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Republic of the Phitippines
HOUSE OF REPRESENTATIVES
Quezon City

NINETEENTH CONGRESS
First Regular Session

House Bill No. 21z

Introduced by Representatives
MIKAELA ANGELA B. SUANSING and HORACIO P. SUANSING, JR.

AN ACT
AMENDING SECTION 13 OF REPUBLIC ACT NO. 11203, OTHERWISE KNOWN
AS AN ACT LIBERALIZING THE IMPORTATION, EXPORTATION AND
TRADING OF RICE, LIFTING FOR THE PURPOSE THE QUANTITATIVE
IMPORT RESTRICTION ON RICE, AND FOR OTHER PURPOSES

EXPLANATORY NOTE

‘The Rice Competitiveness Enhancement Fund (commonly known as “RCEF”, referred to in
RA 11203 as “Rice Fund”) was designed to reduce palay production costs by 30%, to increase
yield by 50% and to double farmer incomes in 6 years to boost Filipino farmers”
competitiveness amidst the liberalization of the Philippines’ rice trade in 2019. To this end.
RCEF has been receiving an annual appropriation of PhP 10 billion, which is allocated across
four (4) component programs (mechanization, seeds, training and credit) and is jointly
implemented by eight (8) agencies led by the Department of Agriculture.

However, there have been reports that, despite RCEF’s implementation, farmers’ yields have
not improved, production costs have not declined, while farmgate prices of domestically
produced palay have remained low. Moreover, the findings of a study by Suansing, M. (2021)
substantiate these issues. Suansing found that, on average, the cost savings and yield changes
realized by farmers from RCEF’s Mechanization Program and Seed Program are not sufficient
to offset the decrease in their gross incomes due to two factors: decrease in palay prices and
decrease in yield. On average, the decline in gross income reported by RCEF beneficiaries
between the two dry seasons was 2.1 times the average cost savings they derived from the
combined effect of RCEF’s Mechanization Program and Seed Program (PhP -3,827/ha vs. PhP

Note: This amendments proposed in this bill are primarily based on Rep. Mikaela Suansing's Masters Thesis
entitled “Improving the Implementation of the Philippine Government's Rice Competitiveness Enhancement Fund
(RCEF)", April 2021, Harvard University

' Montemayor, R. (2021, February 23). Rice tariffeation: 4 litany of broken promises. Retrieved from
Intips:/Pousiness inquirer ne’ 18323/rce-tamification-a-ltany-of-broken-promises,_Miraflor, M.B. (2020, August 11). Rice farmers
disappointed RCEF failed to lower costs. Retieved from bitps:/mb.com ph/2020/08/1Vrice-farmers-disappointed-rcel

‘costs! Offenco, RE. (2020, February 13). One year after rice tariffication: Farmers hurting, angry at new ta
Intps:/Tbusinessmitror com. ph/2020/02/13/one-year-after-rce-arification-farmers-hurting-angry-atnew-law/



1,789/ha). Similarly, the average loss they reported between the two wet seasons was 2.6 times
their average RCEF-derived cost savings (PhP -4,690/ha vs. PhP 1,789/ha). This
the cost savings from these two RCEF component programs thus far were not enough to offset
farmers’ losses.

In recognition of the fact that the livelihood of Filipino rice farmers and the long-term
sustainability of the Philippine rice sector depend on RCEF’s success, this bill seeks to amend
Section 13 of RA 11203, also known as the Rice Tariffication Law (RTL), in order to maximize
RCEF’s efficacy in improving the productivity and incomes of Filipino rice farmers. Five key
amendments are sought:

Key Amendment 1: Institute RCEF as a program that would receive annual appropriations to

perpetuity; that is, RCEF will not only be a 6-year program as currently provided in the RTL
The government should continually provide support to our farmers to ensure the
sustainability and competitiveness of the Philippine rice sector, as well as ensure food
security. While the amount appropriated to the Rice Fund and/or the amounts allocated
to each individual RCEF component program can be changed, the Rice Fund itself’
should be instituted and its receipt of annual appropriations should be guaranteed to

perpetuity.

Key Amendment 2: Increase the annual appropriation for RCEF from the current PhP 10

billion to PhP 15 billion
The additional PhP 5 billion will be sourced annually from the tariff revenues from rice
importation. Based on the data shared by the Bureau of Customs, tariff revenues for
both FY 2020 and 2021 have exceeded PhP 15 billion (i.e. PhP 15.5 billion in 2020.
PhP 18.9 billion in 2021). Tariff revenues in FY 2022 are also expected to surpass PhP
15 billion as PhP 8.4 billion have already been collected as of May 2022. The current
trend in tariff revenues indicate that the proposed PhP 5 billion increase in the annual
appropriation for RCEF can be sustained.

Key Amendment 3: Institute an annual allocation of PhP 5 billion from RCEF towards

providing subsidies for other essential farm inputs, such as fertilizers and other chemicals
Between May 2021 and May 2022, the price of fertilizer has more than doubled. Data
from the Fertilizer and Pesticide Authority showed that the price of granular urea
increased from PhP 1,115.52/bag to PhP 3,002.17/bag while complete fertilizer
increased from PhP 1,094.48/bag to PhP 2,212.15/bag. Based on a survey of rice
farmers (with irrigated farms) in Nueva Ecija, expenditure on fertilizers comprises 39%
of their total expense throughout the cropping season while expenditure on other
chemicals comprises 8%. This shows that subsidies for these other essential farm inputs
are much needed, as low usage of fertilizers has already reduced the country’s palay
yield in the first semester of 2022 by about 6.8%.

* CNN Philippines Staff. (2022, June 24). Outgoing DA chief, Marcas must realign funds for fertilizer subsidy amid food criss. Retrieved
from —tps:/www.canphilippines.con/news/2022/6/24/Outgoing-DA-chief-Marcos-must-realign-funds-for-fetlizersubsidy-amidfood-
crisis hum


While the Department of Agriculture has provided fertilizer subsidies in the past, it has
been on an ad hoc basis. That is, subsidies have been provided during some cropping
seasons but not others, and amounts allocated towards subsidies have varied greatly
depending on fund availability. Thus, this bill seeks to institute the provision of
fertilizer subsidies to rice farmers as an annual program, with a guaranteed PhP 5 billion
allocation from the Rice Fund.

Key Amendment 4: Increase the annual allocation for Rice Farm Machineries and Equipment
from the current PhP 5 billion to PhP 5.5 billion; Decrease the annual allocation for Expanded
Rice Credit Assistance from the current PhP 1 billion to PhP 500 million
Findings of a study by Suansing, M. (2021) indicate that ERCA-RCEF (credit) may
have a very low coverage rate. Between 2019 and January 2021, only 0.1% of the
farmers in scope for the study have availed of credit. This implies that the PhP 1 billion
currently allocated for ERCA-RCEF may be underutilized.

Taking this into account, this bill proposes to reallocate PhP 500 million from the Credit
Program towards the Mechanization Program. Funding in the Mechanization Program
much needed as itis still far from its goal of providing farmers who avail all prescribed
farm technologies an extra income of PhP 5,000/ha. Suansing, M. (2021) found that,
on average, Mechanization Program beneficiaries have only realized cost savings of
PhP 814/ha. PHiIMech would need to provide farmers cooperatives and associations
(FCA) with a more complete set of machineries (ie. for more stages of palay
production, particularly harvest and post-harvest technologies) in order to realize the
large cost savings RCEF aims to effect —and this endeavor requires substantial funding,

Key Amendment 5: Enhance the reporting, monitoring and coordination mechanisms between

the Congressional Oversight Committee on Agricultural and Fisheries Modernization

(COCAFM) and the RCEF implementing agencies
Suansing, M. (2021) found that convergence and synergies across RCEF’s component
programs have not been achieved thus far (e.g. the targeting of beneficiaries is not yet
harmonized across component programs, no unified metrics), and this has undermined
the efficacy of RCEF as a whole. There have also been substantial delays in program
implementation, particularly in the Mechanization Program and in the Rice Extension
Services Program (training).?

While the RTL currently provides for a mandatory review of RCEF to be conducted by
COCAFM at the end of the 6" year of the RTL and also provides for “a periodic
review”, this bill proposes for the establishment of more regular reporting and review
channels to facilitate coordination and feedback. It proposes the conduct of a yearly
review of the amounts allocated towards the different RCEF component programs, that

° Miraflor, M.B. (2020, July 27). DA yet to obligate, disburse 6596 of RCEF Jor this year Retrieved from https:/mb com ph/2020107/27/da-
yerto-obligate-disburse-65-of ceffor-this-year!


government agencies involved in the management and implementation of the Rice Fund
shall submit annual reports to the COCAFM, and that COCAFM shall conduct an
annual review of the use of the Rice Fund.

The goals of RCEF need to be achieved because the livelihood of Filipino rice farmers and the
long-term sustainability of the Philippine rice sector depend on RCEF’s success. The urgency
of the situation becomes more pronounced against the backdrop of the country’s decreasing
tice self-sufficiency rate (95% in 2017 vs. 79.8% in 2019). In view of the foregoing, the

immediate approval of this bill is earnestly sought.

HORACIO P. SUANSING, JR.
2™ District of Sultan Kudarat



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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

NINETEENTH CONGRESS

Introduced by Representatives
ING and HORACIO P. SUA

SING, JR.

AN ACT
AMENDING SECTION 13 OF REPUBLIC ACT NO. 11203, OTHERWISE KNOWN
AS AN ACT LIBERALIZING THE IMPORTATION, EXPORTATION AND
TRADING OF RICE, LIFTING FOR THE PURPOSE THE QUANTITATIVE
IMPORT RESTRICTION ON RICE, AND FOR OTHER PURPOSES

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

SECTION 1. Section 13 of Republic Act No. 11203 is hereby amended to read as follows:

“SEC. 13. Rice Competitiveness Enhancement Fund. ~ There is hereby created
a Rice Competitiveness Enhancement Fund, herein referred to as the “Rice
Fund”. The Rice Fund shall consist of an annual appropriation of [Ten billion
pesos (P10,000,000,000.00)] FIFTEEN BILLION —_— PESOS
(P15,000,000,000.00) [for the next six (6) years] following the approval of this
Act and shall be automatically credited to a Special Account in the General
Fund of the National Treasury which shall be in place within ninety (90)° days
upon the effectivity of this Act.

[“At the end of the sixth (6th) year, a mandatory review shall be conducted by
the Congressional Oversight Committee on Agricultural and Fisheries
Modernization (COCAFM) to determine whether the Rice Fund and its use as
provided for under this Act shall be continued, amended, or terminated. The
COCAFM shall utilize the increase or decrease in farmers’ incomes as a primary
benchmark in determining the effectiveness of the interventions under the
program and its possible extension.

XXX

XXX

XXX


“Subject to the usual accounting and auditing rules and regulations, the Rice
Fund shall be allocated and disbursed to rice producing areas, as follows:

“(a) Rice Farm Machineries and Equipment ~ [Fifty percent (50%)]
FIVE BILLION FIVE HUNDRED MILLION PESOS
(P5,500,000,000.00) of the Rice Fund shall be released to and
implemented by the Philippine Center for Postharvest Development and
Mechanization (PHiIMech) as grant in kind to cligible farmers
associations, registered rice cooperatives and local government units
(LGUs), in the form of rice farm equipment, such as tillers, tractors,
seeders, threshers, rice planters, harvesters, irrigation pumps, small solar
irrigation, reapers, driers, millers, and the like, for purposes of
improving farm mechanization: Provided, That the PHilMech shall,
whenever feasible, procure from accredited local manufacturers to assist
in the promotion of locally manufactured farm machineries and
equipment;

“(B) SUBSIDIES FOR OTHER ESSENTIAL FARM INPUTS —
FIVE BILLION PESOS (P5,000,000,000.00) OF THE RICE FUND
SHALL BE RELEASED TO AND IMPLEMENTED BY THE
DEPARTMENT OF AGRICULTURE (DA) TO PROVIDE
BENEFICIARIES OF THE RICE FUND WITH SUBSIDIES FOR
OTHER ESSENTIAL FARM INPUTS, SUCH AS FERTILIZERS
AND OTHER CHEMICALS;

“[(6)] (©) Rice Seed Development, Propagation and Promotion —
[Thirty percent (30%)| THREE BILLION PESOS
(P3,000,000,000.00) of the Rice Fund shall be released to and
implemented by the Philippine Rice Research Institute (PhilRice) and
shall be used for the development, propagation and promotion of inbred
rice seeds to rice farmers and the organization of rice farmers into seed
growers associations and/or cooperatives engaged in seed production
and trade;

“[()] (D) Expanded Rice Credit Assistance ~ [Ten percent (10%)]
FIVE HUNDRED MILLION PESOS (P500,000,000.00) of the Rice
Fund shall be made available in the form of credit facility with minimal
interest rate-s and with minimum collateral requirements to rice farmers
and cooperatives, to be managed equally by the Land Bank of the
Philippines (LBP) and the Development Bank of the Philippines (DBP);
and

“{(@] (B) Rice Extension Services ~ [Ten percent (10%)] ONE
BILLION PESOS (P'1,000,000,000.00) of the Rice Fund shall be made
available for the extension services provided by PHilMech, PhilRice,
Agricultural Training Institute (ATI) and Technical Education and
Skills Development Authority (TESDA) for teaching skills on rice crop
production, modern rice farming techniques, seed production, farm
mechanization, and knowledge/technology transfer through farm


N

evauaw

SEC. 3. Repealing Clause.

schools nationwide as follows: seventy percent (70%) to TESDA, ten
percent (10%) each to ATI, PhilRice and PHilMech.

“Provided, That the [percentage allocation] AMOUNTS ALLOCATED will
be reviewed BY THE CONGRESSIONAL OVERSIGHT COMMITTEE
ON AGRICULTURAL AND FISHERIES MODERNIZATION
(COCAFM) on the third year of the effectivity of this Act, AND EVERY
YEAR THEREAFTER, for possible revisions should intervention priorities
change.

XXX

“Provided, furthermore, That if the annual tariff revenues from rice importation
exceeds [Ten billion pesos (P10,000,000,000.00)] FIFTEEN BILLION
PESOS (P15,000,000,000.00) in any given year [within the six (6) year period]
following the effectivity of this Act, the excess tariff revenues shall be
earmarked by Congress and included in the General Appropriations Act (GAA)
of the following year:

“(a) XXX
“(b)XXX
“(XXX
“@) XXX

“THE DEPARTMENT OF FINANCE, THE BUREAU OF CUSTOMS
AND THE DEPARTMENT OF BUDGET AND MANAGEMENT SHALL
SUBMIT TO THE CONGRESSIONAL OVERSIGHT COMMITTEE ON
AGRICULTURAL AND FISHERIES MODERNIZATION (COCAFM)
AN ANNUAL REPORT ON THE TARIFFS COLLECTED FROM RICE
IMPORTS AND THE AMOUNT APPROPRIATED TO THE RICE
FUND.

“THE DA, PHILMECH, PHILRICE, LBP, DBP, TESDA, AND ATI
SHALL SUBMIT TO THE COCAFM AN ANNUAL REPORT ON THE
USE OF THE RICE FUND.

“The COCAPM shall conduct [a periodic] AN ANNUAL review of the use of
the Rice Fund. THE COCAFM SHALL UTILIZE THE INCREASE OR
DECREASE IN FARMERS’ INCOMES AS A PRIMARY BENCHMARK
IN DETERMINING THE EFFECTIVENESS OF THE
INTERVENTIONS UNDER THE RICE FUND.”

SEC. 2. Separability Clause. — If any portion of this Act is declared invalid or unconstitutional,
the portions or provisions which are not affected shall continue to be in full force and effect.

3

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


SEC. 4, Effectivity. — This Act shall take effect fifteen (15) days from its publication in the
Official Gazeue or in a newspaper of general circulation.

Approved,