Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City (3 RECEIVE!
> pareQ2 SEP 2013
SIXTEENTH CONGRESS ( TIME: wae

First Regular Session

House BillNo,__26 45

Introduced by Representatives
DIOSDADO MACAPAGAL ARROYO and GLORIA MACAPAGAL ARROYO

AN ACT
INCREASING SHORT-TERM GRAIN AVAILABILITY, MINIMIZING VULNERABILITY
TO EXTERNAL PRICE AND SUPPLY SHOCKS AND ACHIEVING IMMEDIATE RICE
SECURITY, MANDATING FOR THE PURPOSE THE CREATION OF A FERTILIZER
SUPPORT MECHANISM AND THE RESTRUCTURING AND REORIENTATION OF
THE NATIONAL FOOD AUTHORITY, APPROPRIATING FUNDS THEREFOR AND
FOR OTHER PURPOSES

EXPLANATORY NOTE

Food expenditures of the poorest 30% of the Filipino population reveal that 25%
account for rice. Two out of every three of our poor are dependent on agriculture for
employment and sustenance. Thus, rice prices have a significant impact on the well-
being of Filipinos, including smalll rice farmers who are net buyers of rice for household
consumption.

The first half of 2008 had ushered in an alarming series of rice price increases.
Domestic selling price of rice, which is now at Php37.00kg for regular-milled rice and
Php39.00kg for well-milled rice, was only at Php22.43kg for regular-milled tice and
Php24.69kg for well-milled rice at this time last year. The increasing price of crucial
inputs to farming such as fertilizer and fuel has also been unprecedented. The optimal
amount of urea (at 46% nitrogen) per one hectare of irrigated land is 4 bags. However
one bag of urea (at 46% nitrogen) now costs P1,800.00, or double the prices from June
2007. In other words, if incomes did not significantly change from last year, farmers
may be purchasing/affording just half the prescribed amount per hectare.

Moreover, computations indicate that subsidizing production on irrigated land
through fertilizer support can contribute to closing the immediate rice supply gap at 1/5

1


the cost of importing the same amount through the NFA. Specifically, producing rather
than importing an average of 2 million MT of rice would require harvesting an additional
4.1 MT of palay per hectare per crop of irrigated land, which is equivalent to the
application of an additional 1 bag of urea (for a total of 5 bags) per hectare per crop of
irrigated land. Subsidizing this extra bag in addition to subsidizing a base of two bags
per hectare which are now unaffordable due to higher prices - or a total of 3 bags of
urea per hectare per crop of irrigated land, will cost an estimated 15 billion pesos, or
approximately 20% of NFA imports of the same amount

It is evident then that not only is there is an urgent need to revive the rice
economy - to minimize the country's vulnerability to future external shocks and to
reduce supply and price volatility - but that in the immediate term, the rice supply gap
can be minimized at much less cost than what is usually resorted to. Thus, this
proposed measure seeks to mandate an immediate fertilizer support to Filipino farmers
of irrigated land in the form of a “buy 2-take 3” subsidy scheme where farmer
beneficiaries will receive in-kind 3 bags of urea fertilizer per hectare of irrigated rice farm
actually tilled to supplement 2 bags already privately purchased. This will ensure that
farmers are able to use the prescribed amount of fertilizer per hectare, plus one more,
to increase rice yields.

In conjunction with this, long overdue reforms and restructuring in the National
Food Authority will be initiated as a preparatory step toward the long-term goal of rice
self-sufficiency for our country. This bill thus paves the way for redesigning NFA into a
buffer stock management agency that will check and maintain the rice reserve
requirement of the country. Necessary steps to make registration processes more
efficient and its corresponding fees more affordable shall also be undertaken by the
NFA in order to encourage private sector participation in rice importation.

Fertilizer prices have more than doubled over the last two years, making optimal
usage unaffordable and optimal palay yields unattainable. Combining fertilizer support
with initiatives to reorient the NFA into a buffer stock management agency, away from
its importation function, will set the stage to correct rice market distortions that have
been created by NFA intervention in the market over the last three decades

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

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DIOSDADO. CAI ;|AL ARROYO LOA WACAPAGAL ARROYO
Second District, Camarines Sur Second District, Pampanga


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

House Bill No, 2649

Introduced by Representatives
DIOSDADO MACAPAGAL ARROYO and GLORIA MACAPAGAL ARROYO

AN ACT
INCREASING SHORT-TERM GRAIN AVAILABILITY, MINIMIZING VULNERABILITY
TO EXTERNAL PRICE AND SUPPLY SHOCKS AND ACHIEVING IMMEDIATE RICE
SECURITY, MANDATING FOR THE PURPOSE THE CREATION OF A FERTILIZER
SUPPORT MECHANISM AND THE RESTRUCTURING AND REORIENTATION OF
THE NATIONAL FOOD AUTHORITY, APPROPRIATING FUNDS THEREFOR AND
FOR OTHER PURPOSES

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

CHAPTER 1
GENERAL PROVISIONS

SECTION 1. Short Title. — This Act shall be known as the "Immediate Rice
Security Act of 2013."

SECTION 2. Declaration of Policy. - The State hereby reaffirms the fundamental
right of every person to adequate food and to be free from hunger. Toward this end, the
State shall provide immediate strategic measures to ensure short-term availability of
grain, particularly the staple food tice and the sustained productivity growth of
agriculture. Thus, interventions that ensure the availability and accessibility of crucial
inputs to farming, especially fertilizer, shall be carried out by the State to maximize rice
production in order to increase the yield and meet the national requirement.


The initiation and execution of key reforms to address crucial rice market
distortions and to minimize the country's vulnerability to external price and supply
shocks is hereby further declared a State policy. Pursuant to this, the reorientation and
transformation of the National Food Authority into a buffer stock management agency
shall be undertaken and the implementation of measures that make private sector
participation in rice importation more feasible and accessible shall be prioritized.

CHAPTER 2
FERTILIZER SUPPORT PROGRAM

SECTION 3. Creation of the Fertilizer Support Program. — As the mechanism for
extending government fertilizer counterpart to the farmers, a Fertilizer Support Program
(FSP) is hereby created which shall be implemented per cropping season over the next
fiscal year immediately succeeding the enactment of this Act or for the duration of the
rice crisis as determined by the President upon recommendation of the Department of
Agriculture, whichever is longer.

The Fertilizer and Pesticide Authority (FPA), in coordination with the Department
of Agriculture, shall be the primary agency tasked with the implementation of the FSP.
The FPA shall, within sixty (60) days from the enactment of this Act, formulate the
necessary rules and regulations for the implementation of the Fertilizer Support
Program created by this Act

SECTION 4. Fertilizer Subsidy Mechanism. — The FSP shall provide “buy-two-
take-three” in-kind urea (46% nitrogen) subsidy to qualified farmers of irrigated land duly
recognized by and registered with the municipal agricultural offices (MAO) of their local
government units. Upon presentation of proof of procurement of two bags from a FPA
registered fertilizer dealer or retailer, the FPA designated distribution centers shall give
out the corresponding amount of in-kind urea subsidy to MAO-registered farmer-
beneficiaries ; Provided, however, that the amount of urea granted to each farmer shall
not be less than two (2) 50-kgs. bags or more than three (3) 50 kgs. bags per hectare.

SECTION 5. Identification of Famer Beneficiaries. - Each municipal agriculture
office shall submit a masterlist of qualified farmer-beneficiaries, together with the
corresponding area of their rice field to the Department of Agriculture. For the purpose
of the Fertilizer Support Program created under this Chapter, qualified farmer-
beneficiaries must:

a. Be an actual tiller;

b. Have a fully irrigated rice land; and

c. Undertake that he will apply the urea in his rice field


SECTION 6. Fertilizer Procurement. ~The FPA, pursuant to their charter, shall
promulgate the necessary rules and regulations for the importation of the required urea
under the FSP: Provided that procurement shall be conducted through the government
open competitive bidding in accordance with the harmonized procedures on
procurement under Republic Act 9184 or the Government Procurement Reform Act;
Provided further, that the urea imported shall be directly shipped to the respective FPA
distribution centers.

SECTION 7. Monitoring and Assessment. ~The Fertilizer and Pesticide Authority,
through their Provincial FPA Coordinators, shall monitor the distribution and use of urea
under the FSP, as well as fertilizer availability, prices and movements. The Department
of Agriculture shall design a reporting system for the regional field units to monitor and
assess the impact of the FSP on rice farm productivity. The MAFC shall assist the
Provincial FPA Coordinators in the monitoring and evaluation of the program.

SECTION 8. Prohibited Acts. - For the purpose of this Chapter, any person who
engages in any fraudulent transaction or manipulative activity in order to influence the
outcome of the public bidding process, or engages in simulated or fictitious procurement
process leading to the awarding of a contract for the supply of fertilizers, shall suffer the
penalty of imprisonment of not less than twelve (12) years and one (1) day nor more
than twenty (20) years, without prejudice to separate criminal prosecution under
Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act
and other penal laws.

CHAPTER 3
REORIENTATION OF THE NATIONAL FOOD AUTHORITY

SECTION 9. Reforms in the National Food Authority. - The National Food
Authority shall, within one (1) year from the effectivity of this Act, formulate and
implement guidelines to phase out its participation in rice importation: Provided that the
NFA shall undertake a comprehensive review of its plans and programs and redesign
the same to focus on the management and maintenance of proper levels of buffer stock
requirements of the country.

SECTION 10. Rice Importation. - The NFA shall establish rules and regulations
that will make participation in importation of rice more feasible and accessible to the
private sector. Within sixty (60) days from the effectivity of this Act, the NFA shall have
amended its guidelines to facilitate and allow for a shorter registration process and
reduced associated fees to encourage private sector, especially farmer organizations’
participation in the rice importation business. Along with this, the NFA shall implement
necessary restructuring in their programs in order to make vital information that ensure
timely and sufficient importation of rice available to duly registered rice importers.


CHAPTER 4
FINAL PROVISIONS

SECTION 11. Congressional Oversight Committee. — For the effective
implementation of this Act, a Congressional Oversight Committee on Rice Security
Program is hereby created, hereinafter referred to as the Rice Security Program
Oversight Committee, to be composed of five (5) members each from the Senate and
the House of Representatives. The Rice Security Program Oversight Committee shall
be jointly chaired by the Chairs of the Committee on Agriculture and Food of both
Houses, with the Chairs of the Committee on Trade and Commerce of both Houses
acting as vice-chairs. They shall meet bi-annually to monitor and review the status of
implementation of the provisions of this Act. For this purpose, the Rice Security
Program Oversight Committee shall have the power to require the submission of status
reports and other necessary data and information

SECTION 12. Appropriations, — For purposes of the FSP created under Chapter
2 of this Act, a special fertilizer support fund, which will be used by the FPA in the
importation of urea under this program, in the amount of Fifteen Billion pesos
(Php15,000,000,000.00) per cropping season for the fiscal year immediately following
the enactment of this Act, shall be specially appropriated, released to and administered
by the FPA; Provided, that appropriations for the FSP shall continue and be maintained
for the duration of the rice crisis as determined by the President pursuant to Section 3 of
this Act.

SECTION 13. Rules and Regulations. - The Department of Agriculture, in
consultation with relevant government agencies and LGUs, farmer organizations and
other stakeholders, shall, within one hundred twenty (120) days from the effectivity of
this Act, promulgate the necessary rules and regulations to effectively implement the
provisions of this Act.

SECTION 14. Separability Clause. — If, for any reason, any section or provision
of this Act shall be held unconstitutional or invalid, the other section or provision not
otherwise affected shall remain in full force and effect.

SECTION 15. Repealing Clause. — All laws, presidential decrees, executive
orders, proclamations, rules and regulations which are inconsistent with the provisions
of this Act are hereby repealed or modified accordingly.

SECTION 16. Effectivity Clause. —- This Act shall take effect fifteen (15) days

after its publication in the Official Gazette or in at least two (2) newspapers of general
circulation.

Approved,