markets for Philippine agricultural products and assist in the planning
of market centers, marketing channels and distribution networks to reduce marketing costs
for producers and ultimately the cost to consumers;

(e) To foster and assist in the development of new or expansion of existing domestic
and foreign markets through institutional arrangements like contract growing, market
matching, market intelligence and other promotional activities for agricultural products;

(f) To provide farmers, fisher folks and other persons or firms access to existing
public and private researches supporting food market development activities;

(g) To disseminate information standardization, and grading system on inspection,
classification, for all agricultural products to enhance global competitiveness;

(h) To formulate as part of its market development thrust more efficient ways,

systems, and facilities for harvesting, threshing or shelling, drying, storage, milling,


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packaging, post-harvest handling, transportation and/or shipping of agricultural products for
purposes of reducing costs and ensuring stable consumer supply;

(i) To require as a tool for market information the annual registration and publication
of a directory of all persons, natural or juridical, engaged or intending to engage in
wholesaling, milling, processing, warehousing and transporting of agricultural products,
including byproducts thereof,

() To coordinate with the Department of Transportation and Communications
towards establishing more efficient, regular, adequate, suitable, and economical systems of
transporting and/or shipping of food products for purposes of reducing marketing costs and
ensuring availability of basic transport which is central to the whole chain of agricultural
production and distribution; and

(k) To promulgate policies, plans, programs, rules and regulations, sanctions and
penalties as may be necessary for the effective exercise of the powers and functions of the
NATCOR.

SEC. 11. Strengthening of the Agricultural Marketing Information System. - For the
effective implementation of the policy enunciated in this Act, the Bureau of Agricultural
Statistics shall be strengthened as the principal line agency of the Republic of the Philippines
for agricultural statistics and marketing information, It shall serve the data requirements of
the NATCOR,

SEC. 12. Cooperation with other Government Agencies and Private Business
Organizations. - All units and agencies of the government shall support and cooperate with
the NATCOR in the implementation of its functions and programs. Likewise, private research
organizations, purchasing and consuming organizations, boards of trade, chambers of
commerce, other associations of business or trade organizations, transportation and storage
agencies and organizations, or other persons or corporations engaged in the production,
transportation, storing, processing marketing and distribution of agricultural products shall

support the NATCOR in the implementation of its functions.

SEC. 13. Creation of the Public Warehousing Corporation. - There is hereby created
a government-owned corporation to be known as the Public Warehousing Corporation,
hereinafter called the Corporation, which shall be attached to the Council and have the

following functions, powers and responsibilities:


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(a) To establish and maintain warehouses and post-harvest facilities for foods, grain
and other agricultural products in all areas of production in the country;

(b) To provide warchousing/storage services and post-harvest facility assistance for
the farmers grain and food agricultural stocks/inventories;

(©) To issue, pursuant to existing laws and regulations, corresponding warehouse
receipts or quedan for the farmers’ grain and food inventory deposits;

(@) To store and safe-keep the government's food or grain buffer security stocks as
directed by the Council;

(e) To lease out, sell, build, and transfer warehouses and/or post-harvest facilities to
farmer-cooperatives and federations, subject to the approval of the Couneil;

(£) To establish and operate Commodity Exchange Centers (CEC); and

(g) To exercise the general powers and attributes of a corporation as set forth in the

Corporation Law.

SEC. 14, Authorized Capital Stock of the Corporation. - The authorized capital stock
of the Corporation shall be SIX BILLION PESOS (P6,000,000,000) divided into six million
(6,000,000) common shares of stock which shall be subscribed and paid for by the national

government and government institutions.

SEC. 15. Governing Board. - The powers, functions and affairs of the Corporation
shall be exercised and directed by a governing board composed of the following:

(a) Executive Director of the Council as Chair;

(b) General Manager of the Corporation as Vice-Chair;

(c) President of AGCRECOR as member;

(d) Director of NATCOR as member; and

(e) Director of the Bureau of Agricultural Statistics as member.

The Board shall meet regularly at least every month and convene special meetings to
discuss urgent matters. The Board members shall receive per diem for each meeting actually
officiated and other remuneration as may be determined by the Board. It shall preseribe the

rules and regulations to govern its deliberations and other official actions.

SEC. 16. Organization and Staff. - ‘The management of the day-to-day operations of
the Corporation shall be vested in a general manager who shall be appointed by the Council.


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The governing board shall set up the organizational structure, staffing pattem,
qualification standard, compensation scale, functions and authorities of their officers and
employees pursuant to pertinent laws, rules and regulations being implemented by the Civil

Service Commission and the Department of Budget and Management.

SEC. 17. Commodity Exchange Centers (CEC). - The Corporation shall establish at
all terminal markets in the country, especially in Metro Manila and cities in Luzon, Visayas
and Mindanao, Commodity Exchange Centers which shall serve as central trading facilities
for grains in the regions to provide ready market for farmers’ produce and promote efficiency
of grain distribution to consumers under a transparent marketing system which enhances the
interest of farmers and consumers alike. Strategically located warehouses of the National
Food Authority (NFA) shall be the sites and bu

Centers. NFA personnel, because of their expertise in warehousing and grain clas

iness officers of the Commodity Exchange

fication
and grading, shall serve as the core staff for the operation of the CECs.

Initially, daily public bidding of grains shall be on the basis of "on the spot"
commodity. Bidding shall later be on the basis of quedans or warehouse receipts for grain
inventories deposited in the warehouses of the Corporation, the CECs or private bonded

‘warehouses. ‘Trading on agricultural commodity "futures" shall be the final phase that the

CECs shall work for to achieve. Similarly, the CECs shall initially cover grains only and later

include other food and agricultural commodities.
SEC. 18, - Responsibility for Credit Assistance and Guarantee Cover.

of credit assistance and guarantee cover on project loans and inventory financing for

‘The provision

commodities owned and deposited by farmers, consumers, and traders in the warehouses of
the Public Warehouse Corporations and franchised private bonded warehouses shall be the
primordial responsibility of the Quedan and Rural Credit Guarantee Corporation, which is
hereby attached to the Council and renamed as the Agricultural Credit and Guarantee

Corporation of the Philippines, hereinafter referred to as AGCRECOR.

SEC. 19. Operating Guidelines. - The AGCRECOR shall adhere to the following
operating guidelines:
(a) Provide production loans to farmers/fisherfolk through their primary cooperatives

or federations by direct lending, co-financing schemes, providing lending banks with especial


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time deposit, rediscounting lending banks' production loan receivables and similar
mechanisms so as to reach out to as many rural clients as possible;

(b) Encourage lending institutions to extend project loans for production, warehouses,
post-harvest machineries and equipment, land transportation and shipping, bulk and the like,
by providing" a guarantee cover on such loans;

(©) Provide guarantee cover on inventory loans for grain or food commodities owned
and deposited by farmers, consumers and traders in the PWC warchouses, Commodity
Exchange Centers and franchised private bonded warehouses;

(d) Extend loans directly for the aforementioned projects and food inventory when
and where no lending banks are available or willing to provide the loans;

(e) Endeavor to provide soft-term loans by sourcing and coordinating grants, no-
interest and low interest funds and blending them with commercially sourced funds;

() Submit for the Council's approval and funding, a credit plan and budget for the
undertakings envisioned in paragraphs (a) and (d) above, detailing therein the per region oan
volume targets, expected beneficiaries, repayments, arrearages and defaults on previous
loans. Likewise, a separate plan shall be submitted in regard to the guarantee operation; and

(g) Remit back to the Council all repayments for current loans and recoveries on past

due loans funded by the said Council.

SEC. 20. Increase in Fund Base. - To achieve the vital credit assistance and guarantee
cover envisioned in this Act, the authorized capital stock of AGCRECOR is hereby increased
to Five billion pesos (P5,000,000,000.00) divided into common shares of stock of the same
par value and with the same government-private sector ownership structure spelled out under
Republic Act No. 7393. At the start of the year and upon the endorsement of the Council, the
Department of Budget and Management and the Department of Finance shall program and
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execute the national government’s and government institutions’ (LBP, DBP, SS‘

PAGCOR, PCSO, ete.,) subscriptions and payment thereof for the government portion of the
authorized capital stock of AGCRECOR until such government portion is fully completed
within five (5) years.

Furthermore, to enhance credit assistance to farmers/_fisherfolk,
cooperatives/federations and other food enterprises envisioned in this Act, the national
government through the Secretary of Finance shall guarantee the AGCRECOR's borrowings,
duly approved and endorsed by the Council, from government or private, domestic or foreign,

financial institutions.


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SEC. 21. Incentives for Banks' Credit Support. - The guarantee obligation of
AGCRECOR shall be "sovereign" in nature and deemed as the obligation of the national
government in order to entice much greater credit support from the banking sector since such
guaranteed loan receivables shall be considered as compliance with the Agri-Agra Law, have
access to the rediscounting window of Bangko Sentral ng Pilipinas and exempted from the

“single-borrower limit" and "risk asset ratio requirements”.

SEC. 22. Compliance with Agri-Agra Law. - All banking institutions are hereby
mandated to allocate at least fifteen percent (15%) of their loanable funds to the agricultural
sector. Furthermore, the provisions of the Agri-Agra Law, Presidential Decree No. 717, as
amended on substantial compliance through the purchase of government securities, are
hereby repealed, Bank loans extended for grain inventories deposited in the warehouses of
the Corporation, Commodities Exchange Centers and franchised private bonded warehouse

operators shall be deemed as compliance with the Agri-Agra Law.

SEC, 23. Devolution of the Agribusiness Group, the National Agribusiness

Corporation and the Agricultural Credit Policy Council. ~ The Agribusiness Group of the
Department of Agriculture, the National Agribusiness Corporation and the Agricultural
Credit Policy Council are hereby devolved as follows:

(a) The records of the Agribusiness Group shall be transferred to the NATCOR;

(b) The records, researches and reference materials of the Agricultural Credit Policy
Council shall likewise be tuned over to the NATCOR;

(c) All other properties, assets and unexpended appropriations or corporate operating
budget of the National Agribusiness Corporation and the Agricultural Credit Policy Council
shall be transferred to the Couneil;

(@) The Comprehensive Agricultural Loan Fund created under Executive Order No.

113, dated 24 December 1986 is hereby transferred to the Council; and
(e) Officials and employees of the said group and agencies shall be devolved into the

NATCOR on the basis of merit and qualification.
SEC. 24. Devolution of the Personnel, Properties, Assets, Records, and Unexpended

Appropriation of the National Food Authority (NFA). ~ The present warehouses, post-harvest
facilities and equipment, trucks, and utility vehicles of the National Food Authority shall be

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transferred as the initial government equity to the Public Warehousing Corporation. All
personnel attendant to the said grain facilities shall likewise be transferred to the Corporation

‘All other personnel, properties, assets, records and unexpended appropriations of the
National Food Authority are transferred to the National Agricultural Marketing Council and
National Agricultural Trading Corporation in a manner that the said Council shall decide,
This shall include imported rice and com already in the country and such other stocks that
may arrive pursuant to the current importation thereof. Said stocks shall be disposed of in

accordance with the new policy of the Council.

SEC. 25. Outstanding Obligations of the NFA. - All obligations of the National Food
Authority upon the approval of this Act shall be transferred to and absorbed by the national
government: Provided, That those incurred in the current importation shall be paid by the
Council up to the extent of the rice/com inventory still on hand and transferred to the

Council.

SEC. 26. Options of Devolved Personnel. - All personnel herein devolved and those
otherwise not absorbed may opt to retire, if qualified for retirement, or be laid off and gratuity
shall be given as follows:

(a) Not more than 20 years of service, 1.5 months gross pay per year of service; and

(b) More than 20 years of service, 2 months gross pay per year of service. Those with
pending administrative and/or criminal cases shall be paid only after exoneration, otherwise

they shall forfeit whatever benefits are due to them.

SEC. 27. Appropriations for the National Agricultural Marketing Council. - The sum
needed for the operation and maintenance of the Council, including the credit funds to
support food production and other undertakings, shall form part of the appropriations, in the

annual General Appropriations Act.

SEC. 28. Appropriation for the National Agricultural Trading Corporation, - For the
initial operation of the NATCOR, the amount of Two Hundred Million Pesos (P200,000,000)
is hereby appropriated from the current appropriations of the Department of Agriculture or

the National Food Authority.

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Thereafter, such sum as may be needed for its operations and maintenance, including
the amount needed for strengthening the Bureau of Agricultural Statistics, shall be included
as part of the appropriations in the annual General Appropriations Act.

SEC. 29. Appropriations for the Public Warehousing Corporation, - For its initial
operation, the, amount of Five Hundred Million Pesos (P500,000,000) is hereby appropriated
for the Corporation from the current appropriations of the Department of Agriculture or the
National Food Authority.

‘Thereafter, such amount needed for their continuous operation and maintenance shall
be included as part of the appropriations in the annual General Appropriations Act.

SEC. 30. Appropriations for the Regional Agricultural Marketing Council. - The
National Agricultural Marketing Council shall, out of its financial resources, appropriate such
amount as would be necessary for the start-up and continuous operation of each Regional

Agricultural Marketing Councils.

SEC. 31. Separability Clause. - If any provision of this Act or the application of such
provision to any person or circumstance is declared invalid, the remainder of the Act or the
application of such provision to other persons or circumstances shall not be affected by such

declaration.

SEC. 32. Repealing Clause. ~ Any law, presidential decree or issuance, executive
order, letter of instruction, administrative order, rule or regulation contrary to or inconsistent
with this Act is hereby repealed, modified, or amended accordingly.

SEC. 33. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
publication in at least two (2) newspapers of general circulation.

Approved,