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

NINETEENTH CONGRESS

First Regular Session

230

House Bill No.

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 (RTI) 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.”

ice farmers. Business\irror.htp:/Mousnessmieror com pl 2019009/12ithe-

‘sve Dejaresco, 7. (2019, September 12) The ageds of the Flip
Philippines’ rice granary, farmers endure falling grain prises. JBSACAN News

‘raged -of-the-filipine-riee-famers! Fenel J. 2019, October 13)

hyp: /nows abs-cbn convbusines/10/14/1fnephilppines-rice-pranary-frmers-endure-fallin-asain-pices
‘ve Ondinario, C. (2017, Jule 2). PSA: Varmers, Fishermen remain poorest in PHIL. Business¥firror. hp: lbusinesstimor om ph/2017A7/02ipsa
lhumers-ishermen-tomuain presi phi

PKatighak, T2019, September 17, "The plight of Filipino’ sige farmers. The Philippine — Star

ips isa conpio/20940 195247
What you cum do to help

in-riesfarmers
pin rie farmers, Rapper, hitps daw: rapplercommowve-ph/2393 8-vhat-people=

vdorhelp ice farere
Fenol. J. 2019, Ostober 14). In the Philippines’ riee granary. farmers end
he comfusiness/ 0/141 9hin-plippines-rce- gmpers-edure-falling- grain
re Lins, M. Q019, September) A Kilo of Unhushed Rive Costs 7) And its Strving Our Farmers. Esquire
haps esquiremag.ppoliticsnewsie-4aw-starving-fiemrs-al0293-20 19095

Sve Simeon, 1. (2020, February Farmers lose P68 billin fiom rice trification aw: The Phalippine Star
haps pista combusiness/2020002/22/1995025 iarmerslose-p6 billion rie tefTication-law, Madavang. C. (2019, September 3). Why rice
farmers are crying for help aller the Rige Tantication Law. diteraksson ups intraksyon complies isus!201989/09/ S489 /ammersice-
amfication-ieetfoot

filling wrsin prices. ABS-CKN’ News, hnpasews abs



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
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 diesel 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 kibbut= (where the means of production are communally
owned) and the moyhav (where purchasing and marketing are done cooperatively), have also worked.

Immediate passage of this bill is earnestly sought.

LM Non
/ GERALDINE B. ROMAN

* Litworo, A. & Tidon, A. (1996) AVarkerine of gricultural Commaiies by Producer Groups m the Philippines. Intemational Development Research
Cenire [Research paper. hips/dl-bne-idre dspucedirectorpsitttamn/handle/10625/22022/l 13022 pPPsequence=1

Rivas, R (2019. August 6). William Dar aims to quudeuple agri growth, double farmers income. Rappler.hups://ww rapper combusiness!297174
wlliam-da-aines-agriculture-prowsth-double-income-farmts

"Lulrero, A & Tidan, A. (2996). Marketng of Agricultural Cammadities hy Producer iroups in the Plilppines. i
‘Gootre [Research puper) huis /il-bne-drespacodiret ong/bitsteanvhandle!10628/22022/113022 pasequence=?
"Senate of the Philippines (2008. Oxtober 28) Zubiri- Take ow the middlemen in the rice imlusiry [Press release
ups tvs senate gov: press release2008/1028_rubiil asp

"De Padus, 1D 1998, June). Rice postharvest &maal conference daft summary - 11.2, Food aod Agriculture Organization [Rese
up av foo org/ 5 427e/4S427E02 htm opOPage

Chien, HL 016, February 12) Role ofthe Public Sector in grieultural Coopettion: Place-based Marketing it Past-¥TO Rural Taiwan. Journal of
Management and Strategy |Research paper] bipsfidoiorg/1 S430) sTal pS

emational Development Research

paper]



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

NINETEENTH CONGRESS
First Regular Session

House Bill No. 230

Introduced by Representative GERALDINE B. ROMAN

AN ACT
PROMOTING FARMER COOPETITION, MANDATING THE ESTABLISHMENT OF
FARMER COOPETITION HUBS, 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 “/‘armer Coopetition Act.”

SEC. 2. Declaration of Policy.— 1t is the declared policy of the State to promote social justice,
i.¢., 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:

) “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.

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

d) “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 ofFarmer Coopetition Hubs. — As a pilot program 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) It shall be the exclusive conduit of government farming assistance.
¢) All 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.


d) 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, Repeating 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.