FIFTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
FIRST REGULAR SESSION )

Introduced by the Honorable Agapito H. Guanlao

EXPLANATORY NOTE

The current food crisis especially on the rice importation fiasco has brought to
focus the need to review the government policy on food securil
to seek creative means to reinvigorate the agricultural sector.

as well as the need

Viewed through the prism of a liberalizing economy seeking to compete
against well-entrenched world economies, the Philippines however is hard-pressed
to make its agricultural policies more responsive and more advanced in order to
hope for a modicum of parity with the rest of world.

Investments in the agricultural sector, while very needed, cannot be hoped to
be shouldered by the public sector alone in the light of the government's perennial
fiscal challenges since decades past.

Corporate farming programs aim to attract more private sector engagement in
the agriculture sector. Corporate farming’s unique advantage is its ability to
vertically integrate the entire process of food production and offers more efficient
and effective management not only of the farm itself, and also the entire chain of
agriculture-related business, including seed supply, agrochemicals, food processing,
machinery, storage, transport, distribution, marketing, advertising, and retail sales.
‘This would have significant impact on the ensuring a more stable rice and corn
supply, as well as making rice and corn prices more predictable.


However, any measure seeking to promote corporate farming must address
the national needs and aspirations for national sovereignty and agrarian justice with
the need to provide security to the larger masses of poor Filipinos.

BUTIL Farmers Party has long upheld the primacy of farmers’ security as
synonymous to food security. The farmers and farm-workers must be partners in
any corporate farming endeavors and not merely spectators or indentured laborers,
Society should also not discount the probability that the farmers themselves, through
their agricultural cooperatives, may acquire the necessary capitalization and
landholding required by a vertically-integrated corporate farming scheme, a “cor
porative” farming design that a pro-farmer legislation should be open to.

‘This Representation’s proposed version of a corporate farming initiative
reflects this view. Thus, provisions upholding the rights of agrarian reform.
communities are well reflected and prioritized, as well as the necessity for an
alternative “cor-porative” farming scheme as aforementioned. Compliance with
existing laws especially on Organic Farming and the revised Agri-Agra Law is
earnestly pursued and proposed.

Your full support on this measure is therefore earnestly sought.

HON. 0 JANLAO.


FIFTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )
FIRST REGULAR SESSION )

HOUSE OF REPRESENTATIVES
HOUSE BILL No. 3182

Introduced by the HONORABLE AGAPITO H. GUANLAO

AN ACT PROMOTING CORPORATE FARMING AND PROVIDING
INCENTIVES THEREOF

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

SECTION 1. Domestic Corporations and Partnerships. ~ For the purpose of this
Act, domestic corporations and partnerships shall refer to all corporations and
partnerships organized and existing under Philippine laws, operating for profit:
Provided, That said corporations and partnerships report earnings over the last four
(4) years that will allow them to engage in the production of rice/ corn for their
employees’ requirements without adversely affecting their financial viability.
Appropriate guidelines shall be issued to determine the corporations and
partnerships that are to be covered by this Act.

SEC. 2. Corporate Farming Arrangements, ~ Participation to the Corporate
Farming Program shall be on a voluntary bas

. For the purpose of this Act, the
following are the corporate farming schemes that the corporations/ partnerships
may engage in:

(a) Corporations/ partnerships with existing landholdings suitable for
rice/corn production may manage the land and produce the rice/cor or may enter
into a management/contractual arrangement with farmers’ groups such as farmers’
associations, cooperatives and agrarian reform communities (ARCs);

(b) Corporations/ partnerships may purchase or lease on a long term basis,
public or private agricultural land suitable for rice/corn production, whereby the
corporations/ partnerships are given full management and production control over


the purchased or leased lands or may enter into contractual arrangements, or joint
ventures with landowners, farmers’ organizations and ARCs

Agricultural lands purchased or leased for the purpose cannot be converted
lo other uses. Should the corporate farming venture ceases to be financially viable
and the partners declare bankruptcy or insolvency, land ownership shall
automatically revert to the agrarian reform beneficiaries within a period of three (3)
years in the case of public agricultural fands and for private lands originally
distributed under the Comprehensive Agrarian Reform Program. Fifty percent (50%)
of the land should have been developed within a period of three (3) years, and
ninety percent (90%) within a period of five (5) years.

For purcha

ed lands, the government has the right to offer the said lands to
other interested parties based on the original acquisition cost and initial
development cost, if any, to be refunded to the corporation/ partnership, in case the
land has not been developed as intended; and

(©) Corporations/ partnerships may enter into contractual arrangements with
farmers’ organizations/ ARCs, whereby the corporations and partnerships will
provide the production inputs and technical and related services, then buy back the
produce, Provided, That the farm inputs that shall be utilized shall subscribe to the
requirements set forth by Republic Act 10068 or the "Organic Agriculture Act of
2010."

‘The local government units (LGUs) shall be required to identify appropriate
land areas for corporate farming in consonance with their comprehensive land-use
plan and ordinances. The LGUs shall require the participating
corporations/ partnerships to provide livelihood projects/ opportunities to families
who will not be hired by the said entities.

Further, the LGUs may also identify local taxes that may be offered as
incentives for corporate farming.

(a) Farmer's or other agricultural cooperatives with existing landholdings and
sufficient capitalization to undertake a “cor-porative” farming scheme for rice/corn.

SEC. 3. Disposition of Excess Production. - The corporations/ partnerships shall
be required to provide a minimum of six hundred (600) kilograms of rice/corn per
employee per year or fifty (50) kilograms per employee per month. Production in


excess of the employees’ consumption requirements may be sold in the local
markets: Provided, That such will be reported to the National Food Authority
(NFA).

SEC. 4. Implementing Agencies and Implementing Rules and Regulations (IRR). ~
The Department of Agriculture (DA) and the Department of Agrarian Reform (DAR)
shall be the lead agencies to institute measures to ensure higher rice/com
productivity through corporate farming schemes.

Moreover, the DA and the DAR shall facilitate with the appropriate
government agencies the processing of management contracts between the
corporations/ partnerships and the farmers’ groups, Further, the DA and the DAR
shall oversee and monitor the IRR and guidelines of this Act. The DA and the DAR
shall exercise the following functions:

(a) Develop eligibility criteria for both corporations/ partnerships and.
farmers’ groups, cooperatives and/or ARCs for consideration under this Act and to
institute their accreditation: Provided, That the farmers’ group criteria should
include management capabilities, technical and production skills critical to the
effective operation of the corporate farm;

(b) Identify suitable private and public-owned rice/corn production areas for
corporale farming and determine the maximum ceiling of landholdings for
corporate farming arrangements: Provided, That the DA and the DAR shall
periodically determine the need to expand/ reduce rice/corn production areas for
corporate farming schemes on the basis of rice/corn demand-supply gaps;

(©) Facilitate and promote grassroots cooperation to access agricultural
services such as information, inputs and technical assistance;

(d) Initiate and develop periodic rural/farm assembly markets to provide
avenues to showcase their produce;

(c) Exercise regulatory functions with respect to the adherence to the
provisions of contracts and arrangements entered into by both

corporations/ partnerships and farmers’ groups, cooperatives and/or ARCs and to
develop mechanisms to facilitate negotiations and mediate in disputes between
stakeholders on matters of contract enforcement;



(f) Coordinate with the appropriate government agencies to ensure the timely
establishment of support services such as credit, infrastructure, extension services
and others;

(g) In consultation with other concerned government agencies,
nongovernment organizations, private sector and farmers’ groups involved in
tice/corn production, formulate the IRR necessary lo operationalize the provisions
of this Act within ninety (90) days from its approval; and

(h) Facilitate the registration of the participating corporations/ partnerships
with the NFA.

SEC. 5. Incentive Package. ~ Corporations/ partnerships which shall participate
in the Corporate Farming Act shall be entitled to tax incentives covering all aspects
of the operation germane to corporate farming activities.

‘These include the following:

(a) Exemption from the payment of customs duties on the importation of all
types of agricultural inputs, particularly seeds, fertilizers, agricultural machinery
and other agricultural implements as provided under Republic Act No. 9281, which
amends Republic Act No. 8435 or the Agriculture and Fisheries Modernization Act;

(b) Exemption from the value-added tax (VAT) on the importation of
agricultural inputs in accordance with Section 109(4) of the National Internal
Revenue Code, as amended; Provided, That the importation requirements shall be in
accordance with the provisions of Republic Act 10068 or the "Organic Agriculture
Act of 2010."

(c) Exemption from the payment of capital gains tax for a person, either
natural or juridical, who sells and/or transfers idle agricultural land to corporations
and partnerships engaged in corporate farming; and

(d) Tax incentives, including income tax holiday, in accordance with the
provisions of Executive Order No. 226 or the Omnibus Investment Incentives Code,
as amended.


SEC. 6. Other Incentives. ~ Loans extended by banks, both government and
private, to participating corporations/ partnerships shall be treated as compliance to
Republic Act 10000 or “The Agri-Agra Reform Credit Act of 2009.”

SEC. 7. Duration. - Participating corporations/ partnerships with existing
landholdings may engage in rice/corn production within a period of time to be
determined by this Act. However, those corporations/ partnerships which purchased
agricultural lands for the purpose cannot convert the land to other uses and must
relinquish land ownership in favor of agrarian reform beneficiaries within a period
of three (3) years in the case of public agricultural lands and for private lands
originally distributed under the Comprehensive Agrarian Reform Program should
they wish to terminate the corporate farming agreement.

Arrangements/negotiations for leased public or idle private agricultural
Jands shall be for a period not less than ten (10) years.

SEC. 8. Automatic Review. ~The DA and the DAR, being the lead government
agencies in the Corporate Farming Program, shall submit periodic reports to both
Houses of Congress on the accomplishment of the Program.

A review on the viability of the Program shall be made by the concerned
agencies after five (5) years of its implementation.

SEC. 9. Effectivity. ~ This Act shall take effect after fifteen (15) days following
its publication in the Official Gazette or in a national newspaper of general
circulation.

Approved,