Republic of the Phitippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

4603
House Bilt No.
SSS

Introduced by Representatives
DIOSDADO MACAPAGAL ARROYO and GLORIA MACAPAGAL ARROYO

AN ACT

INCREASING SHORT-TERM GRAIN AVAILABILITY, MINIM(ZiING.
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 reveat
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 small 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 rice 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 the cost of importing the same amount through the NFA. Specifically,
producing rather than importing an average of 2 million MT of rice would fequire
harvesting an additional 1.1 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 irigated 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 fand, will cost an estimated 15 billion pesos, or approximately
20% of NFA imports of the same amount.

tis 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 ta
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 imrigated 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 fice yields.

'n conjunction with this, long overdue reforms and festructuring 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 correspanding 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 eamestty requested.

DIOSDADO' -APAGAL ARROYO GLO! MACAPAGAL ARROYO
Second District, Camarines Sur Second District, Pampanga


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

4603

House Bill No.

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 shail be known as the "Immediate Rice
Security Act of 2011."

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 stapte food rice 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 yieks and
meet the national requirement.


ation and execution of key reforms to address crucial rice market
distortions and to minimize the country’s vulnerability to extemal 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 govemment fertilizer counterpart to the farmers, a
Fertilizer Support Program (FSP) is hereby created which shall be implemented
per cropping season aver 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
inigated 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 aut 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-beneficiares,
together with the corresponding area of their rice field to the Department of
Agricutture. 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 Fertiizer 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 fo 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 Corupt 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 osder 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 compased 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, shalt 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. — lf, 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 fult 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,