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

Fourteenth Congress
Third Regular Session

HOUSE BILL NO. 2520

Introduced by Honorable PEDRO M. PANCHO,
Honorable JOSELITO ANDREW R. MENDOZA, Honorable LINABELLE RUTH R.
VILLARICA and Honorable ARTURO B. ROBES

EXPLANATORY NOTE

This bill seeks to establish Treasury Crop Certificate (TCC) system in the marketing
of palay, corn or other grains deposited at any authorized NFA warehouse.

For almost five (5) decades the problem in rice shortage is being felt by our
agriculturally-rich country. The only solution the government has offered is to change the
name of agency and replace its officials but the system is still the same.

The NFA is tasked with the stabilization of prices of grains, palay and corn. In
order to provide the farmers with the highest price possible for palay, corn and other
grains, the NFA needs to balance prices of grains at the lowest consumer cost possible.
Such mandate requires massive capital to finance the program.

Under this proposed measure, the NFA shall issue the Treasury Crop Certificate
(TCC) in favor of a farmer who deposits his crop harvest with the NFA. The farmer is
paid in cash for one-half (¥/2) of his stocks and in TCC for the remaining one-half (/2).—-~
The TCC may be used by the farmer as collateral to secure a loan based on the face
value of the stock or on a percentage value depending upon the discretion of the bank or
he may just hold on to the TCC until its maturity date. The TCC shall be an interest-
bearing instrument and shall be redeemable in cash after one hundred eighty (180) days
from the time the crop is brought to the NFA warehouse. Ten (10) days before maturity
of the TCC, the farmer shall inform the NFA of his intention to surrender the same to
allow time for the disposal of the crop and raise the amount needed.

The NFA shail monetize the certificate at a pre-agreed price for the bank or the
farmer, as the case may be. If the market price of the stored grains stock is higher than
the NFA pre-agreed price, the farmer may request the NFA for the withdrawal and
disposition of the stock to outside buyer.


If the NFA refuses to make the purchase and the grain is sold to an outside buyer,
the former shall deduct the loan value and storage fees and other legal charges and the
excess shall be released to the farmer.

The TCC shall likewise be available as a collateral for any loan that the farmer may
secure from any bank or other lending institution. On the other hand, the bank shall
make available for lending to the agrarian reform beneficiaries the unused portion of its
loanable agricultural credit fund. The TCC shall be guaranteed by the national
government through the Department of Finance and exempt from income taxes.

It is the mission of the State to ensure adequate support for the country’s farmers
engaged in the production of palay, corn and other grains especially during harvest time.
Towards this end, the State shall extend assistance to farmers by creating a financial
arrangement that will protect farmers in marketing their products and the NFA will
double its capacity to procure grains, especially palay, without the burden of borrowing
from local and foreign financial institutions.

In view of the foregoing, approval of this bill is highly recommended.

Rep. PEDRO M/PANCHO.
2" District of Bulacan

Arc
Rep. LINABELLE RUTH R. VILLARICA
4" District of Bulacan



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

Fourteenth Congress
Third Regular Session

HOUSE BILL NO. 2520

Introduced by Honorable PEDRO M. PANCHO,
Honorable JOSELITO ANDREW R. MENDOZA, Honorable LINABELLE RUTH R.
VILLARICA and Honorable ARTURO B. ROBES

AN ACT
ESTABLISHING A TREASURY CROP CERTIFICATE (TCC) SYSTEM IN THE
MARKETING OF PALAY, CORN AND OTHER GRAINS AND APPROPRIATING
FUNDS THEREFOR

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

SECTION 1. Short Title. - This Act shall be known as the “7reasury Crop
Certificate Act of 2010."

SEC. 2. Declaration of Policy. — It is hereby declared the policy of the State to
ensure adequate support for the country’s farmers engaged in the production of palay,
corn and other grains especially during harvest time. Towards this end, the State shall
extend assistance to farmers by creating a financial arrangement that will protect farmers
in marketing their products.

SEC. 3. Objectives. — This Act shall have the following objectives:


a) Hasten the development of financial instruments which will allow financial
institutions to participate in the rural credit markets and improve farmers’ access to credit
resources;

b) Stabilize prices of grains at levels that will provide not only reasonable
returns to farmers but also result in affordable prices for consumers; and

c) Promote grain marketing efficiencies through awareness and access to
updated and upgraded post-harvest technology and services.

SEC. 4. Treasury Crop Certificate System. — There shall be established a
Treasury Crop Certificate (TCC) System which shall be under the supervision of the
National Food Authority and guaranteed by the National Government through the
Department of Finance.

Farmers may avail of the TCC System by depositing their palay, corn or other
grain produce at any National Food Authority (NFA) authorized warehouse. Farmers shall
be paid in cash for fifty percent (50%) of the grains deposit and the remaining fifty
percent (50%) shall be paid in TCCs.

SEC. 5. Redemption Period. - The TCC shall be redeemable after one hundred
eighty (180) days from the date the grains were received by the NFA or such maturity
period that the NFA may fix in consultation with the farmer-beneficiaries,

Ten (10) days before maturity of the TCC, the farmer shall inform the NFA of his
intention to surrender the same to give the NFA sufficient time to dispose of the crop and

raise the necessary amount for the redemption of the TCC.


SEC, 6. Megotiable Instrument. - The TCC shall bear an interest rate of a
treasury bill and shall be a negotiable instrument which may be used as a collateral for
any loan or debt incurred by the farmer.

SEC. 7. Option to Purchase. — The farmer shall also be given the option to
purchase back the grains paid by TCCs: Provided, That he pays the authorized storage,
handling and other fees or charges imposed by the NFA, including cost of shrinkage.

In case the farmer opts not to purchase back the grains, the NFA shall have the
right to dispose of the palay, corn and other grain products in order to raise funds for the
payment to the farmers. Likewise, the NFA may issue the TCC to banks for the purpose
of financing its local procurement operations.

SEC. 8. Exemption from Tax. - The income derived from the TCCs shall be
exempted from income tax for five (5) years from its initial issue.

SEC. 9. Price Reference and Product Standards. — The NFA shall adopt a
price reference for buying palay, corn and other grains based on average prices during
the lean months of the previous cropping season, and based on certain minimum product
standards. The NFA shall disseminate information regarding such price reference and
product standards to the farmers, farmers’ cooperatives and organizations.

SEC. 10. Bank Collateral. — The TCC shall qualify as bank collateral for any loan
‘that a farmer may secure from a bank or other lending institution. The bank, whether
government or private, shall make available for lending the unused portion of its loanable
agricultural credit fund.

SEC. 11. Implementing Rules and Regulations. — The Administrator of the
National Food Authority shall, in coordination with the Secretaries of Finance and

5


Agriculture, issue the necessary rules and regulations for the effective implementation of
this Act.

SEC. 12. Appropriation. — That amount needed for the initial implementation of
this act shall be appropriated out of any funds in the National Treasury not otherwise
appropriated. Thereafter, such sum as maybe needed for the continued implementation
of the TCC system shall be included in the annual General Appropriations Act.

SEC. 13. Repealing Clause. — All laws, executive orders, decrees, rules and
regulations and other issuances inconsistent with the provision of this Act are hereby
repealed or modified accordingly.

SEC. 14. Effectivity. - This Act shall take effect fifteen (15) days after
publication in the Official Gazette or in two (2) national newspapers of general
circulation.

Approved,