Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. 6761

Introduced by Representative GERALDINE B. ROMAN

EXPLANATORY NOTE

We are an agricultural country with a population of over 100 million of which about 10
million ~ or 24% of the total national employment ~- are rice farmers,' Sadly, over 34% of our
rice farmers are poor.’ They struggle to make “less than P200 a day.”” Among them are Miguel
Ferrer from Pangasinan province who earns only P183.96 a day* and Ignacio Ortiz. from Nueva
Ecija province who tearfully laments, “It's painful for a farmer, to plant the seeds to feed
‘everyone then have nothing to eat.”* Low income prevents our rice farmers from supporting their
families, accessing and paying farm loans, and growing rice production. It has dampened interest.
in farming, forcing rice farmers and their children to seek other employment and sell their
farmlands to industrialists, threatening our rice industry and food security.° This is not
acceptable, To add to the problem, poverty makes our rice farmers particularly vulnerable to the
economic hardships imposed by the Covid-19 pandemic.

Our rice farmers suffer from low income due to (1) the low farmgate price of unhusked
rice and (2) the high cost of rice production. The low farmgate price of unhusked rice is due to
increased competition from cheaper rice imports resulting from the implementation of the Rice
Tariffication Law (RTL) enacted to liberalize rice imports to fill the local rice shortage. Since
taking effect in March 2019, the RTL has cost our rice farmers anywhere from P68 to 95 billion.”
It is also due to the fact that our rice farmers lack direct market access and, as such, are “price
takers.”* Our rice farmers sell (a) mainly to middlemen who are known to short supply and

" See Dejaresco, Z. (2019, September 12). The tragedy of the Filipino rice farmers. BusinessMirror.

‘nps:/businessmirror.com.ph/2019/09/12/the-tragedy-of-the-filipino-rice-farmers/; Fenol, J. (2019, October 14). In
the Philippines’ rice granary, farmers endure falling grain prices. ABS-CBN News.  hitps:/inews.abs-
cbn.com/business/10/14/19/in-philippines-rice-granary-farmers-endure-falling-grain-prices
* ‘See Ondinario, C. (2017, July 2). PSA: Farmers, fishermen remain poorest in PHL. BusinessMirror.
bttps:/businessmirror.com,ph/2017/07/02/psa-farmers-fishermen-remain-poorest-in-phU/

Katigbak, T. (2019, September 17). The plight of Filipino rice farmers. The Philippine Star.
btps://www philstar.com/opinion/2019/09/17/1952474iplight-filipino-rice-farmers
* See Velasco, B. (2019, October 22). What you can do to help Filipino rice farmers. Rappler.
!ntps:/www:rappler-com/move-ph/239348-what-people-an-do-help-ice-frmersphilippines

* Fenol, J. (2019, October 14). In the Philippines’ rice granary, farmers endure falling grain prices. ABS-CBN News.
hiips://news.abs-cbn.comVbusiness/10/14/19/in-philippines-rice-granary-farmers-endure-falling-grain-prices
© See Limos, M. (2019, September 5). A Kilo of Unhusked Rice Costs P7 And It's Starving Our Farmers. Esquire.
bitps:/www esquiremag,phipolitics/news/rice-law-starving-farmers-a00293-20190905
7 See Simeon, L. (2020, February 22). Farmers lose P68 billion from rice tariffication law. The Philippine Star.
‘ntip:/wwwphilstar.com/business/2020/02/22/1995025/farmers-Iose-p68-bllion-rce-tarification-law; | Madarang,
C. (2019, September 5). Why rice farmers are erying for help after the Rice Tariffication Law. Interaksyon.
bups://wwe.iteraksyon.cony/politis-ssues/2019/09/05/154489/farmers-ricetarification-aw-effects!

* Librero, A., & Tidon, A. (1996). Marketing of Agricultural Commodities by Producer Groups in the Philippines.
International Development Research Centre» (Research paper). _ihtpsi/id-bne~
dre dspacedirect.org/bitstreamVhandle/ 10625/22022/1 13022.pd?sequence=



increasingly buy imported rice or directly import rice to avoid incurring overhead for processing
and distributing rice to retailers, and (b) the National Food Authority (NFA) which, for lack of
resources, is unable to fulfill its legal mandate to buy rice from our rice farmers at reasonable
prices. The high cost of rice production is attributable to notable increases in prices of fertilizers,
which are imported, and the high price of diese! needed for farm irrigation systems.

To solve the problem, this bill seeks to (1) require cooperation among competing farmer
associations and cooperatives — or “coopetition” - through place-based clustering and (2)
establish a multi-purpose, fully equipped hub per cluster (“coopetition hub”). At present, the
government extends farming assistance (machinery, equipment, seeds, training, and loans)
through competing farmer organizations, but farmlands are underutilized because not every
farmer organization receives government farming assistance. Placed-based clustering of farmer
‘organizations to mainly serve as the exclusive conduit of government farming assistance and to
take advantage of synergies in the sourcing and sharing of farming resources would result in
wider dispersal of farming resources, increased utilization of farmlands, increased rice
production, reduced dependence on rice imports, and, ultimately, food security (presently
threatened by the Covid-19 pandemic). In that regard, Secretary of Agriculture William Dar
agrees farmlands should be “consolidated to bring about economies of scale, particularly for
crops that require mechanization and massive use of technology.”” We also need to establish
coopetition hubs, so farmers will have the means and venue to process rice, sell directly to the
market, and command reasonable prices for their produce. Secretary Dar, in that regard, agrees
farmer organizations should “undertake marketing functions ... to minimize inefficiencies in the
marketing system and to enable farmers to avail themselves of better returns to their produce.”"”
However, to have the opportunity to test, address and mitigate any risks that may arise during
implementation, and refine the proposed solution before expanding it elsewhere, this bill
proposes piloting it in the First District of Bataan.

The experience of other countries augurs well for this project. In Thailand and Korea,
farmers “control the planting, processing and marketing of their own produce,” “have bonded
into big cooperatives and thus are not at the mercy of middlemen, traders and millers.”'!
‘Vietnam has rice farm estates where a central management group orchestrates the production and
post-harvest and marketing activities of farmers who have farm lots within the estate.'? In
Taiwan, state-led “coopetition” in the agricultural sector have benefitted farmers and their
communities." In Israel, two unique forms of agricultural settlements, the kibbutz (where the
means of production are communally owned) and the moshav (where purchasing and marketing
are done cooperatively), have also worked.

Immediate passage of this bill is earnestly sought.

° Rivas, R. (2019, August 6). William Dar aims to quadruple agri growth, double farmers’ income. Rappler.
haitps://www rappler.com/business/237174-william-dar-aims-agriculture-growth-double-income-farmers
"° Librero, A., & Tidon, A. (1996). Marketing of Agricultural Commodities by Producer Groups in the Philippines.
International Development Research Centre [Research paper). —_=ttps//id-bne-
idre-dspacedirect.org/bitstreanvVhandle/10625/22022/1 13022.pdf?sequence=1
Senate of the Philippines (2008, October 28). Zubiri: Take out the middlemen in the rice industry [Press release].
hitps:/www. senate. gov.ph/press_release/2008/1028_zubiril.asp
'? De Padua, D. (1998, June). Rice post-harvest e-mail conference draft summary - V.1.2. Food and Agriculture
reanizaton (Reseach paper. htp:/www a0 or/3/xS427e/%5427e02.htmiTopOfPage

Chien, H. (2016, February 12). Role of the Public Sector in Agricultural Coopetition: Place-based Marketing in
Pos-WIO Rural Taiwan. Journal of +-Management and Strategy [Research paper].
hitps://doi.org/10.5430/jms.v7n1 p65



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

House Bilt No, 6761.

————

Introduced by Representative GERALDINE B. ROMAN

AN ACT
PROMOTING FARMER COOPETITION,
MANDATING THE ESTABLISHMENT OF FARMER COOPETITION HUBS,
ADOPTING THE FIRST DISTRICT OF BATAAN AS PILOT SITE, AND
APPROPRIATING FUNDS THEREFOR

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

SECTION 1. Short Title. — This Act shall be known as the “Bataan Farmer Coopetition Act.”

SEC. 2. Declaration of Policy. — It is the declared policy of the State to promote social justice,
ie., protect and enhance the right of people, including local rice farmers, to human dignity,
reduce social, economic, and political inequalities, and recognize the indispensable role of the
agricultural sector for national growth and development. It is also the declared policy of the State
to support local rice farmers through appropriate technology and research, and adequate
financial, production, marketing, and other support services; promote cooperation between and
among competing farmer associations and cooperatives; and regulate or prohibit monopolies in
the rice industry.

SEC. 3. Definition of Terms. — As used in this Act, the following terms shall mean:

a) “Cooperative” shall refer to a cooperative defined and established in the Philippine
Cooperative Code (PCC), R.A. 9520, and its implementing rules and regulations (IRR).

b) “Farmer associations and cooperatives” shall refer to organizations of farmers who own
and/or till farmlands.

©) “Farmer Coopetition” shall refer to cooperation between and among competing farmer
associations and cooperatives.

4) “Farmer Coopetition Hubs” shall refer to centers established for and awarded to clusters
of farmer associations and cooperatives, providing the means and venue for (1) sourcing
and sharing of farming resources (machinery, equipment, loans, farmer training, seeds,
fertilizers, pesticides, and diesel) from the government and private suppliers, (2) the
processing (drying and milling) and storage of rice, (3) the manufacture of rice products,
(4) the direct marketing and sale of rice and derivative products to retailers and
consumers, and (5) other identified cooperative activities.


e) “Federation” shall refer to a federation defined and established in the PCC but whose
formation and attributes are as defined in this Act. Other provisions of the PCC not
inconsistent with this Act shall apply to federations as defined herein.

f) “Government Farming Assistance” shall mean machinery, equipment, seeds, training,
subsidies, agricultural loans, and such other benefits or grants extended to rice farmers
under existing and future programs.

SEC. 4. Clustering of Farmer Associations and Cooperatives. — Farmer associations and
‘cooperatives in the First District of Bataan shall be clustered to form federations, which shall be
registered as cooperatives under the PCC. The Department of Agriculture shall determine the
appropriate number of clusters based on the number and locations of farmlands owned and/or
tilled by members of farmer associations and cooperatives, ensuring geographical proximity
between each farmland and the Farmer Coopetition Hub established under Section 5

The federation shall be exempt from the following requirements under the PCC, other
cooperatives laws and regulations or otherwise:

1) bonding;

2) registration fee;

3) feasibility study; and

4) such other requirements waived by the IRR.

SEC. 5. Establishment of Farmer Coopetition Hubs. — There shall be established in the First
District of Bataan one or more Farmer Coopetition Hubs. The Department of Agriculture shall
determine the appropriate number and sites for the Farmer Coopetition Hubs.

Each Farmer Coopetition Hub shall be managed by the federation formed under Section
4, Notwithstanding the provisions of the PCC, the IRR for this Act shall provide for a simplified
registration process for the federation in accordance with the provisions and spirit of this Act.

SEC. 6. Powers, Capacities, and Privileges of Federation. — A federation formed under
Section 4 shall have the following powers, capacities, and privileges:

a) It shall have the powers and privileges of both a cooperative and federation under the
PCC.

b) Itshall be the exclusive conduit of government farming assistance.

©) Alll sales, services, or transactions of a federation shall not be subject to any taxes and
fees imposed under the internal revenue laws and other tax laws, including income
taxes, VAT, percentage taxes sales, and local sales taxes.

4) All real properties owned and those directly used for the operations, management, and
maintenance of a federation formed under Section 4 shall be exempt from the payment
of real property taxes imposed under existing laws.

©) Itshall have such other powers, capacities, and privileges deemed necessary to promote
‘cooperative activities within the federation as defined in the IRR.

SEC. 7. Management of the Farmer Coopetition Hub. — Notwithstanding the provisions of the
PCC and for purposes of this Act, the management and operation of the Farmer Coopetition Hub
shall be performed by the Management Committee formed by the federation. The Municipal
Agriculturist of each municipality where farmlands owned and/or tilled by members of clustered
farmer associations and cooperatives are located shall be non-voting ex-officio members of the
Management Committee. The IRR shall define the functions of the Management Committee and
relationship between and among members of the Management Committee, the federation, and
member farmer associations and cooperatives. The Management Committee may enter into


management contracts for the efficient management and operation of the Farmer Coopetition.
Hub.

To become sustainable, the IRR shall provide for a phased-in revenue-based operational
model for the Farmer Coopetition Hubs. Each Farmer Coopetition Hub shall be given a period of
time in the IRR to become self-sustaining. Within such period, the Farmer Coopetition Hubs
shall receive monthly operational funds.

SEC. 8. Appropriations. — The amount necessary for the implementation of this Act shall be
charged against the appropriations for the Department of Agriculture and from a portion of the
20% Developmental Funds of the Annual Internal Revenue Allocation. The required budget for
continued implementation of this Act shall be submitted to the Department of Budget and
Management for inclusion in the General Appropriations Act.

SEC. 9. Implementing Rules and Regulations. — Within sixty (60) days from the effectivity of
this Act, the Department of Agriculture, in consultation with the Cooperative Development
Authority, shall issue the necessary rules and regulations for the effective implementation of this
‘Act.

SEC. 10. Repealing Clause. — All laws, presidential decrees or issuances, executive orders,
letters of instruction, administrative orders, rules or regulation inconsistent with the provisions
of this Act are hereby repealed or modified accordingly.

SEC. 11. Separability Clause. — If any provision of this Act is declared unconstitutional, the
remainder of this Act or any provision not affected thereby shall remain in full force and effect.

SEC. 12. Effectivity. — This Act shall take effect fifteen (15) days after the publication in the
Official Gazette or in a newspaper of general circulation,

Approved.