Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

TWENTIETH CONGRESS
First Regular Session

House BiLLNo. 4111

Introduced by: Hon. Keith Micah “Atty. Mike” D.L. Tan

AN ACT
INSTITUTIONALIZING A NATIONAL CACAO DEVELOPMENT PROGRAM, CREATING
FOR THE PURPOSE THE PHILIPPINE CACAO COUNCIL, APPROPRIATING FUNDS
THEREFOR, AND FOR OTHER PURPOSES

EXPLANATORY NOTE

In recent years, the Cacao Industry has been gaining recognition in the domestic
and export markets as the supply and demand gap of cocoa beans is increasing. One of
the primary drivers of this increase is the growing middle class, increasing discretionary
household income in developing countries, new and innovative uses of cocoa in the food,
cosmetics and pharmaceutical industries, and the positioning of cacao as health food.

Based on PSA data, the Philippine cacao has a slow but increasing production trend
with an average increase of 2,743 hectares per year from 2013 to 2020. Such increase
may be attributed to area expansion and the seed/seedling dispersal programs of DA,
DENR and PCA. However, despite the increasing trend in production, supply still fall short
to meet the increasing market demand domestically and globally. Low productivity is due
to high mortality of planting materials and the lack of knowledge of cacao growers.

Like most countries that grow cacao, majority of the cacao farms in the country are
small holdings and are being owned and managed by farmers. Thus, the need for
localization and clustering.

The Philippines is a net importer of cacao with an average of USD 168.3-M worth
of import but with only USD 22.1-M export value. The large import of cocoa powder and
export value of chocolate is being credited to major chocolate manufacturers in the
country who seldom buy local cocoa beans. Instead, they use imported powder and cocoa
butter for their raw materials.

Cacao is a small evergreen plant introduced by the Spaniards to the Philippines in
1674 to 1680. Its seeds or beans are used to make cocoa and chocolate, which has
medicinal uses as well as culinary purposes.


The very rich and fertile soil of the country is very well suited in the production of
cacao but, ironically, the country still imports a large amount annually. As of 2008 the
country only has 1.5 million cacao trees producing around 6,000 metric tons annually.
This placed the country as 18% in the rankings in the world among cacao-producing
nations. Southern Mindanao is the country's largest cacao-producing region, particularly
Davao Oriental with nearly 4,000 hectares planted to cacao trees, followed by the
CALABARZON region, particularly Quezon and Cavite.

This bill envisions the creation of a national program, which seeks to gather
government agencies together with the Department of Agriculture as lead agency to do
education and training of all stakeholders in the cacao industry, collecting relevant
researches, scientific studies, and market strategies, extending technologies and creating
international linkages for development, promotion and be a competitor in the world
cacao market.

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

Keith Micah “Atty. Mike” D.L. Tan
4th District, Quezon


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

‘TWENTIETH CONGRESS
First Regular Session

HOUSE BILL No. 4111

Introduced by: Hon. Keith Micah “Atty. Mike” D.L. Tan

AN ACT
INSTITUTIONALIZING A NATIONAL CACAO DEVELOPMENT PROGRAM, CREATING
FOR THE PURPOSE THE PHILIPPINE CACAO COUNCIL, APPROPRIATING FUNDS
THEREFOR, AND FOR OTHER PURPOSES

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

SECTION 1. Short Title. - This Act shall be known as the "Philippine Cacao Industry
Development Act”.

SEC. 2. Declaration of Policy. - Itis hereby declared the policy of the State to develop
a sustainable and competitive cacao industry that is environmentally sound,
economically viable, socially responsive and aimed to spur development through
livelihood creation, job generation, and income augmentation thereby contributing to
poverty alleviation, inclusive growth, and peace and order attainment particularly in the
rural areas,

Towards this end, the State shall promote and support the sustained production
of Philippine cacao and increase value adding activities by allocating adequate financial
resources to the cacao industry towards the attainment of its full potential in the
domestic and international markets, and making cacao as one of the leading agricultural
exports of the country.

SEC. 3. Objectives. - This Act aims to achieve the following objectives:

(a) To enhance and increase the production of cacao through expansion and/or
rehabilitation of cacao production areas;

(b)To formulate strategies and craft action plans, anchored on the value chain
approach that will provide development interventions from farm to market
and bean to bar for an enhanced and sustainable growth of the Philippine cacao
industry;

{c) To improve the country's cacao seed system and production of quality planting
materials to ensure traceability and reliability of cacao plantations;


(d)To institutionalize adaptive sustainable land management system with the
participation of smallholders and private sector in nursery establishments and
commercial-scale plantations for inclusive agribusiness;

(e)To optimize local production capacity by providing improved and climate
resilient technologies for cacao production and modern technologies for
processing cacao beans and the application of sustainable agricultural
practices towards meeting world standards for competitiveness;

() To integrate and harmonize programs, projects, and activities of government
agencies and the private sector supportive of the short, medium, and long-term
agenda of the cacao industry;

(g) To encourage private sector investment in agribusiness through policy reforms
and advocacy, investment promotion, access to financing, and cost-effective
incentives;

(h)To promote Philippine cacao in the local market and in the international
market by providing the needed marketing support through a proactive
product and market development program that will position Philippine cacao
in the local and global markets;

(i) To uplift the welfare and increase the income opportunities of the country's
smallholder cacao farmers, producers, processors, and retailers, including their
dependent families, by improving their productive capacities and enhancing
production quality towards attaining inclusive growth;

(j) To provide technology upgrading and continuous innovation in the design,
manufacturing, and/or assembly of locally-produced farm equipment and
post-harvest tools for cacao production and processing to improve
productivity and efficiencies;

(k)To create a proactive and responsive national implementing office that will
review, approve, implement, monitor and evaluate cacao-related programs,
projects, and activities to ensure the focused development of the cacao industry
that is aligned with the Philippine Cacao Industry Roadmap and subsequent
program extension and cacao industry development plans;

(I) To strengthen research for development of the cacao industry; and

(m)To harness, strengthen, and enhance existing participatory mechanisms to

ensure full engagement and active participation of various stakeholders in the

development of the cacao industry.

SEC. 4. The Philippine Cacao Industry Development Program. - To ensure a
harmonized and collaborative implementation of policies, programs and projects for the
advancement, industry-wide development, and inclusive growth of the cacao industry
through a value chain approach, as well as increased and sustained yield and income;
improved farm productivity and quality; enhancement of farmers’ capabilities and skills;
and to achieve the objectives set forth in this Act, the Philippine Cacao Industry Roadmap
crafted in consultation with the cacao industry stakeholders including any updates
thereon, is hereby adopted.

‘The Philippine Cacao Industry Roadmap shall serve as a vital document to provide


direction to the cacao industry stakeholders for the optimal realization of the targets
towards a sustainable and globally competitive Philippine Cacao Industry that will
likewise contribute to attaining food security and poverty alleviation. The strategic
interventions, programs and other activities from the national down to the local levels
shall be anchored on the Roadmap. It shall be regularly reviewed and evaluated to
determine the accomplishment of its targets. It shall likewise be continually and regularly
updated in consultation with industry stakeholders to make it consistent with, and
adaptive to, the current industry situation.

SEC. 5 The Philippine Cacao Industry Council. - For a focused and harmonized
implementation of the Philippine Cacao Industry Roadmap and of the provisions of this
Act, and to catalyze, provide leadership, and proactively engage stakeholders in the
promotion and development of a champion cacao industry, there is hereby created a
Philippine Cacao Industry Council, otherwise known as the Council. The Council, which
shall be constituted within sixty (60) days from the approval of this Act, shall be attached
administratively to the Department of Agriculture (DA) and shall have the following
composition:

(a) Secretary of the Department of Agriculture (DA), as Chairman;

(b) Secretary of the Department of Trade and Industry (DTI), as Vice-Chairman;

(c) Secretary of the Department of Science and Technology (DOST), as member;

(d) Secretary of Department of the Interior and Local Government (DILG), as
member;

(e)Secretary of the Department of Agrarian Reform (DAR), as member;

(f) Secretary of the Department of Environment and Natural Resources (DENR), as
member;

(g) Secretary of the Department of Education (DepEd), as member;

(h) Commissioner of the Commission on Higher Education (CHED), as member;

(i) Director General of the Technical Education and Skills Development Authority
(TESDA), as member;

(j) Administrator of the Philippine Coconut Authority (PCA);

(k) Two (2) representatives from civil society organizations from Luzon;

(1) Two (2) representatives from civil society organizations from Visayas; and

(m) Two (2) representatives from civil society organizations from Mindanao.

The government sector representatives in the Council may appoint an official
alternate with a rank of an Undersecretary or its equivalent. The official alternate shall
possess the same powers as the Heads of the above-named government agencies and
whose acts shall be considered as acts of the heads of office being represented.

Representatives from the civil society organizations shall be appointed by the DA
Secretary from among the officers and members of existing regional cacao councils and
associations of cacao farmers and other private stakeholders of each island. They shall
be chosen based on the following minimum qualifications:


(a) Must be a resident and citizen of the Philippines;

(b) Must be an active member of a non-government cacao organization, association
or cooperative, or known and recognized in the cacao industry as an expert in
cacao;

{c) Must be engaged in cacao production, research and development, processing,
promotion, or in any activity in the cacao value chain from production to local
and/or international marketing; and

(d)Must be a person of integrity, respected by the industry, and willing to serve
with utmost responsibility and efficiency.

Representatives from the civil society organizations shall serve for a period of two
(2) years. When a vacancy arises due to the resignation, removal for cause, death or
incapacity of a member, a replacement shall be appointed who shall serve for the
remainder of the representative's term of office.

Government sector representatives shall not be entitled to compensation in the
discharge of their functions in the Council but they shall be entitled to reimbursement of
any reasonable expenses incurred in the performance of their functions. Private sector
representatives shall be entitled to honoraria or allowances for the expenses incurred in
the discharge of their functions as members of the Council.

SEC. 6. Powers and Functions. - The Council shall have the following general powers
and functions:

(a) Formulate, adopt and implement sustainable and industry-wide development
policies and programs to steer the growth of the cacao industry towards
increased production of fine quality Philippine cacao and its intensive
marketing and promotions for domestic and export markets;

(b) Through the Cacao Program Management Office, oversee the implementation
of the Philippine Cacao Industry Roadmap;

(c) Ensure the availability of adequate funding for the accomplishment of the
targets in the roadmap, and compliance with the declared policies and
attainment of the objectives of this Act;

(d) Formulate the criteria and guidelines for the establishment of Cacao Centers of
Excellence in major cacao producing regions or in areas suitable for cacao
production, and ensure the conduct of relevant research, scientific study and
feasible marketing strategies;

(e)In collaboration with the Information and Communications Technology
Services of the implementing agencies, establish, maintain and integrate a web-
based Cacao Production and Farmers Information System which shall be linked
to the Farmers and Fisherfolk Enterprise Development Information System
(FFEDIS) of the DA established pursuant to Section 10 of Republic Act (R.A.)
No. 11321 or the Sagip Saka Act and its Implementing Rules and Regulations.

(f) Ensure the establishment of cacao production and post-production/ value-
adding facilities; adoption and use of modern and advanced technologies for a



more profitable, efficient, safe, and environmentally friendly cacao production;

(g) Establish a system for the conduct of capacity building, education, and training
of cacao farmers and their organizations;

(h)Serve as the official platform/venue for convergence on policy-making and
operations relative to the cacao industry, and to call upon, coordinate and/or
collaborate with other agencies of the government, including bureaus, or
government-owned and -controlled corporation, local government units, other
concerned agencies, the private sector, and other stakeholders;

(i) Formulate policies and programs to promote agribusiness ventures on cacao
industry;

(j) Establish linkages and collaborate with national and international

organizations, development institutions and funding networks of the cacao industry;

(k) In coordination with the Agricultural Credit Policy Council and other credit
facilities and the Philippine Crop Insurance Corporation, formulate and recommend
policies and programs on easy access credit programs and provision of crop insurance
for the cacao industry stakeholders;

(1) Officially represent the industry in national and international cacao events and
fora;

(m) Serve as the sole authorized body in the conduct of major cacao events and
activities such as cacao congress, conference, cacao cupping/ sensory and other relevant
activities for the promotion of the cacao industry;

(n) Promote and pursue Philippine cacao branding such as denomination of origin,
Geographical Indications, etc.;

(0) Develop efficient and effective marketing and promotions systems of cacao for
domestic and export markets;

(p) Review, harmonize and update existing standards on cacao and direct or
recommend the crafting of additional standards, as necessary;

(q) Review existing and recommend new legislation to develop the cacao industry
and promote the welfare of cacao stakeholders;

(r) Formulate consultation mechanism to ensure that farmers, farm workers,
processors, and other stakeholders of the cacao industry may actively participate in
policy-making, strategic planning, implementation monitoring and feedback needs and
concerns of the cacao industry;

(s) Mobilize existing nationwide network of consultative mechanisms to ensure
participation of multi-stakeholders in policy development, strategic planning, and
monitoring and feedback in the implementation of the Philippine Cacao Industry
Development Program;

(t) Conduct an annual review and assessment of the implementation of the
Roadmap in coordination with the

(u) Philippine Council for Agriculture and Fisheries (PCAF) and other relevant
stakeholders to determine the accomplishment of the cacao industry as provided in the
Roadmap, and to identify the gaps, issues and challenges in its implementation; and

(v) Perform other functions and duties as may be necessary.

SEC. 7. Meetings. The Council shall regularly meet at least once every quarter, or


as often as the Chairperson deems necessary. The presence of the majority of all the
members of the Council shall constitute a quorum. The use of digital technology in the
conduct of meetings and approval of Council Resolutions shall be allowed, subject to such
security measures as the Council shall implement.

SEC. 8. Cacao Program Management Office. - To manage, oversee and ensure the
implementation of the Philippine Cacao Industry Roadmap, the Cacao Program
Management Office (Cacao PMO) is hereby created. It shall be headed by an Executive
Director to be designated by the Chairperson of the Council and shall be under the
supervision of the DA Undersecretary in charge of High Value Crops.

The Executive Director shall identify the personnel of the Cacao PMO, subject to
the approval of the Secretary of DA. The salaries and positions of the personnel of the
Cacao PMO shall be based on the Revised Compensation and Position Classification
System and other civil service rules and regulations.

SEC. 9. Functions of the Cacao Program Management Office. - The Cacao PMO shall
manage and ensure the implementation of the Philippine Cacao Industry Roadmap and
shall identify and recommend to the Council the strategic programs, projects, and
interventions to be prioritized for implementation. It shall further:

(a)Provide support services for the coordination and monitoring of the
implementation of the programs, policies and plans formulated pursuant to
this Act;

(b) Ensure that the roadmaps and other programs are implemented and targets
accomplished;

(c) Establish a monitoring and evaluation system by which the Cacao Development
Programs shall be evaluated;

(d) Execute policy decision of the Council;

(e) Prepare quarterly report on the implementation of the roadmap to be

submitted to the Council;

(f) Prepare annual work plan and operating budget of the Council and the Cacao

PMO for approval of the Council;

{g) Recommend policies and procedures for Council approval;

(h) Function as the Secretariat of the Council and provide general administrative

and technical support;

(i) Coordinate with the appropriate government agency and private institutions in

the establishment of an accurate cacao industry data; and

(i) Perform other related functions as may be assigned by the Council.

SEC. 10. Regional Cacao Councils (RCC). - For an effective and efficient
implementation of the provisions of this Act, the Council shall create Regional Cacao
Councils in cacao-producing regions which shall be composed of the following:

(a) Regional Director of DA, as Chairman;


(b) Regional Director of DTI, as Vice-Chairman;

(c) Regional Director of DOST, as member;

(d) Regional Director of the DILG, as member;

(e) Three (3) representatives from civil society organizations of the cacao industry
in the region, who shall be chosen by the government representatives of the RCC from a
list of at least three (3) nominees from the Regional Agriculture and Fisheries Council.
They shall have the same term and qualifications as the government representatives in
the Council.

The functions of the RCC shall include but not limited to the following:

(a) Localization and implementation of the Philippine Cacao Industry Roadmap,
including any revisions and updates thereof in the region;

(b) Coordinate and collaborate with partner agencies in the region and with the
local government units;

(c) Monitor and assess the implementation of the roadmap in their respective
region;

(d) Prepare the Annual Work and Financial Plan of the RCC;

(e) Regularly submit a report to the Council on the status of the implementation of
the roadmap to include the issues and challenges encountered;

(f) Upon consultation with the cacao industry stakeholders, make policy
recommendations that will enhance existing practices;

(g) Assist in the conduct of survey, profiling, review, and evaluation of
information/data for the regional cacao industry database; and

(h) Perform such other necessary functions that may be assigned by the Council.

The RCC shall be assisted by a support staff to be determined and approved by the
RCC.

SEC. 11. Establishment of Cacao Centers of Excellence (Centers). - For the enhanced
development of the Philippine Cacao Industry, the DA shall establish and maintain Cacao
Centers of Excellence in major cacao-producing regions and in areas suitable for cacao
production. The establishment and operations of the Center shall be subject to such
criteria and guidelines as may be formulated by the Council. In coordination and
collaboration with the DOST and the Food and Drug Administration (FDA), relevant
government agencies and State Universities and Colleges, the Centers shall function as
follows:

(a) Organize systematic programs to improve cacao production including the
development of effective production and post-production systems to produce fine cacao;

(b) Serve as cacao farmer resource center for cacao production from farm to
market and from bean to bar, to include best practices aligned with the world standards
in the cacao value and supply chains;

(c) Serve as product development hub for value-added cacao and cacao by-
products as results of continuous research and development;

{d) Serve as the central site for networking and training;


(e) Develop capacity building programs and initiatives for cacao farmers and other
stakeholders in the cacao value chain;

(f) Assess, establish, and conduct collaborative research on emerging technology
‘on cacao;

(g) Establish and maintain cacao bean grading laboratory to improve and maintain
cacao quality;

(h) Develop pool of experts of certified cacao graders and promote culture of cacao
bean profiling and grading using the globally accepted standards and protocols with the
following core implementing functions: cacao research and development, technology
transfer and capacity building, socio-economics evaluation, and policy research;

(i) Develop new clonal varieties which are high yielding, good quality, and pest and
disease-resistant cacao varieties which can be easily mass propagated.

(j) Provide technical assistance on nursery establishment, planting systems and
rehabilitation of farms;

(k) Develop efficient, sustainable, productive, modern and advanced post-harvest
and processing technologies for cacao beans;

(I) Establish and conduct collaborative research and other scientific studies;

(m) Partner with accredited training centers and implement cacao farming schools
as the major channels for technology transfer;

(n) Develop and implement programs on capacity-building activities for cacao
farmers and other stakeholders in the cacao value chain;

(0) Establish and maintain a germplasm collection and gene bank for cacao; and

(p) Perform other functions as may be necessary.

The Council shall prioritize the establishment of Centers in existing facilities of the
DA, DTI, and of State Universities and Colleges. It may likewise collaborate and partner
with the private sector in the establishment of Centers.

SEC. 12. Whole of Government Approach. - To further strengthen the convergence
and the consultative and collaborative mechanism particularly in the regions, all
departments, agencies, and instrumentalities of government, including government-
owned or -controlled corporations (GOCCs), shall give their support, perform their
functions and deliver the required services under this Act in accordance with their
respective mandates as provided in their charters and under existing laws, provide
assistance and cooperation to the Council in discharging its functions and more
importantly, in implementing the Philippine Cacao Industry Roadmap, to include but not
limited to the following:

(a) National Economic Development Authority (NEDA);
(b) Food and Drug Administration (FDA)

(c) State Universities and Colleges;

(d) Philippine Statistics Authority (PSA);

(e) Government financing institutions;

(f) Other agencies or institutions as may be deemed necessary.


The Council shall ensure that an effective platform is established for the active
participation of all stakeholders in the cacao industry for consultative and continuing
discussions affecting the cacao industry from the national level to the regional, provincial,
and municipal levels.

SEC. 13. The Role of Local Government Units (LGUs). - Recognizing the role,
participation and support of the LGUs in the delivery and implementation of agricultural
projects and programs, the Council and the RCC shall coordinate and establish
partnerships with the LGUs for the implementation of this Act. (NOTE: TWG agreed to
include data collection, monitoring and geo-tagging and submission of reports to the
Council - DA and DTI to submit additional inputs on who will conduct data gathering)

The LGUs with areas suitable for cacao production are mandated to align their
cacao production projects with the Roadmap. They are likewise mandated to provide
counterpart funding and services to boost the production of cacao in their jurisdiction.

SEC. 14. Local Chocolate Shops. - All shops serving cocoa or chocolate drink,
including local and foreign franchises, restaurants and hotels are encouraged to serve
and include in their menus cacao/chocolate that are grown, produced, sourced and
manufactured locally.

For purposes of this Section, the DTI, shall conduct a separate consultation with
relevant stakeholders, including cacao shop owners and franchisees, for the formulation
of the guidelines to implement this section. The guidelines shall be incorporated in the
Implementing Rules and Regulations of this Act.

The DTI shall be the lead agency in the implementation of this Section.

SEC. 15. Tax Incentives. - Any donation, contribution, grant, in cash or in kind,
whether local or foreign, which may be made by individuals and organizations, including
private entities, which shall provide the appropriate services, technology, facilities,
materials and other inputs, and delivery support services for the promotion and
development of the Philippine cacao industry, shall be exempt from the donor's tax and
the cost of which shall be considered as an allowable deduction from the gross income of
the donor in accordance with the provisions of the National Internal Revenue Code of
1997, as amended.

SEC. 16. Review of the Roadmap. - The Council, in coordination with the Philippine
Council for Agriculture and Fisheries (PCAF) and other relevant stakeholders, shall
update the Philippine Cacao Industry Roadmap every five (5) years, or sooner as may be
deemed necessary.

SEC. 17. Mandatory Review and Impact Assessment. - The Council, in partnership
with the PCAF and other concerned government agencies, the private sector and other
stakeholders, shall conduct a mandatory review of the implementation of this Act, and


submit such report to Congress to assess its impact and measure its effectiveness. The
mandatory review and impact assessment shall be conducted not later than five (5) years
from the effectivity of this Act, and every five (5) years thereafter.

SEC. 18. Appropriation. - The funds necessary to carry out the initial
implementation of this Act shall be charged against the respective budget of concerned
agencies for the current year. Thereafter, such sums as may be necessary for the
continued implementation of this Act shall be included in the annual General
Appropriations Act.

SEC. 19. Implementing Rules and Regulations. - Within one hundred twenty (120)
days from the effectivity of this Act, the Secretary of the DA, in collaboration with the DTI,
DOST, DILG, ULAP, and CHED, and in consultation the DAR, DENR, PCA, FDA, cacao
farmers’ organization and association, and other relevant stakeholders shall promulgate
and issue the necessary implementing rules and regulations for the effective
implementation of this Act. The implementing rules and regulations issued pursuant to
this Section shall take effect fifteen (15) days after its publication in the Official Gazette
or in a newspaper of general circulation.

SEC. 20. Separability Clause. - If any provision of this Act is declared invalid or
unconstitutional, the other provisions not affected by such declaration shall remain in
full force and effect.

SEC. 21. Repealing Clause. - All laws, executive orders, administrative orders, and
rules and regulations inconsistent with this act are hereby repealed or amended
accordingly.

Nothing in this Act shall amend, modify or repeal the provisions of Republic Act
7900, otherwise known as High-Value Crops Development Act of 1995.

SEC 22. Effectivity Clause. - This Act shall take effect fifteen (15) days after the
completion of its publication in the Official Gazette or in two (2) newspapers of general
circulation.

Approved,