Republic of the Philippines
HOUSE OF REPRESENTATIVES.
Quezon City
FIFTEENTH CONGRESS

First Regular Session

House Bill No._1702

Introduced by Hon. Rodolfo G. Biazon

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EXPLANATORY NOTE

The theory of inter-linked transactions between the landlord and the tenant
demonstrates the many things that the landlord was to the farmer - owner of the land he
lilled, creditor, source of non-labor inputs, buyer of his outputs, and employer of extra
non-farm labor. In a sense the landlord provided the tenant with his only link to
markets. The bundling together of all these transactions also remedied the problem of
credit risk and transactions costs. In the absence of anything better, the landlord-tenant
relationship was an improvement over subsistence production with no opportunity for
exchange

Agrarian reform addressed the distributive inequities of the tenancy system.
However, with the exit of landlords from rural markets, the farmer finds himself without
access to credit, to market opportunities and to many other things. Government
intervention in rural markets has to address the urgent need to institutionalize ways of
packaging factor inputs in agriculture to bring about innovative, efficient and competitive
modes of production and marketing. Otherwise, support services like extension,
information, and infrastructure will not be sufficient to overcome the perceived production
risks that deter the farmer from venturing into higher value crops.

This bill rationalizes and restructures the existing government organizations in order
to establish harmony and coordination between policy-making and implementation, and
market-development programs geared towards supporting the farmer as he transforms himself
into an entrepreneur.

The National Agricultural Marketing Council will serve as the policy-making body
for agricultural trading, with the Regional Agricultural Marketing Councils as its branch
offices. The following attached agencies are also created to serve proprietary roles in market
development and intervention:

(a) The National Agricultural Trading Corporation (NATCOR), to function as the


(b) The Public Warehousing Corporation, to operate Commodity Exchange Centers
(CECs); establish terminal markets all over the country, and maintain the
country’s buffer stocks of food grain and other food commodities;

(c) The Agricultural Credit and Guarantee Corporation of the Philippines
(AGCREDOR) to provide credit assistance and guarantee cover on project loans
and inventory financing for commodities deposited in the warehouses of the
Public Warehousing Corporation's warehouses,

The above agencies will absorb the functions and resources of the Agribusiness
Group, the National Agribusiness Corporation, the Agricultural Credit Policy Council, the
Quedan and Rural Credit and Guarantee Corporation of the Philippines and the National
Food Authority

Under the proposed set-up, the specialized functions are clearly identified,
delineated and distributed among the appropriate agencies so as to avoid conflict of interest
situations that have so often hamstrung past policy making and implementation, Moreover,
the separation of policy-making and enforcement from proprietary functions paves the way
for the eventual transfer of the latter functions to the private sector, with competitive markets
geared for efficiency.

It has been said that the poverty in many underdeveloped economies stems from
the massive waste of resources that result from the inadequacies of market mechanisms.
In the Philippine countryside, the government must confront the challenge to develop the
market institutions that will put a stop to the massive waste of resources, bring
productive inputs together, pave the way for more innovative modes of production and
deliver our products to national, regional and international markets.

In view of the foregoing, immediate passage of this bill is earnestly requested

Represer
Lone District, Muntinlupa City


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
FIFTEENTH CONGRESS

First Regular Session

House Bil No,_ 1702

Introduced by Hon, Rodolfo G. Biazon

AN ACT

TO PROMOTE THE AGRICULTURE INDUSTRY, STABILIZE PRICES OF
AGRICULTURAL PRODUCTS AND ENHANCE FOOD SECURITY THROUGH
THE EFFECTIVE PRODUCTION, | PROCESSING, MARKETING AND
DISTRIBUTION OF AGRICULTURAL PRODUCTS, RATIONALIZING AND
RESTRUCTURING FOR THE PURPOSE, ALL EXISTING GOVERNMENT
ORGANIZATIONS IN AGRICULTURAL PRODUCTION, DISTRIBUTION
MARKETING AND OTHER SUPPORT PROGRAMS, APPROPRIATING FUNDS
THEREFOR AND FOR OTHER PURPOSES

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

SECTION. 1. Title - This Act shall be known as the “National Agricultural
Marketing Act of 2010.”

Sec. 2. Declaration of Policy - tis 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 critical 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 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 responsibiliti

(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;

(©) 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
agencies;

(f) 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;

(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;

(D 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 attainment
of efficient agricultural marketing systems and food security.

Sec. 4. Governing Council. - The powers, functions and affairs of the Council shall
be exercised and directed by a governing council to be chaired by the Executive Secretary,
with the Secretary of Agriculture as Vice Chair and with the following as members:

(a) The Secretary of the Department of Agrarian Reform;

(b) The Secretary of the Department of Finance;

(©) The Secretary of the Department of Trade and Industry;

(d) The Secretary of the Department of Public Works and Highways;

(©) The Secretary of the Department of the Interior and Local Government;

(f) 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
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-to-day 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

3


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;
(©) A representative from the farming/fisheries sector;
(@)_ A representative from the agricultural marketing and trading sector, and
(ce) 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.
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
nal council subject to the approval of the national council.

the regi

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.

Sec. 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;


(0) 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;

(© To gather, analyze and disseminate market information on various foreign
countries’ food supply, domestic and export demand, local and export prices and
other relevant data;

(a) 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;

(©) 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 on inspection, classification, standardization, and
grading system 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,
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 by-products 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

s


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
Organization - Allunits 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:

(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 warehousing/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 deposit

(d) To store and safe-keep the government’s food or grain buffer/security stocks
as directed by the Coun:

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

(f) 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 Five billion Pesos (P5,000,000,000) divided into five
million (5,000,000) 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
jon 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;
(@) Director of NATCOR as Member; and
(e) Director of the Bureau of Agricultural Siatistics 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 prescribe 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 ina general manager who shall be appointed by the
Council.

‘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 inthe 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 business officers of the Commodity Exchange Centers. NFA personnel, because of
their expertise in warehousing and grain classification and grading, shall serve as the
core staff for the operation of the CECs.

daily public bidding of grains shall be on the basis of “on the spot”
idding 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 - The
provision of credit assistance and guarantee cover on project loans and inventory
financing for 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/fishers through their primary cooperatives
or federations by direct lending, co-financing schemes, providing lending banks
with especial 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
warehouses, Commodity Exchange Centers and franchised private bonded
warehouses;

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

(©) 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 forthe 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 loan 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) 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 execute the national government's and
government institutions’ (LBP, DBP, SSS, GSIS, PAGCOR, PCSO, etc.,) 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/fishers,
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.

See. 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 the 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 meterials of the Agricultural Credit Policy
Council shall likewise be tured over to the NATCOR;

(©) 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 Council;

(a) 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 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.

See, 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.

See. 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. 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. Repealing Clause - All laws, decrees, executive issuances, rules and
regulations inconsistent with this Act are hereby repealed or modified accordingly.

Sec. 32. Separability Clause - The provisions of this Act are hereby declared
to be separable, and in the event one or more of such provisions are held
unconstitutional, the validity of the other provisions shall not be affected thereby.

Sec, 33, Effectivity Clause. - This Act shall take effect immediately after its
complete publication in at least two (2) newspapers of general circulation.

Approved,