EXECUTIVE SUMMARY - National Agricultural and Fishery Council ...

AFMA – Overall Executive Summary
The AFMA formulators had a grand vision for Philippine agriculture and fisheries.
The seven AFMA principles: (1) poverty alleviation and social equity; (2) food
security; (3) rational use of resources; (4) global competitiveness; (5) sustainable
development; (6) people empowerment; and (7) protection from competition are
in the right places.
The Philippines is not lacking in visions and plans. However, AFMA can be
faulted for over-commitment and trying to do many things with too many
agencies, and saddled with lack of resources. In the process, it faltered in
implementation. The additional money of P20 billion in the first year (1999); and
P15 billon a year in the next six years (2000 - 2005) did not materialize.
Moreover, the mandated allocation by component was not observed: there were
relatively more funds for production support and far less in marketing, R & D,
human resources and inter-agency linkages. In fact, the annual financial flows for
Agriculture and Fisheries Modernization Plan (AFMP) declined from 1999 to
2005. In inflation-adjusted terms, the decline would be sharp. In any undertaking,
no program should be launched without assured resources at the right time and
place. The AFMA is a sad commentary of what a program should not be.
The report is a result of almost two years work – from research and interviews to
consultation workshops in 16 regions (up from six areas from inception). The
expansion was to ensure that as many stakeholders are consulted.
Department of Agriculture
1997-2006 General Appropriations (Regular/GATT or AFMP)
In Thousand Pesos
Year Regular GATT AFMP Total
1997 2,690,163 14,474,968 17,165,131
1998 2,838,727 12,892,205 15,730,932
1999 3,344,289 11,612,233 14,956,522
2000 4,164,823 16,635,428 20,800,251
2001 4,656,604 11,449,739 16,106,343
2002 5,599,053 14,440,018 20,039,071
2003 4,444,621 12,129,019 16,573,640
2004 4,252,089 9,361,554 13,613,643
2005 4,273,715 10,261,068 14,534,783
2006* 4,353,783 11,465,850 15,819,633
Source: Department of Agriculture
To many stakeholders, the AFMA has not achieved its goals as the programmed
additional resources were not granted. It was a failure of information, education
and communication (IEC) as the grassroots could not accept the idea that
programs of the DA and other agencies have been relabelled as AFMA
programs. Viewed from the five principles, the AFMA appears to have mixed
results.
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1. Poverty alleviation. Agriculture and fisheries grew by almost 3.5 percent
annually between 1999 and 2005, its best record since 1970s. However,
rural poverty remains a challenge. The lack of resources for AFMA was
contributory. The non-observance of the criteria for sound allocation of
funds was not also observed, e.g. such as grains vs. tree crops trade-off.
2. Food security. Agriculture growth invariably led to improved food
security. Rice, poultry and fishery contributed heavily. Good weather in
the 2000s also helped.
3. Rational use of resources. Allocation of resources from cost-benefit
analysis should be guidepost in investment. However, it appeared that
production support rather than marketing and R & D were given priority.
4. Global competitiveness. There were no significant product
breakthroughs in the export market over the past six years. The export
winners' list remained unchanged: banana, pineapple, tuna, seaweeds,
carrageenan, and some coconut products. Sugar started to become
competitive.
5. Sustainable development has economic, social and environmental
aspects. Public investment decision must be sound to sustain economic
development. For instance, farm incomes, especially for coconut farms,
did not increase as there was little flow of resources. Job creation could
have improved if the enabling environment for private investments was
favorable.
Where will AFMA go from here? Agriculture and fishery are the main occupations
in the rural sector. Rural poverty remains high. By government accounts, half of
the rural folks are poor; while 70 percent of the poor reside in the countryside.
Indeed, poverty is an agriculture phenomenon.
The Philippine Farm Sector. In 2005, agriculture and fishery produced P 775
billion (in gross value added at current prices). Crops contributed 58 percent,
livestock and poultry 22 percent, and fishery 15 percent. By crops, palay
provided 16.6 percent; coconut, 5.3 percent; banana, 4.4 percent; corn, 4.3
percent; and sugarcane, 2.4 percent. Other crops (tree crops, fruits, vegetables,
etc) had almost 25 percent of total output.
Philippine agriculture is predominantly small, unorganized farm holdings. Crops
occupied most of the farmlands. The 2002 Census of Agriculture revealed:
Some 4.8 million (M) farms covering 9.7 M hectares (ha). The average
farm size was 2.0 ha;
Some 40 percent of the farms were less than 1 ha (occupying 8.6
percent of area), 41 percent at 1 ha and below 3 ha (31 percent of
area); 10.6 percent between 3 to 5 ha (18.4 percent of area), and 6.3
percent, above 5 and less than 10 ha (19.8 percent of area). In effect,
about 90 percent of the farmers have less than 5 ha (58 percent of
area);
Some 97 percent were individual farms (94 percent of area); less than
0.2 percent were corporations (2.2 percent of area);
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Most were owner-operated. Nearly 79 percent (83 percent of the area)
were owned; less than 13 percent were tenanted (12 percent of area),
2.3 percent leased (2 percent of area); and
About 67 percent were under temporary crops such as rice and corn
(50 percent of area; 35 percent under permanent crops such as
coconut (44 percent of area).
By product, coconut and rice farms had more than half of all farms and area.
Coconut farms (1.4 M) had slightly higher number than rice farms and
significantly larger (3.3 M ha vs. 2.5 M ha). Corn, sugarcane and other crops
covered over 3 M ha.
Farm Lands by Crop: Number of Farms, Farm Size and Tenure
Tenure of Parcels (in percent)
Item
No. of Farms
Total No. Owned Tenanted Leased Others
Rice 1,351,678 58.9 23.5 10.8 6.8
Corn 679,183 59.7 21.4 5.2 13.7
Coconut 1,400,394 65.6 19.1 3.4 11.9
Sugarcane 67,490 63.0 12.0 9.6 15.4
Others 1,323,994
All Types 4,822,739 61.4 20.1 5.5 13.0
Area of Farms Total Area (ha) Area Share by Tenure (in percent)
Rice 2,467,164 63.9 23.1 8.3 4.7
Corn 1,354,428 67.1 19.3 5.2 8.4
Coconut 3,325,449 68.8 24.4 2.2 4.6
Sugarcane 362,877 76.0 7.7 11.1 5.2
Others 2,160,875
All Types 9,670,793 67.1 21.3 5.4 6.2
Source: 2002 Census of Agriculture
Fisheries comprised some 1.6 million operators, mostly in subsistence municipal
fishery. Aquaculture is a growing business and its potential is high.
Number of Fishing Operators in 2002
No of Operators Share (in percent)
Municipal 1,371,676 85.0
Commercial 16,497 1.0
Aquaculture 226,195 14.0
TOTAL 1,614,368 100.0
Source: 2002 Census of Fisheries
The constituencies of AFMA are the over 11 M workers in 4.8 M farms and 1.6 M
fishing operators; and the significant millions in the downstream supply chain.
The major challenge is how the DA, LGU and related agencies meet the
challenge of millions of small, widely dispersed stakeholders.
Agriculture modernization is an ambitious goal. It took at least 20 years for some
Asian countries to achieve broad-based high agriculture productivity. The
Philippines will need that no less. But to take a high growth path requires
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esources and judicious resource use. There must be bold initiatives to force the
issue to rational and sound criteria rather than business-as-usual political
expediency.
Box 1.
Key Success Factors of Asian Agriculture and Fisheries
• Strategic directions that remained unchanged despite changes in political
leadership;
• Continuity in leadership, anchored by a bureaucracy that values professionalism
and meritocracy;
• A bureaucracy that is not subject to the vagaries of political leadership;
• A marketing infrastructure that links producers to buyers at reasonable and
speed;
• A well-budgeted R & D program, accompanied by human resource development
of scientists and researchers, that engages universities and private sector;
• A market information system with timely, accurate and accessible information
• Producers that are mostly organized and learned on the dynamics of the market
place – cost, quality and supply reliability; and
• An investment climate that welcomes local and overseas investors.
At the same time, the country must launch bold initiatives in R & D investments to
address areas such as productivity, variety, input cost reduction, diversification,
etc in both land and aqua farming. Data shows that R & D has among the
highest impact on agriculture production and poverty alleviation (See below).
Impact of R & D on Agriculture and Poverty Reduction
China India Thailand Vietnam
Item
Ranking of Returns in Agriculture Production
Agriculture R & D 1 1 1 1
Education 2 3 3 3
Roads 3 2 4 4
Telecommunications 4 - - 2
Irrigation 5 4 5 5
Electricity 6 8 2 -
Soil and water
conservation
- 6 - -
Agriculture R & D 2 2 2 2
Roads 3 1 3 4
Education 1 3 4 3
Telecommunication - - - 1
Electricity 4 8 1 -
Irrigation 6 7 5 5
Source: Shenggen Fan (2005). The Role of Agriculture in Poverty Reduction: Evidence
from Asia. IFPRI
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There are several principles that must be observed in amending the law and its
IRR.
1. A policy environment that delivers a good investment climate. The private
sector is the engine of growth. Some 90 percent of the investments are
made by the private sector. Investment means jobs.
2. Government resources must be leveraged. Thus cost-sharing must be the
order of all programs whether these are from the LGU, education and
research institutions, industry associations, farmers groups, in cash or in
kind.
3. There must be sound criteria in the use of resources: market-orientation,
and social rates of return. This is to correct the disproportionate allocation
to rice to the detriment of other crops, such as tree crops, aquaculture, etc.
There are also many types of irrigation for different crops.
4. Program budgets, particularly marketing support, R & D, infrastructure
(such as farm to market roads, post-harvest facilities, laboratories and
equipment), irrigation and human resource development must be made on
multi-year basis.
5. Protecting the consumer against unsafe, impure and fraudulently
presented agriculture and fishery products is the foremost responsibility of
a national agriculture and fisheries product control agency.
6. The government must be fully committed to establish structures and
develop policies to deliver the optimum level of consumer protection. Any
cost recovery scheme implemented to reduce financial burden on the
national government must be carefully evaluated as these costs are often
passed on to the consumers and the poor consumers are
disproportionately affected.
7. Stakeholders must be engaged in the planning and monitoring of
programs.
8. The DA must focus on the “steering” of agriculture development; while the
LGUs, on the “rowing.” There should be a manual of engagement
between national government (i.e., DA) and the LGUs.
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Box 2.
Stakeholders’ Opinions
A Survey of Stakeholders of 23 key national associations and regional agriculture
and fisheries council indicated the following:
• Practically all (96 percent) of the respondents were aware of AFMA.
• Two-thirds indicated that AFMA had not achieved modernization of agriculture
and fishery.
• Nearly four-fifths (78 percent) indicated that AFMA had not enhanced profits
and incomes.
• About four in five respondents (78 percent) indicated that AFMA has not
ensured accessibility, availability and stability of food supply.
• Some three in five (57 percent) of the respondents answered that AFMA has
not encouraged horizontal and vertical integration in agriculture.
• Two thirds (65 percent) of the respondents indicated that AFMA failed to
strengthen peoples’ organizations, cooperatives and NGOs; did not agree that
AFMA has enhanced the comparative advantage of the agriculture and
fisheries sectors; and felt that AFMA failed to induce the agriculture and
fisheries sectors to ascend continuously.
• About half (52 percent) felt that AFMA was unable to promote industry
dispersal.
• Nearly three quarters (74 percent) responded that AFMA was not able to
provide safety nets.
• Two thirds (65 percent) of the respondents felt that AFMA was not able to
improve their quality of life.
• Seven out of ten respondents were not satisfied with AFMA performance.
• Nearly three in five respondents (57 percent) indicated awareness of the
AFMP.
• Most of the respondents felt “not satisfied” with AFMP implementation.
Box 3.
Regional Stakeholders Opinions
Some 724 participants in 16 regions responded to the five overarching questions
prior to the start of the workshop.
• Nearly 90 percent were aware of the AFMA;
• About 68 percent answered positively that AFMA helped agriculture/industry.
Large majorities were recorded in all regions, except Central Mindanao;
• Two-thirds showed awareness of the Strategic Agriculture and Fisheries
Development Zones (SAFDZ) in their respective areas;
• Barely 40 percent were satisfied with SAFDZ implementation. Only four regions
showed high levels of satisfaction: Ilocos, Cagayan Valley, Central Luzon and
Southern Mindanao; and
• They cited that the major concerns on AFMA were: information dissemination,
implementation, budget, and duration.
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The 724 regional workshops participants were asked to rank the AFMA
components according to their priorities. The national average (the simple
average of the 16 regions) showed their main priorities were: irrigation,
marketing, other infrastructure (e.g. farm-to-market roads), post harvest facilities
and credit. However, the priorities varied considerably across the 16 regions
Ranking of Priority Sectors of AFMA Components: Philippine Average
Component/
Region
Irrigation 3.2 1
Credit 4.2 5
Marketing 3.5 2.5
Post-harvest 3.6 4
Other Infrastructure 3.5 2.5
Education 7.1 6
Information Support 7.5 8
Product Standards 8.1 10
Extension 9.2 11
Trade 7.4 7
R & D 8.0 9
Average
16 Regions Rank Remarks
The average ranks of 16 regions
indicated close support for each
of the top 5 components.
Irrigation landed on top but
marketing, other infrastructure,
and post harvest were not far
behind.
Luzon ranked irrigation, post harvest, marketing support, credit and other
infrastructure as major priorities. However, CAR ranked marketing as Priority No.
1.
Priority Sectors of AFMA Components: LUZON
Component/
Region CAR 1 2 3 4-A 4-B 5 Ave.
Cluster
Rank
Irrigation 2 1 1 1 1 1 1 1.1 1
Credit 3.5 2 3 3 5 5 3 3.5 4
Marketing 1 3 2 4 4 4 4 3.1 3
Post-harvest 3.5 4 4 2 2 2 2 2.8 2
Other Infrastructure 5.5 6.5 5.5 5 3 3 5 4.8 5
Education 5.5 6.5 9.5 11 10 6 9 8.2 10
Information Support 7 6.5 7 9 8.5 7.5 8 7.5 7
Product Standards 8.5 6.5 8 7.5 7 7.5 10 8.1 9
Extension 8.5 11 11 10 11 10 6 9.2 11
Trade 10 10 9.5 7.5 6 9 7 7.4 6
R & D 11 6.5 5.5 6 8.5 11 11 8.0 8
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In the Visayas, the top priorities were: irrigation, credit, other infrastructure,
marketing support, and post harvest facilities. Central Visayas rated other
infrastructure as higher priority than irrigation.
Priority Sectors of AFMA Components: VISAYAS
Component/
Region 6 7 8 Ave. Cluster Rank
Irrigation 1 2 1 1.3 1
Credit 3.5 5 2.5 3.7 2.5
Marketing 5.5 4 5 4.8 4
Post-harvest 3.5 3 11 5.8 5
Other Infrastructure 2 1 8 3.7 2.5
Education 9 11 2.5 7.5 8.5
Information Support 11 9 7 9.0 9.5
Product Standards 10 7 10 9.0 9.5
Extension 7 10 4 7.0 7
Trade 8 6 6 6.7 6
R & D 5.5 8 9 7.5 8.5
Mindanao’s priorities differed from the rest of the country. Its top five were: other
infrastructure, marketing support, post harvest facilities, credit and education.
Irrigation copped the top slot only in Western Mindanao and Southern Mindanao.
It rated low in Northern Mindanao, Central Mindanao, Caraga and ARMM. By
contrast, other infrastructure rated No. 1 in Northern Mindanao, Southern
Mindanao, Central Mindanao and ARMM.
Priority Sectors of AFMA Component: MINDANAO
Component/
Region 9 10 11 12 Caraga ARMM Ave.
Cluster
Rank
Irrigation 1 7 1 11 11 8.5 6.6 7
Credit 4 11 4 3.5 4 5 5.3 4
Marketing 5.5 2 2 1.5 1.5 7 3.3 2
Post-harvest 2 3 3 3.5 7 2.5 3.5 3
Other
Infrastructure 3 1 1 1.5 4 1 1.9 1
Education 9 7 7 6 1.5 2.5 5.5 5
Information Support 7 7 8 5 8.5 4 6.6 7
Product Standards 8 9.5 6 8 6 10 7.9 9
Extension 11 9.5 10 10 10 8.5 9.8 10
Trade 5.5 5 10 9 4 6 6.6 7
R & D 10 4 5 7 8.5 11 7.6 9
The principal lesson: regional priorities vary. So far, irrigation (primarily for
rice) had the largest budget share at 30 percent but in fact, rice comprised less
than 30 percent of farms, 17 percent of gross value added in agriculture and
fisheries, and 17 percent of gross farm value. In the process, development of
deserving farm products was stifled due to lack of rational allocation criteria.
Irrigation must also include high value crops.
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KEY PROPOSALS
A. Full Implementation of the Law
1. The major recommendation is to ensure funding. The incremental budget of
P15-20 billion a year over the pre-AFMA should be implemented. This
means a budget level today of P31 to 36 billion a year versus less than P16
billion in 2006.
2. Secondly, the percentage allocation by component as mandated by AFMA
must be followed at the very least.
3. As provided by the law, the Department of Agriculture should formulate and
implement a medium and long term comprehensive Agriculture and Fisheries
Modernization Plan in consultation with various stakeholders including all
concerned government agencies and considering regional priorities.
4. Market prospects should determine the balance between food and non-food
crops (grains and tree crops) and land-based and water (sea) based farming.
5. The project/program spending must be subject to sound economic and social
criteria.
6. The budget releases will have multi-year components in order not to
jeopardize long-gestating projects such as R & D, and tree crops. Using one
percent of agriculture and fisheries gross value added as benchmark, the
current budget for R &D should be in the order of P 8.5 billion in 2006. The 10
percent AFMA allocation for R & D appears inadequate using the benchmark.
7. There should be a working Program Benefit Monitoring and Evaluation
System (PBMES) of the AFMP as provided for by Section 18 of AFMA and its
IRR.
8. A broad based monitoring system under the NAF Council should be designed
and implemented to assess the effective implementation of the AFMA.
B. Amendments to the Law
General
1. Section 2 (Declaration of Policy). The proposed wording will be:
The State shall promote an enabling environment that encourages investments.
The State recognizes the critical role of private investment in growth and
job creation.
2. Section 3 (Statement of Objectives). Proposed additions:
To promote private investment as a prime vehicle of job creation and rural
industrialization.
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To ensure that allocation of resources are based on sound economic, social and
environmental criteria.
3. Section 111 (General Provisions). Budget allocations by component must
reflect regional priorities.
C. Proposals by Component
To fully appreciate the full significance of the Report, readers are strongly
encouraged to read the main findings and recommendation in the Chapter
Summaries of the individual AFMA Components.
1. Marketing Support and Information (Sections 38-45)
Ensure that AFMA provisions will:
(a) Secure the mandated 8 percent of the total AFMP budget. The focus will
be diversification of the regions, product development, export market
intelligence, and participation in trade fairs with cost-sharing;
(b) Revisit the 30 percent allocation to irrigation in regions where rice is not
the major economic base; and
(c) Support the operation of an expanded network of agriculture (and
fisheries) attaches.
Amendments
(a) Section 41 (NIN). Focus resources to complete the linkage of DA
agencies and national research institutions
(b) Section 42 (Information and Marketing Service). Expand data collection
coverage and frequency by product at the municipal and barangay levels;
and
(c) New Section. The national and local governments will promote costsharing
with the private sector on agriculture and fishery projects such as
access infrastructure, irrigation, R & D, etc.
Revisions to IRR
(a) AMAS. Rule 40.6. AMAS will have an expanded role (See Chapter
Summary)
(b) NIN. Rule 111.5.10 provides that 4 percent of the AFMP will be for the
National Information Network. Given the recent developments in ICT, the
NIN should instead focus on linking DA regional offices as well as various
research institutions with new cost-effective technologies. Linkages with
LGUs must be at their initiative and on a cost-sharing basis.
(c) ITCAF. Rule 44.1 Taking advantage of the recent ICT, it will: (a) complete
linkages at the regional level of all agriculture agencies using low cost
internet technologies. The LGU who wish to be connected must costshare;
and (b) accredit universities as repository of commodity information
(market, farm technology and economics, value adding, etc.) along the
lines of the USDA model.
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(d) BAS Rule 44.1 BAS must be provided with adequate resources under its
new mandate of expanded data generation relevant to commodities, rural
incomes and consumption patters (See Chapter Summary).
(e) AFIS. Rule 42.1. This report supports the transformation of AFIS into a
Corporate Communication Office of the DA.
(f) NMAP Rules 40.4 – 40.5. Considering that the NMAP has little relevance
in a globally competitive market, its mission should be delegated to the
producer groups and supply chain players.
(g) NMU. Rule 40.7 There is needed to revisit the “big roles” of NMU. The
AFMA support is better used under cost-sharing schemes with industry
associations and farmers’ associations in building their competitive
intelligence capability. It is proposed that a private sector-led Agri-fishery
Marketing Advisory Council be convened as and when needed. The High
Council will be composed of presidents of leading industry associations.
(h) DA Research Service (Policy Analysis Service) will emulate the model of
the USDA Economic Research Service.
(i) Agricultural Attaches Rule 42.4. The Attaches must be provided with
adequate resource to network with industry players overseas, assemble
timely and accurate information, and conduct/ purchase market and
strategic country studies. The proposals are to: increase by at least 50
percent the number of agriculture attaches by 2010; and benchmark
attaché numbers, tasks and budgets with ASEAN nations.
(j) Capability Building. Rule 111.5.7 provides that 5 percent of the AFMP
budget will be for capability building for scholarships, technical upgrading
and training, etc. This should include capability building for marketing,
market research, market studies, supply chain and benchmarking, etc.
2. Trade and Fiscal Incentives (Sections 108-110)
The recommendations are as follows:
(a) Pursuance of a more vigorous macro and sub-sectoral policy
reforms and law enforcement relative to agricultural trade, to enhance
the evolving gains in export competitiveness during AFMA implementation
period. Enforcement of existing laws (e.g. anti-smuggling, quarantine) and
enhancement of domestic support measures to gain competitiveness are
in the right directions.
(b) Continue stronger trade negotiation initiatives with other members of
the LDCs (Group of 20, Group of 33 and AFTA) of WTO to level the
playing field in agricultural trade. This implies strengthening of the Policy
Analysis Division of DA to backstaff trade negotiations.
(c) Assist small-medium enterprises and cooperatives in the regions to
avail of tariff exemptions of imported agricultural inputs, to enhance their
competitiveness in the export market. The feasibility of removing all forms
of tariff that constrains agricultural modernization should be explored as a
policy.
(d) Revisit the ACEF, extend its economic life if necessary, and study
alternative strategies to make it more effective as an enhancing
mechanism to global competitiveness in the agriculture and fisheries
sector;
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(e) Reprioritize the remaining budget of ACEF so that it can provide
funding for strategic public investments closest to the major project areas
of already ongoing ACEF projects and allocate grants to special projects
for technical assistance (feasibility studies, management guidance, etc)
among small farmers’ organizations and cooperatives applying for funding
under ACEF Facility.
(f) Revisit the implementation mechanisms of ACEF to separate the policy
and oversight functions with the management /implementation of the
facility.
(g) Trade issues should be integrated in the national development
agenda, especially those related to poverty reduction, increasing
productivity and competitiveness, providing compensation and human
development safeguards, and diversification of exports and markets. At
the regional / international development levels, trade issues should build
credible alliances, achieve fairer terms of trade, target technical
assistance, strengthen the special and differential treatment (SDT)
provisions of the WTO Agreement, offer aid for trade and focus on human
development.
3. Irrigation and SAFDZ (Sections 5-12; 26-37)
The review points to one main conclusion, that is, irrigation and SAFDZ
components were not implemented! Four general sets of recommendations were
formulated for the effective and speedy implementation of the irrigation and
SAFDZ components of AFMA. These include the following:
(a) Jump starting the implementation of stipulations and their corresponding
IRRs that are within the capability of existing institutions and institutional
mechanisms to carry out.
In more than half of the IRRs, there was no compliance due to inaction
or indifference of the agencies concerned. These include rules under
Section 26 to 30.
(b) Amending sections and IRRs of AFMA for clarity of objectives, targets,
budgetary provisions, adequacy of baseline information and institutional
mechanisms, and realistic time frames.
The stipulations and IRRs are beyond the capability of the concerned
institutions and individuals to accomplish within the specified time
frames of AFMA activities. They should be reviewed for clarification of
budget, objectives, and targets, amendments in terms of more realistic
time frames, and data adequacy as well as institutional arrangements,
strengthening, and reorganization. These include mandates under
Sections 5 and 9.
(c) A Program Framework for Accelerated and Sustained Irrigation
Development.
The Team Expert has formulated a framework that is still very relevant
today in his book Averting the Water Crisis in Agriculture: Policy and
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Program Framework for Irrigation Development (David, 2003). This
includes a strategic vision for the transformation of high-risk, rainfed
agriculture into highly productive, intensive and diversified irrigated
agriculture.
(d) A procedure for the identification of NPAAAD, SAFDZ, and model farms
based on the stipulated criteria and implementation of the SAFDZ
concept has been proposed.
The root cause of the non-compliance with the SAFDZ concept was
flawed process of delineating the SAFDZ. There is an urgent need to
accurately and expediently delineate the SAFDZ on the basis of the
criteria stipulated by the Act (Section 6 and its IRR).
4. Credit (Sections 20-25)
The following are recommended:
(a) To address the lack of investment credit:
• Strengthen Land Bank’s capacity to evaluate and finance long-term
projects; and
• Promote collaboration among GFIs and private banks/business and
the farming community to develop appropriate loan products and
services for long-term projects
(b) To help resolve the inadequate financing of smallholder.
• Re-examine lending policies, processes and products of Land Bank
and Quedancor, e.g. wholesale and retail lending, participation of
rural financial institutions
(c) To address the missing market for finance services:
• Identify barriers or constraints and devise incentives for investors and
lenders; and
• develop innovative pilot projects to improve access to formal lending
(d) To minimize the systemic risks in the rural areas:
• Introduce a better package of risk-reducing instruments, e.g., critical
rural infrastructure, access to research and development, technology
and information.
(e) To help small farmer access to the global supply chains.
• Provide technical assistance to small farmers/rural producers;
• Provide budgetary appropriations for critical rural infrastructure and
other support services
• Link agricultural primary producers with agro-processors, agri-
businesses, marketing agents, etc.
(f) To mitigate the impact of agrarian reform on land and credit markets:
• Re-examine policies affecting land market transactions
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5. Other Infrastructure and Post-harvest Facilities (Sections 46-59)
The general recommendations:
(a) Finalize an integrated agriculture and fishery infrastructure plan.
The plan will serve as the blue print in identifying priority post-harvest
facilities, farm-to-market roads, research and technology infrastructure,
and other implementing mechanism based on effective organizing
frameworks by the DA-concerned agencies in partnership with LGUs
during the period of AFMA extension. The DA should also coordinate with
the officials of DAR and DENR to determine the convergence of FMRs
and other related infrastructure.
(b) Review and finalize the guidelines for the prioritization of
government resources for the other infrastructure and post-harvest
facilities. DA-FOS, BPRE and DA-PDS have initially prepared the
guidelines for prioritization of government resources for the other
infrastructure and post-harvest facilities. In view of the extension of
AFMA, DA-OSEC and concerned agencies must review the said
guidelines to determine whether these are still relevant given the
changing needs of the agriculture and fisheries sector, and if not
formulate a more appropriate guidelines/criteria.
(c) Designate a Department Assistant Secretary to take charge of agrifisheries
infrastructure. Rule 46.2 of AFMA states that the DA
Secretary should designate a DA Assistant Secretary to take charge of
the DA’s program of infrastructure support for agriculture and fisheries
modernization. At present, there is no DA Assistant Secretary assigned
to assume such function.
(d) Institutionalize the agricultural engineering groups of DA and LGUs.
The agricultural engineering groups of DA and LGUs which have been
existing for so long should be mainstreamed in the DA structure and
LGUs to effectively and efficiently provide the necessary technical and
engineering support in the implementation of agri-fishery infrastructure
and mechanization projects under AFMA as well as in the provision of the
needed assistance by farmers concerning the operation and
maintenance of their post-harvest facilities and machinery projects.
(e) Enforce and continue developing the Philippine agricultural
engineering standards. Although the DA has already adopted five
volumes of the Philippine agricultural engineering standards, these
should be fully enforced as part of the implementation of agri-fisheries
infrastructure, mechanization and post-harvest facilities projects.
Likewise, other standards particularly on the machineries and agricultural
facilities for other agricultural and fishery commodities which are not yet
existing should also be developed. This will address the issues and
problems on low quality, substandard and underutilization of post-harvest
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facilities, slaughterhouses, farm machineries and other agri-fisheries
facilities.
(f) Design and implement an effective monitoring system for AFMA.
Although there is a monitoring scheme suggested for FMRs and
expectedly for post-harvest facilities and agricultural machinery, it is
important that NAFC will serve as the overall agency responsible for
integrating the progress reports submitted by concerned agencies and
monitoring of other infrastructure that has no designated DA-agency to
assume such function. It is important to allocate a regular budget of at
least 1 percent of the total budget to be earmarked for other infrastructure
and post-harvest facilities for monitoring purposes. A consultant may be
hired to assist in the design of the monitoring system for other
infrastructure and post-harvest facilities.
The specific recommendations include:
(g) Continue the implementation of the counterpart-funding scheme between
the LGUs and the national government for FMR
construction/rehabilitation as stipulated in the IRR.
(h) Involve the target beneficiaries in the construction/rehabilitation and
maintenance of FMRs.
(i) Adopt the proposed amendments/addendum on the existing policy
guidelines on FMR development.
(j) Conduct policy studies on shipping services.
(k) Assess the state of telecommunication services for agro-industry.
(l) Fast-track the validation, approval, and adoption of the Action Plan on
quarantine and regulatory services.
(m) Finalize the program that will encourage the LGUs to turn over the
management and operation of public markets and abattoirs to qualified
vendors’ or suppliers’ cooperatives.
(n) Develop a national post-harvest development plan.
(o) Fast-track the passage of the agricultural and fishery mechanization law
(p) Provide adequate training and extension support
(q) Continue conducting the nationwide post-harvest facility and agricultural
machinery inventory.
6. Budget (Sections 111-112)
The following recommendations are put forward:
(a) DA to define its Strategic Priorities consistent with its core
functions under the AFMA. For a more efficient use of its limited
resources, the DA needs to clearly define its strategic priorities and make
them consistent with its core functions under the AFMA. It should be able
to direct its resources in the performance of its mandated functions
through a transparent financial budget. The rationalization program of the
national government is a major enabling milestone for the DA to fine tune
the agriculture bureaucracy to meet the challenges posed by the AFMA.
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(b) DA to implement budget reform measures. DA has started instituting
measures in accordance with the principles of public expenditures
management reforms espoused by the DBM. New budget formats that
will enable the DA to structure its budgetary allocation in accordance with
its Major Final Outputs (MFO) had been started. These new formats
should facilitate the reconciliation of authorized expenditures with their
MFOs, and consequently their priority areas for spending.
(c) DA to institutionalize agency-wide reforms. The effective
implementation of the World Bank-assisted Diversified Farm Income and
Market Development Project should provide the much needed boost to
the institutionalization of reforms. This execution of the five interlinked
components should bolster an agency-wide change and development
process.
(d) Budget allocation priorities to take into account results of regional
consultations.
(e) DA to enjoin more active participation by the private sector and
LGUs. The DA’s major role should be to encourage private sector
investments that would dynamically induce agricultural development and
modernization. It should concentrate on providing a more conducive
policy environment for the private sector initiatives to thrive. Also,
concentration on major infrastructure development, outside the ambit and
financial reach of the private sector, would result in improved symbiotic
relationship between government and private sector.
(f) DA to reconcile its records with the DBM. It is important that efforts be
made by the DA to reconcile its records with that of the DBM. This should
include all the other records pertaining to fund attributions to the AFMA
special funds. The effect of not using the same set of data when
requesting (on the part of the DA) and analyzing and deciding on the
budget approvals and fund releases (on the part of the DBM) cannot be
overemphasized.
7. Product Standardization and Consumer Safety (Sections 60-64)
Proposed Amendments
AFMA Chapter 7, Product Standardization and Consumer Safety, should be
amended to strengthen the agriculture and fisheries product control, promote
uniform application of consumer protection measures, more timely action to
protect consumers and more cost efficient and effective use of resources and
expertise. The AFMA IRR and related AOs will have to be amended as well.
(a) The first proposed amendment is to provide for the establishment of
the Agriculture and Fisheries Safety Authority (AFSA). AFSA shall
integrate the agriculture and fisheries safety and quality system to
achieve effective collaboration and coordination among the different
agencies of DA, DOH, DTI and LGUs.
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(b) The second proposed amendment concerns the function and
organization of BAFPS. BAFPS should be made the sole standards
formulation agency of government in the agriculture and fisheries sector.
BAFPS will formulate new standards, and review and update existing
standards to harmonize them with international standards.
(c) The third proposed amendment is the establishment of a Laboratory
Service at the same level as BAFPS and the Inspection and Regulatory
Service. The LS will be the new management structure for all
laboratories (more aptly referred to as “service laboratories”) and a
National Reference Laboratory (NRL) that is yet to be established.
DA agencies which currently perform standards development function
should be stripped of this power. All DA regulation and enforcement
functions that are currently under BPI, BAI, NMIS, BFAR, FPA, NFA,
PCA, SRA, NTA, and CODA should be consolidated under an Inspection
and Regulation Service (IRS). The function would include product quality
and safety, and plant and animal health inspection and regulation. The
role of the LGUs in enforcement should be clarified to avoid confusion
that leads to conflict as well as gaps.
BAFPS should continue to act as Codex Contact Point (CCP). It should
also be host and Secretariat to the National Codex Committee (NCC),
the SPS Enquiry and Notification Point.
Market development and market promotion activities fall under the
purview of and should be turned over by the regulatory agencies to
AMAS. For most regulatory agencies, product research and
development could be performed by government research or academic
institutions. These activities are usually funded with resources from
commodity programs or BAR anyway. They also compete for resources
within the agency.
(d) The fourth amendment is the establishment of a Central Laboratory
Service (CLS) to address the critical issues of the state, utilization,
performance, staffing and funding of all laboratories that are so important
to standards formulation and regulation.
(e) For the fifth amendment, the “extended AFMA” funding should make
specific provisions for multi-year funding for infrastructure, facilities and
equipment; research for standards setting; and research related to
agriculture and fisheries safety issues.
To address the eternal funding constraints, some services could be
shifted to a “user fee” system which simply means user pays for
services, for example, inspection for certification/accreditation/permits,
and laboratory services.
The fifth revision should authorize all concerned agencies to retain all
fees collected by the agency to be used to sustain operation instead of
being turned over to the Bureau of Treasury.
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(f) Review of AFMA – Related Laws and Current Donor Projects
The review and amendment of AFMA is the best time to conduct a
comprehensive review of the Philippine agriculture and fishery safety
system, especially if the policy makers choose to adopt an integrated
system to minimize duplication and eliminate the gaps and enhance
efficiency as recommended in this report.
DA and COCAFM should revisit the on-going projects to review the
relevance and consistency of the current efforts under those projects
with the Agriculture and Fishery Control objectives under the proposed
AFMA amendment. DA should ensure that the projects are aligned with
the objective of strengthening of the agriculture and fishery control
system to protect the Filipino consumer as well as consumers of the
Philippine export products equally and promotes the competitiveness of
Philippine products in the domestic as well as foreign markets.
8. Research and Extension (Sections 80-95)
On research, the following are recommended:
(a) the IRR must be revised and that the task of revision must be the
responsibility of BAR and ATI.
(b) The utility of a consultative approach is good only if there is a good
recording and there is a task force that will integrate the results of the
consultation.
(c) A framework should be developed and it is suggested that resource
management is used as a framework.
(d) The consultation is most invaluable in sharpening the edges of an agreed
upon framework.
(e) The pros and con of consultation. It could be said that the inherent
difficulties embedded in AFMA’s IRR is its abstract orientation and the
difficulty of translating them into action.
(f) Consultation is an interpretive action. However, the issue on how to
integrate such action is not easy to do. This could have been facilitated
and made easy if the consultation process was based on an agreed upon
frame of reference. Without this, the present IRR is fragmented and it is
very difficult to see how the different components are linked to form a
unity.
(g) The RDE component is a clear illustration of this. Many of the rules are
stated in the abstract. Take the case of research in relation to improving
research structural performance:
Rule 81.2.1 - The term enhance shall denote the improved
responsiveness and usefulness of research and extension to the
livelihood concerns of agriculture and fisheries operators and
entrepreneurs.
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The use of the term livelihood is not clear. Generally, this is used to refer
to income generation projects (IGPs). Why not productivity and
profitability?
Rule 81.2.3 The term consolidate means the unification in strategy,
approach and vision, of agriculture and fisheries components of the
ongoing National Agriculture Research and Extension Agenda (NAREA)
formulated by the Department of Science and Technology Agenda for
National Development (STAND) formulated by DOST, as well as the
unification of the overall management of, and responsibility for, the
research and extension system, in agriculture and fisheries under the
Department at the national level and under the LGUs at the local level.
The use of the term unification is not clear. In theory, it is from the vision
where the strategies and approaches are derived. These can, therefore,
be integrated only on the basis of an agreed upon vision. In other words,
unify the vision to integrate action.
Rule 81.8.1 – (The CERDAF shall) promote the integration of research,
development and extension functions and enhance the participation of
farmers, fisherfolk, the industry and the private sector in the
development of the national research, development and extension
agenda.
For a long time now, we have been trying to integrate our development
activities to no avail. It seems that in developing the IRR we have not
brought to bear our major lessons learned in RDE.
Rule 81.8.2 Prepare and oversee the implementation of a
comprehensive program RDE to enhance, support, consolidate and
make full use of the capabilities of the interlinked NaRDSAP
What does comprehensive entail? There are at least two meanings of
the term: 1) comprehensive internally e.g. with commodity; and, 2)
between commodities. Does the term refer to both cases? This is not
clear.
Rule 81.9.2 Develop methodologies and systems for effective
research, development and extension planning in agriculture and
fisheries emphasizing the quality and intensity of participation…
In view of the specific use of the concept methodology in research, the
appropriate term is strategies. Also what is meant by quality and
intensity?
Rule 81.13.1 Provide national leadership in the planning and
orchestration of the implementation of M & E of the RDE program.
Again this should be made more explicit since agriculture and fisheries
are multi-commodity systems
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Extension
Rule 81.14.1 Provide leadership in the planning and orchestration of the
implementation of M & E of an integrated RDE within a farming
systems approach in coordination with the Regional Training Center
(RTC).
Again the term integrated must be spelled out. Why the sudden
appearances of farming systems approach? Is this the key to
modernization or something else? Make this clear and show how it fits
the overall RDE system.
The RDE expert considers the section on extension to be weak. The section is
mainly focused on structural arrangement and barely on substantive matters.
(a) The link between research and extension was hardly discussed.
(b) The precise role of research output in the design of extension service
was not specified.
(c) The basis function of information in extension was not discussed.
(d) The transformative impact of information on agriculture and fisheries was
not discussed in extension work.
(e) The role of IEC in relation to ICT was not included in the design of
extension work. The innovative and creative role of SUCs in assisting
LGUs in institutionalization a new mode of production systems through
human resource development was not given much importance.
(f) The expert would like to recommend, therefore, that the section on
research could stand as such. What needs to be done is mainly
clarification of definitions and putting them in the right context.
(g) It is the section on extension that would require major overhaul.
(h) The substance of extension was not discussed in terms of the
complementation of innovation and improvements in information and
knowledge management.
Its implications to the delivery of extension service and to the management of
agriculture and fisheries were not discussed.
9. Institutions and Bureaucracy.
The most important task for Congress is to ensure the reorganization of the DA
consistent with the requirements of AFMA and the recommendations of the
AGRICOM. This task can be pursued in several ways depending on the position
legislators will take regarding the limits of executive and legislative
reorganization.
(a) If Congress takes the position that the power to reorganize fundamentally
or solely resides in the legislature then it must prioritize the following:
• The enactment of a law providing for a system-wide reorganization of
the bureaucracy.
• The enactment of Senate Bill 240 (Osmeña Bill) which provides for the
reorganization of the DA along functional lines as provided for in the
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AFMA Report and RA 8435. The main provisions of the proposed
rationalization plan under E.O. 366 can be incorporated as author or
committee amendments to SB240.
• Legislative action on bills that reorganize the National Food Authority
and the creation of a separate Department of Fisheries and Aquatic
Resources.
(b) If Congress adheres to the more radical view that the President has
continuing powers to reorganize the bureaucracy as provided for by P.D.
1416, PD 1772 and the E.O. 292 then it must:
• Support the on-going reorganization effort undertaken through E.O.
366 and impress upon the DA leadership the need for a more radical
reorganization that includes government corporations.
• Request the President to issue an executive order to rationalize the
NFA and other commodity corporations consistent with the AFMA
recommendations.
(c) Congress must also exercise its oversight powers, either through the
COCAFM or through independent third-party policy assessment, to
determine:
• Whether the creation of a separate DA-BFAR regional unit and the
existence of two separate DA regional offices has actually improved
governance in the fishery sector to determine the appropriate
integration of agriculture and fisheries offices at the regional level.
• The extent of implementation of key tasks given to the BFAR by the
Fisheries Code such as the demarcation of fishing areas; updating of
the Philippine Marine map including the delineation of the boundaries
and depth of municipal waters; conduct of an inventory of rare,
threatened and endangered aquatic species; providing assistance to
local government units particularly the delineation of the boundaries of
municipal waters, establishment of a comprehensive information
network at the local level for collecting, storage and retrieval of fishery
data; and the establishment of monitoring, control and surveillance
system of Philippine waters at the national and local levels.
• The extent and quality of participation of agriculture stakeholders in the
boards and councils of agricultural agencies to increase participation in
DA governance and guide the rationalization of these agencies either
through an executive order or a reorganization law.
• The status of implementation of the provisions of the Fisheries Code
(RA 8550) on the organization of fisheries and aquatic resources
management councils and integrated fisheries and aquatic resources
management councils to guide legislative action on the institutional
arrangements that best promote stakeholders participation in the
development of fisheries and aquatic resources.
• The extent of participation of local governments through the leagues or
the Union of Local Authorities of the Philippines (ULAP) in the boards
and councils of the various commodity corporations and attached
xxi

agencies and develop the appropriate mechanisms of participation of
local governments in the governance of these institutions.
• The expenditure pattern of local governments for devolved services in
terms of compliance with the requirements of the Local Government
Code, the level of national government non-IRA funding needed to spur
agricultural modernization, and incentives needed to convince local
governments to allocate more resources for agriculture.
• The implementation of E.O. 344 in terms of its policy objective to
determine LGU-compliance with the LGC mandates on the devolution
of agriculture functions, and the appropriate DA RFU-LGU linkages that
will help promote agricultural modernization.
10. Human Resource Development (Sections 65-78)
The incomplete implementation of AFMA to establish a National Agriculture and
Fishery Education System was not a case of lack of initiatives among the
agencies involved but simply a typical case of budgetary inadequacy for new and
incremental initiatives of these agencies using already regularly allocated funds.
In this regard, the following recommendations are suggested:
(a) Strengthen the operational and technical working relationships between
the DA, the CHED, DepEd and TESDA in focusing prioritized program of
activities in the establishment of quality, efficient, competitive and
sustainable National Agriculture and Fisheries Education System
(NAFES) in the country;
(b) The DA should take the lead role in facilitating the immediate transfer of
funds from the budget allocated to AFMA for the NAFES; and
(c) Revisit more intensively the NAFES Policies, Plan and implementing
Guidelines established in 2002 and select strategic core HRD activities
that can propel the effective realization of NAFES.
11. Rural Non-Farm Employment (Sections 98-107)
Rural industrialization is a critical element of rural development. The importance
of employment in the non-farm sector can not be over-emphasized. With small
holdings, agriculture alone will be unable to absorb the increase in labor force in
the sector.
(a) The Basic Need Program (BNP) goals must be revisited as they are
ambitious and duplicate agency activities.
(b) The BOI incentives for agriculture and fisheries appear in order.
However, investments in ecozones for exports should also be promoted;
and
(c) The training and certification of workers should continue but it must be
market and employer-driven.
CONCLUSIONS
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AFMA is a good law with rather ambitious goals but with lack of political
commitment to fund it. The AFMA elicited a lot of expectations with the additional
resources. There was, however, a weak IEC that did not indicate that all related
programs will form part of the Agriculture and Fisheries Modernization Plan. As
a result, the stakeholders felt that implementation was below par, and its impact
poor to moderate. There are at least several footnotes to the review:
1. The budget by components (in percentage terms) was not followed;
2. There was bias for production-support, and less in marketing, R & D,
human resources development and inter-agency linkages;
3. There was little concern for regional priorities;
4. The need for sound criteria for project selection was not explicit;
5. The role of private investments in growth and job creation was not explicit;
and
6. PBME was severely inadequate which, in part, affected the effectiveness
of the Review Team.
Looking forward, the amendments to AFMA and its IRR will be big steps forward.
However, they are insufficient conditions unless funds are forthcoming and they
are allocated with sound criteria. Lastly, there are important aspects of the
enabling environment that are not part of the AFMA Review but they are also
necessary elements to move a competitive agriculture, fishery and agri-industry
to full speed. These include:
1. Amendments to the CARP Law (e.g. free the land markets to bring
collateral value to agricultural lands);
2. Amendments to the Local Government Code (e.g. to revisit the disjointed
lines of authority between the provincial agriculture officers and the
municipal agriculture officers);
3. Review of the Fisheries Code as it relates to the AFMA;
4. Implementation of existing laws (e.g. Tarrification Law);
5. A meritocratic bureaucracy;
6. Continuity in leadership, particularly in the DA; and
7. Good local governance (e.g. sound use of IRA for agriculture
development).
These will bring agriculture, fisheries and agri-industry growth to full speed, and,
in turn, reduce rural poverty.
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Chapter Summaries
CHAPTER 1. INTRODUCTION
1. The Agriculture and Fisheries Modernization Act (AFMA) became a law in
late 1997. The Implementing Rules and Regulations (IRR) was issued in
July 1998. From budget resource standpoint, full implementation started in
1999. The AFMA expired in 2004 but was quickly extended by Congress
to 2015 in March 2005.
2. The AFMA Review is anchored on Section 117 which provides:
• Section 117. Automatic Review – Every five years after the effectivity of the
Act, an independent panel composed of experts to be appointed by the
President shall review the polices and programs in the Agriculture and
Fisheries Modernization Act and shall make recommendations based on its
findings, to the President and to both Houses of Congress.
3. The IRR Rule 117.1 further provides that:
• The services of an independent review panel shall be recommended to the
President by the COCAFM, and upon the President’s approval, be engaged
by the COCAFM Secretariat no later than the end of the third year after the
effectivity of the Act, to allow for adequate preparation for the automatic
review.
4. In July 2005, the Congressional Oversight Committee on Agricultural and
Fisheries Modernization (COCAFM) and the CRC Foundation signed the
Memorandum of Agreement witnessed by the representatives of the
National Agricultural and Fishery Council (NAFC) and Strive Foundation.
5. This draft final report is among the several milestones ending with the final
report after comments from COCAFM, DA, and NAFC have been
incorporated. This report contains heavy inputs from the stakeholders
following the regional consultations and surveys of leading producer
associations.
6. The AFMA Review Study is expected to: (a) evaluate and measure the
impact of AFMA and its programs on outputs; (b) to analyze the flow of
budgetary resources to the sector and specific industries (if possible); (c)
determine how AFMA was implemented through specific sector and
commodity-specific studies, surveys and consultation workshops; and (d)
recommend policy directions, program interventions, and amendments to
the law and IRR (Ref: Inception Report, August 1, 2005).
7. The Report will have the following coverage:
a. Analysis of agriculture performance, pre-AFMA and post-AFMA;
b. Reports by AFMA components with recommendations; and
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c. Commodity specific reports
CHAPTER 2. METHODOLOGY
8. Since AFMA visualizes as a strategy the transformation of Philippine
agriculture from a resource-based to technology and market-driven
agriculture, the team of consultants will assess as an entry point, the
development of the Strategic Agriculture and Fisheries Development Zone
(SAFDZ) as the convergence for AFMA related development interventions
evolving into integrated development plans that will serve as inputs to the
National Agriculture and Fisheries Modernization Plan.
9. The project team used both primary and secondary data. Primary data
were gathered through interviews with key informants from the
government and the private sector. A series of regional consultations
were also conducted before report finalization. Meanwhile, secondary
data were collected from government agencies, data banks of international
organizations, research firms, and private institutions.
10. The analysis covered nine plus two additional components of AFMA as
follows: (a) marketing and information; (b) trade and fiscal incentives; (c)
irrigation; (d) credit; (e) other infrastructure and post-harvest facilities; (f)
budget/finance; (g) product standardization and consumer safety; (h)
research, development and extension; and (i) institutions and bureaucracy.
The two other components which were not included in the original
mainstream terms of reference of the Team of Experts were: (j) human
resource development; and (k) rural non-farm employment. Their
analysis, however, was not as extensive as the other nine due to
budgetary constraints.
11. The chapter assessed the different AFMA components and activities and
discussed how these translated into the performance of agriculture and
fisheries. It also analyzed the flow of budgetary resources to the
agriculture and fishery sectors as well as its effects on employment and
poverty alleviation. Given the review and analysis undertaken, the study
proposed policy and program recommendations that can enhance the
effective implementation of AFMA.
CHAPTER 3. AGRICULTURE PERFORMANCE
12. The discussions focused on four areas: agriculture output, agricultural
productivity, employment and trade during the pre-AFMA (1993-1998) and
AFMA period (1999-2004).
Agriculture Output
13. Pre-AFMA Period. Agriculture accounts for about 20 percent of total
gross domestic product (GDP). From 1993-1997, the real gross value
added in agriculture, fishery and forestry grew by 2.6 percent per year, a
moderate record by world standard. The growth leaders were poultry,
banana, livestock and palay. In 1998, growth dipped by a record 6.4
percent due to the adverse effects of a severe El Niño episode.
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14. AFMA Period. From 1999-2004, the sector registered a relatively
impressive growth of 4.1 percent per year. The strong performers were
several crops, poultry and fishery.
15. In terms of contributions to growth, some 57 percent of the growth
between 1993 and 1997 came from crops, 24.6 percent from poultry, 23.5
percent from livestock and 7.9 percent from fishery. Forestry and
agricultural activities and services had negative contributions. Meanwhile,
between 1999 and 2004, the growth contribution of crops dropped to 42
percent. The same was true for poultry and livestock. Fishery,
meanwhile, managed to increase its share to 33.7 percent.
16. The numbers showed that during the pre-AFMA period, market-driven,
private sector-led commodities contributed over half of growth, primarily
other crops, livestock and poultry. Palay also provided solid contribution.
By contrast, during the AFMA period, the market driven, private sector-led
commodities (livestock, poultry and more so fishery - mainly seaweeds)
provided the buoyancy.
17. Relative to selected country competitors, the Philippines’ agriculture
performance was not far behind compared to the 1980s. In 1993-1997, it
fared better than Malaysia and Indonesia. While it posted the worst El
Niño contraction in 1998, it managed to bounce back in the succeeding
years, still surpassing the two countries. Thailand and Vietnam, though,
were far better performers all throughout.
18. The nagging question is the high incidence of the poor in the rural sector
where agriculture is the primary occupation. Poverty is an agriculture
phenomenon (Senator Edgardo J. Angara, c. 2000). This makes
agriculture both a threat to growth and an opportunity.
Overall Productivity
19. The growth of agriculture labor productivity in the country, as represented
by the agriculture real value added per worker, improved from 0.7 percent
per year in 1993-1998 to 1.3 percent per year in 1999-2002. Growth,
however, lagged behind other Asian countries. In 1999-2002, Philippine
growth was only a third of Thailand, a fourth of Vietnam, and a little over a
fifth of Malaysia.
20. Meanwhile, in terms of land productivity, as measured by agriculture real
value added per hectare, growth averaged 2.2 percent in 1993-1998,
accelerating to 7.4 percent per year in 1999-2002. Performance was
significantly better compared to its Asian counterparts. This could imply
that agriculture growth in the Philippines could be driven more by yield
improvements (e.g. through the use of better varieties) rather than area
expansions, especially in 1999-2002. However, its land per worker was
declining faster than its Asian neighbors.
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Employment
21. From 1993-1998, agriculture contributed an average of 42 percent of the
total employment, or about 11.3 million jobs yearly. This share dropped to
37 percent in 1999-2003, or about 11 million people annually. The decline
may be attributed to a possible shift to the industry and service sectors,
which managed to post increases during the same period.
22. The growth of agriculture employment was rather flat at 0.1 percent per
year from 1993-1998. It registered a better turnout in 1999-2003 with
mean growth of 2.9 percent.
23. Agriculture accounted for a large chunk of total employment in many Asian
countries. Compared to its neighbors – China, Indonesia, Malaysia,
Thailand and Vietnam, however, the Philippines performed badly in 1993-
1998 but bested them in 1999-2003. Further, all countries except
Indonesia registered drops in the respective shares of agriculture to total
employment in 1999-2003 as compared to 1993-1998.
Agricultural Trade
24. The Philippines was a net exporter of agricultural products until 1995,
when the country, for the first time, posted a deficit of US$ 41 million. This
deficit has ballooned to US$827 million in 2004.
25. Philippine agricultural exports grew by 3.5 percent per year from 1993-
1998 and this increased to 7.6 percent per year in 1999-2004. The
average share of agricultural exports to total exports dropped from 13.4
percent to 5.6 percent during the two periods.
26. Meanwhile, agricultural imports grew at a faster rate of 13.1 percent per
annum from 1993-1998. This slowed down to 3.1 percent per year from
1999-2004. Agricultural imports contributed 9.5 percent of the country’s
total imports in the former period; the share slid slightly to 9 percent in the
latter period.
27. Overall, Philippine agricultural trade fared badly when compared to its
Asian competitors like Indonesia, Malaysia, Thailand and Vietnam. These
countries have managed to post trade surpluses all throughout 1993-2002.
The poor trade performance of the Philippines may be attributed to a
number of factors: low agricultural productivity especially in the 1990s,
trade liberalization which led to the influx of cheap imports, stagnation of
the country’s commodity exports (i.e., coconut), and increases in input
prices (e.g. wheat and feed ingredients). Exports were also affected by
the Asian financial crisis and the economic slowdown in the country’s
major markets, the US and Japan. Further, the country’s agricultural base
was also battered by adverse climatic conditions like the El Niño and La
Niña weather phenomena.
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CHAPTER 4. AFMA COMPONENTS
28. This chapter covered a review of the nine plus two additional AFMA
components.
4.1 Marketing and Information
29. Agriculture and fish marketing faces many challenges along their
supply/value chains. The dominance of unorganized, dispersed and small
producers is a key factor. Unorganized producers affect scale and result in
high cost, uneven quality and poor supply responsiveness, and limited
access to timely information. There is also the high supply chain cost due
to transport costs, assembly costs, and quantity/quality losses.
30. Globalization provides many marketing opportunities as well as
challenges. Market size and segments are far bigger and the buying
power of the consumers is much higher in the foreign markets. But
markets are also more competitive as trade barriers are lower. At the
same time imports have increasingly encroached into the domestic
market. Under this liberal regime, producers must be organized across
the supply/value chain keeping in mind cost, quality, reliability and
responsiveness, and product innovation.
31. At the same time, technical barriers to trade continue to hobble export
trade. Some countries have now more stringent minimum levels and
minimum residue levels. The lack of agreement under the WTO Doha
Round is a “missed” opportunity as the parties failed to agree on: reduction
of subsidies in developed countries; tariff reduction; and non-agriculture
market access.
32. The role of the government, particularly the DA, LGU and the Legislature
is to provide the enabling environment for producers (including small
farmers and fisherfolk) and investors in the supply chain. Investment is
the driver of economic growth and job creation. Without investment in
agriculture and fisheries, stagnation and rural poverty will be exacerbated.
Government must focus on what it can do best: making the goods and
information highway efficient, freeing the land market, enhancing security,
and improving resource use. The private firms know the market better and
have comparative advantage in choosing the right investment.
The Philippine Farm Sector
33. The Philippine farm sector is dominated by small holdings. In 2002, there
were 4.82 million (M) farms covering 9.67 M hectares (ha), with average
size of only 2 ha. Some 40 percent of the farms were less than 1 ha (with
8.6 percent of area), 41 percent of farms were 1 ha and below 3 ha (31
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percent of area); 10.6 percent between 3 to 5 ha (18.4 percent of area),
and 6.3 percent, above 5 and less than 10 ha (19.8 percent of area).
Altogether, about 90 percent of the farmers have less than 5 ha (58
percent of area).
34. Coconut and rice farms comprised more than half of all farms and area.
Contrary to popular views, coconut farms (1.4 M) had slightly higher
number than rice farms and are significantly larger (3.3 M ha vs. 2.5 M ha).
Corn, sugarcane and other crops covered over 3 M ha.
Farms by Crop: Number and Area of Farms in 2002
Number of Share Area of Share
Farms ( percent) Farms (ha) ( percent)
Coconut 1,400,394 29.0 3,325,449 34.4
Rice 1,351,678 28.0 2,467,164 25.5
Corn 679,183 14.1 1,351,428 14.0
Sugarcane 67,490 1.4 362,877 3.7
Others(a) 1,323,994 27.5 2,163,875 22.4
All Types 4,822,739 100.0 9,670,793 100.0
(a) Banana, fruit trees, tree crops, vegetables, rootcrops, tobacco, fibercrops, etc.
Source: 2002 Census of Agriculture
35. The fisheries and aquaculture comprised some 1.6 M operators, with
almost 1.4 M in subsistence municipal fishery, and 0.2 M in aquaculture
(mainly in fish and seaweed farms). According to experts, the subsector
has not even reached a fifth of its potential.
36. These are the constituencies of AFMA. The major challenge is how the
government (from national to the local level) can cost-effectively respond
to the needs of the small holders and fisher folk. At the same time, the
public sector has to think of AFMA partnerships in order to leverage its
resources and promote investment and job creation.
The Role of AFMA
37. The AFMA mandates that: A market information system shall be installed
for the use and benefit of, but not limited to the farmers and fisherfolk,
cooperatives, traders, processors, the LGUs and the Department (Section
39). Thus, the Department shall establish a National Marketing Assistance
Program that will immediately lead to the creation of a national marketing
umbrella in order to ensure the generation of the highest possible income
for the farmers and fisherfolk or groups of farmers and fisherfolk, matching
supply and demand in both domestic and foreign markets (AFMA, Section
40).
38. The status of AFMA targets and achievements under the various IRR are
extensively discussed in the Main Text of the report. These involved
agencies engaged in marketing [e.g., Agribusiness and Marketing
Assistance Service (AMAS)], data generation [Bureau of Agriculture
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Statistics (BAS), Bureau of Animal Industry (BAI), and National Statistics
Office (NSO)], and information dissemination [Information Technology
Center for Agriculture and Fishery (ITCAF), and Agriculture and Fisheries
Information Service (AFIS)]. The overall AFMA achievement and target
were not encouraging. The Law may have set targets that were ambitious
from the standpoint of organizational capabilities and budgetary support.
Nevertheless agriculture growth was recorded and some advances were
made despite broad-based resource constraints. The growth could be
mainly attributed to private sector investments.
AFMA General Impact and Implementation on Marketing and Information
39. The workshops in the 16 regions showed that AFMA Marketing and
Information impact and implementation had low to moderate ratings. The
participants rated AFMA implementation as poor to fair.
40. The major factor that emerged was the limited budget relative to the AFMA
targets. In addition, the severely inadequate information, education and
communication campaign (IEC), and the high expectations generated
could have contributed to the stakeholders’ disaffections. The poor IEC
with respect to the conversion of all agriculture and fishery related
programs and projects as cornerstones of Agriculture and Fisheries
Modernization Plan has heavily contributed to the poor perception.
AFMA Impact and Implementation
Rating Rice Corn HVCC Livestock Fisheries
GENERAL IMPACT
High 1 1 3 - 3 (a)
Moderate 5 6 8 7 5
Low 7 8 4 7 6 (a)
None 3 1 1 1 3
IMPLEMENTATION
Good 1 1 2 1 2(b)
Fair 7 6 10 6 7
Poor 5 7 1 7 9(b)
None 3 2 3 1 0
(a) Fisheries in Region 4-A had two ratings: aquaculture and marine.
(b) Fisheries in Regions CAR and 3 had two ratings for marine and aqua
41. The regional picture indicated mixed performance. The Team felt that
some deserving regional directors did not receive good ratings. They, too,
have suffered from the stakeholders’ backlash, in many cases, for no fault
of their own.
General Impact of AFMA, Perception by Region
REGION Rice Corn HVCC Livestock Fisheries
CAR L L* L, M - H
Region 1 H M H L L
Region 2 N L M L M
Region 3 M H M M H- Aqua, L- Marine
Region 4-A L M M M M
Region 4-B M M M L L
Region 5 L M H M M
Region 6 M L H L M
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Region 7 L L L L L
Region 8 N M M N L
Region 9 M L L M M
Region 10 N N* N M H
Region 11 M M* M L N
Region 12 L L* L M L
ARMM L L M L N
Caraga L L* L M N
Note: L = low N = None
M = Moderate * = combined with Rice during consultation
H = High
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AFMA Implementation, Perception by Region
REGION Rice Corn HVCC Livestock Fisheries
CAR P P* P, F P, G
Region 1 G F F P F
Region 2 N P F P F
Region 3 F G F F L-marine; H-aqua
Region 4-A P F F G F
Region 4-B F F F P P
Region 5 F F G F F
Region 6 F N G P F
Region 7 F P F P P
Region 8 N F F N P
Region 9 P P N F F
Region 10 N N* N F F
Region 11 F F* F P P
Region 12 P P* P F P
ARMM F P F P P
Caraga P P* N F P
Note: P = Poor N= None
F = Fair * = Combined with rice during the consultation due to limited participants.
G = Good
Amendments to the AFMA Legal Structure
42. The AFMA Section 111 (General Provisions) indicated that 8 percent of
the AFMP budget shall go to marketing assistance, 5 percent for capability
building, and 4 percent for national information network. From interviews,
such level of support was severely inadequate. Irrigation obtained at least
30 percent of the total budget while rice as a crop got the largest share, at
least two-thirds according to some DA officials. The disproportionate
actual allocation for irrigation is detrimental to other regions suitable to
products such as tree crops, and aquaculture.
The AFMA budget provision should be amended to:
a) Ensure that marketing support obtain near the mandated 8 percent of the
total AFMP budget. Marketing support must include: participation in
overseas trade fairs, strategic and marketing research, support to industry
boards and producer associations, publications, website, strategic studies
in competitive intelligence, etc; and
b) The budget should also support the operation of an expanded network of
agriculture (and fisheries) attaches in strategic areas that will include
regular market reports as well as strategic and industry studies.
43. AFMA must be explicit on the role of private investments in
agriculture growth and job creation. Some 90 percent of the
investments in the country are made by the private sector. Investment
expands the country’s productive capacity, increases output, and creates
jobs. It is unthinkable for a country to grow without investment. AFMA can
provide a better investment climate by:
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(a) providing a policy and regulatory framework that minimize red tape and
regulatory capture;
(b) supporting critical mass of quality infrastructure such as farm to market
logistics in selected agribusiness and fisheries zones;
(c) ensuring a free land market that facilitates and consolidation and bank
lending;
(d) having a sound criteria for project selection; and
(e) ensuring good local governance, i.e. ease of doing business.
Proposed Amendments to the IRR
44. AMAS. AMAS has a challenging mandate. IRR Rule 40.6 is a long list
and further expanded under Rule 40.7 [i.e. National Marketing Umbrella
(NMU)].
45. Rule 40.6 cites that in addition to the functions of the former AIIS and
MAS, the AMAS shall be responsible for many other support services and
activities. The 10 sub-rules under the IRR focus on: (a) inventory and
assessment of all post-harvest facilities (PHF) owned by NFA, FTI, PFDA
as well as idle assets owned by GOCCs; (b) turnover of selected PHF to
support NMU; (c) provision of management and technical support to
marketing and agribusiness projects of farmers and fisher folks; (d)
provision of technical assistance and/or upgrading of existing and viable
PHF to be used by NMU; (e) facilitation of linkages of farmer’s
organization; (f) provision of technical assistance for contract growing
schemes or joint agribusiness ventures; (g) financing of technical services
for the conceptualization, design and operationalization of NMU; (h)
promotion of appropriate product standards and quality management; (i)
advocacy for policy reforms supportive of market information; and (j)
organization of fairs, exhibits, shows and other events which promote
market of agriculture and fisheries products.
46. Today, AMAS has a staff of about 60 in the central office and in the
regions, and an annual budget of about P20 M (Note: a high percentage of
the staff is nearing retirement or must be heavily retrained). In the
corporate setting, marketing people are in the frontlines. They form a
large cadre of people. In private companies, marketing budget (market
research, advertisement, product promotion, etc.) is in the range of 5
percent to 15 percent of annual sales. Assuming the DA budget (say P15
billion) as a baseline, the marketing support budget at 5 percent could be
around P750 million a year. The budget will cover: marketing support
for local firms, participation in overseas trade fairs, marketing
intelligence, support to industry boards and associations,
publications, strategic studies, etc.
47. AMAS had a large mandate but a disproportionately low resource to boot.
A large part of the marketing budget was lodged in the flagship
commodity-based (GMA) programs. Funds for competitive intelligence,
such as market research overseas were few and far between. Overall,
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AMAS performance record is mixed due to tasking overload as well as
resource and manpower constraints.
48. Proposal: As part of its new role, AMAS will:
(a) Track agribusiness investments in the supply chain; and prepare project
briefs for investors;
(b) Develop comprehensive databases on commodity supply chains and
players in every region/province, land availability, etc; and collaborate
with DAR. DENR and LGU;
(c) Develop data base (volume, quality, etc.) on primary, and secondary
players in city markets and institutional buyers (for small producer
groups);
(d) Develop data base on sources of supply in production areas and
seasonality (for city buyers and SME processors);
(e) Cost-share with industry associations, civil society organizations and
LGUs the conduct of studies on competitive intelligence (market,
technology, country competitors, etc.);
(f) Cost share with industry associations on commissioning for new product
development and promotion, market promotion (domestic and overseas
trade fairs, etc); and
(g) Develop industry account officers who are well-versed with the market,
investments and supply chain of commodities (from seed to shelf).
49. NIN - Rules 41.1- 41.7. A National Information Network shall be set up
from the Department level down to the regional, provincial and municipal
offices within one year from the approval of this Act, taking into account
existing information networks and systems. The NIN shall likewise link the
various research institutions for easy access to data on agriculture and
fisheries research and technology. All departments, agencies, bureaus,
research institutions, and local government units shall consolidate and
continuously update all relevant information and data on a periodic basis
and make such data available on the Internet.
50. Proposal: The NIN is an overly ambitious plan and suffers from doing
too much with less. The ambition must be tempered to focus on
interconnecting the DA agencies in the region. In the light of rapid
advances in ICT, low cost new technologies using the private sector
backbones can be utilized. An example is the Skype, a low-cost voice
over internet technology (VOIT). It must be revisited.
51. NIN - Rule 111.5.10. The Rule provides that 4 percent of the AFMP will
be for the NIN. The current NIN under ITCAF has been saddled by
inadequate and highly variable budgets. Given the recent developments
in ICT, the NIN should instead focus on linking DA regional offices as well
as various research and academic institutions with new cost-effective
technologies. Linkages with LGUs must be at their initiative and on a costsharing
basis.
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52. ITCAF - Rule 44.1. ITCAF is mandated together with BAS to
operationalize the NIN. The NIN has a comprehensive mandate as the
lead information provider at the national to local levels. A system such as
this requires a strategy, structure, system and sustained resources. When
the volume of information expands, updating becomes more frequent, and
as client demand is expanding, a sophisticated system may be imperative
that includes software and delivery system. If the budget is not adequate,
there is high risk of low actual capability of the system and its high
probability for technology obsolescence.
53. The ICT has developed to a sophisticated level that less investment may
be needed for hardware. Data, voice and image communication can be
utilized using the Internet (e.g. Skype). The challenge is interconnection
with the LGUs. Sadly, in many LGUs, the level of IT sophistication is
many years away. Digital access does not exist (e.g. no ISPs), there are
few desktop computers, and there is a dearth of supply of computerliterate
personnel.
54. Proposal: It is best that the DA focus on the interconnection of
various DA units at the regional level. It is the primary responsibility
of the LGUs, and not the DA, to interconnect with the DA information
network on felt need basis.
55. Taking advantage of the recent ICT, it will:
a) Complete linkages at the regional level of all agriculture agencies using
low cost internet technologies. The LGU who wishes to be connected
must provide it own funds;
b) Consider cost sharing with LGU and telephone companies for repeater
stations in remote areas for SMS access of BAS price data; and
c) Accredit universities as repository of commodity information (market, farm
technology and economics, value adding, etc.) along the lines of the
United States Department of Agriculture (USDA), where selected industry
information are outsourced to universities, e.g. University of California in
Davis for tomatoes. Another example is the Cornell University Albert R.
Mann Library which hosts the USDA agricultural economics, statistics and
market information system. The system contains nearly 2500 reports and
datasets from several agencies of the U.S. Department of Agriculture,
covering U.S. and international agriculture and related topics and is
updated usually yearly.
56. BAS - Rule 44.1. The BAS and ITCAF shall design and operationalize the
NIN, in collaboration with the AFIS . On or before September 30, 1998,
the BAS and the ITCAF shall jointly propose for the approval of the
Secretary the mobilization plans that will enable the BAS and the ITCAF to
implement the NIN. The mobilization design shall include the organization,
design and associated investment requirements for the national structure
of the NIN. The organic structure and organization of the BAS and ITCAF
shall be expanded to enable these units to assume added functions in
relation to the NIN. Additional resources shall be provided to the BAS and
ITCAF organization to improve its data collection, processing, analysis and
xxxv

dissemination capabilities. The facilities of the RFUs and BAS provincial
operation center shall be upgraded to cope-up with the requirements of the
NIN.
57. Proposal. Access to timely and accurate information is an endearing
competitive advantage. But it must be done well. To enhance its
response capability, BAS shall:
(a) Expand data collection capability and frequency for commodities up to the
barangay level;
(b) Establish real time response via text messaging of prices in key market
centers;
(c) Conduct annual rural incomes surveys (on-farm, off-farm, and non-farm) in
every region; and
(d) Conduct a survey of provincial patterns of consumption every two years.
58. AFIS. The Agriculture and Fisheries Information Service (AFIS) is
mandated to ensure effective packaging and dissemination of agrifisheries
production and market information. It will have presence down to
the regional level. Packaged information is good if the information is
timely and accurate. The AFIS is only a recipient of information.
Information dissemination should be under LGU through its extension
services, and assisted by ATI. The DA has many activities and
achievements but they are not well-communicated. The plan to convert
the AFIS into a corporate public affairs arm of the DA is a step in the right
direction.
59. NMAP - Rule 40.4. The Department, particularly the AMAS, assisted by
the National Food Authority (NFA) and the National Agribusiness
Corporation (NABCOR) shall draft the design for the National Marketing
Assistance Program (NMAP). The NMAP shall cover the DA's full set of
projects, activities and. services in support of agriculture and fisheries
marketing and post-harvest commerce, including the National Marketing
Umbrella (NMU).
60. Rule 40.5. Upon the completion of consultations and inputs from the
concerned entities, the AMAS shall consolidate the proposed NMAP for
approval by the Secretary on or before October 30, 1998.
61. The NMAP document was submitted to the DA and NABCOR in June
1999. The result of the study was accepted by the DA. However, the
NMAP was not operationalized and budget was not allocated.
62. Proposal: NMAP is an overly ambitious program with little relevance
in a globally competitive market. Its mission should be delegated to
the producer groups and supply chain players. A lot of circumspection
is needed on why the government should be fully immersed in a program
in which the industry groups could do better following the universal
principle of subsidiarity. After all, marketing is the principal task of the
private sector, and not the government’s.
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63. NMU - Rule 40.7. In August 2001, DA Special Order 490 created the
NMU National Steering Committee (NSC). Its early meeting led to the
creation of the NMU Core Group composed primarily of representatives
from the farmers and fisherfolk, cooperatives and industry
associations/federations sectors. In September 2002, the NMU was
registered as a Non-Stock Corporation with the Securities and Exchange
Commission. The NMU had conducted several dialogues with different
agencies and funding institutions and has passed 47 board resolutions of
various concerns from 2002 to 2004. Meanwhile, AMAS continues to
support the NMU.
64. Proposal. The NMU need not be a permanent body, but it can be a high
level Advisory Council for Agriculture and Fisheries Marketing, co-chaired
by the DA Secretary, and with National Agriculture and Fisheries Council
as Secretariat. It will be composed of key leaders of industry associations.
It can meet from time to time to discuss urgent and strategic issues as
called by the DA Secretary or at its own initiative.
65. DA Research Service (Policy Analysis Service). Data and policy
analysis service must provide the key inputs for strategic thinking and
management with DA and related agencies. Following the model of the
USDA Economic Research Service, it shall:
(a) Undertake comparative analyses of structures and trends, policy regime,
regulatory framework as well as product competitiveness by benchmarking
with other countries;
(b) Collaborate with industry associations, AMAS, BAS and other DA attached
agencies in the conduct of such studies; and
(c) Strengthen policy group in evaluating impact of trade agreements.
66. Agriculture Attaches - Rule 42.4. The Agricultural Attaches must
become effective agents of competitive intelligence. Physical presence in
a foreign country is an insufficient condition for intelligence work. The
Attaches must be provided with adequate resource to network with
industry players overseas, assemble timely and accurate
information, and conduct/ purchase market and strategic country
studies.
67. The DA Agricultural Attaches shall, in addition to their other functions,
provide information relevant to foreign agriculture and fisheries markets
and foreign agribusiness investment opportunities, in coordination, as
appropriate, with the Commercial Attaches of the DTI.
68. The current cadre of attaches is few and far between. There are about 10
attaches in seven posts – Australia, China, EU, FAO/Italy, Japan,
WTO/Geneva, and USA. China, the world’s second largest economy, has
only one “volunteer” personnel. Based on the four key cities of Shanghai,
Beijing, Guangzhou and Chonqging, maybe four are needed. The United
States has easily five key cities and corridors (Los Angeles/San Diego,
San Francisco/Bay Area, Chicago, New York, and Houston/Dallas), but
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there are only two in Washington, D.C. In the ASEAN, a large market and
hosts competitors, there is none. The proposals are to:
a) increase by at least 50 percent the number of agriculture attaches by
2010; and
b) benchmark attaché numbers, tasks and budgets with ASEAN nations.
69. SUCs. Assign universities as repositories of information (market,
technologies, economics, and other global developments) like the
University of California Davis in the USA.
70. Capability Building Rule 111.5.7. The Rule provides that 5 percent of
the AFMP budget will be for capability building for scholarships, technical
upgrading and training, etc. It is proposed that this would include
capability building for DA, LGU and related agencies and industry and
producer associations in domestic and export marketing, feasibility
studies, market research, competitiveness and benchmarking, etc.
71. In closing, marketing and information are critical elements for agriculture
and fisheries competitiveness. The Philippines seats in the most dynamic
region of the world where demand for agri-food and value added products
will continue to grow. At the same time, Asia hosts among the most potent
competitors. Domestic producers must organize to achieve scale and hone
their competitive attributes of cost, quality, delivery and responsiveness,
and product innovation. Information gathering must be timely and
appropriate but at the same time, cost-effective. This calls for partnerships
with the supply/value chain players.
4.2 Trade and Fiscal Incentives
72. Trade is a major component of agriculture and fisheries modernization.
The law adopts open trade regime as one of its frameworks. The law is
also very clear in its rationale to pursue trade as provided by Section 2,
“Declaration of Policy” that “the state shall adopt the market approach…
and promote market-oriented policies in agricultural production to
encourage farmers to shift to more profitable crops.”
73. Under the same section, at least two of the seven principles have direct
relevance to trade. These specific principles are:
(a) “Global Competitiveness - the State shall enhance the competitiveness
of the Agriculture and Fisheries sectors in both domestic and foreign
markets” and
(b) “Protection from unfair competition - the State shall protect small farmers
and fisherfolk from unfair competition such as monopolistic and
oligopolistic practices by promoting a policy environment that provides
them priority access to credit and strengthened cooperative-based
marketing system.”
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74. The more specific terms, under “TITLE 5, TRADE AND FISCAL
INCENTIVES,” Sections 108 and 109 of AFMA provide that “taxation
policies must not deter growth for value-adding activities in the rural
areas.” Finally, the law also provides under Section 109, for the granting of
exemptions to all enterprises of tariffs and duties for the importation of all
types of agriculture and fisheries inputs, equipment and machinery such
as, but not limited to fertilizer, insecticide, pesticide, tractors, trailers,
trucks, farm implements and machine harvesters, threshers, hybrid seeds,
genetic materials, sprayers…” Provided that the imported agricultural and
fisheries inputs, equipment and machinery shall be for the exclusive use of
the importing enterprise.”
75. The major objective of the trade and fiscal incentives analysis was to find
out whether AFMA has provided the enabling mechanisms to encourage
domestic and international trade during its implementation. The Team
reviewed and analyzed the effectivity of trade and fiscal incentives
awarded to agribusiness enterprises in terms of agriculture and fisheries
outputs and inputs. Analysis of the Agricultural Competitiveness
Enhancement Fund (ACEF) and domestic and international trade polices
was also undertaken, including trend analysis of trade flows and export
diversification before and during AFMA’s implementation. Likewise
analysis was done on the constraints posed by the GATT-WTO agreement
on the export performance of agricultural products. Finally, the Regional
consultations provided inputs in the assessment of trade and fiscal
incentive situations during the AFMA implementation. Data from these 16
Regional consultations served as validation of the national situation at the
Regional levels on the impact of AFMA components on the agriculture and
fisheries sector.
76. Relative to trade and fiscal incentives, the major target of AFMA is to
provide the enabling policy environment such that Philippine agriculture
and fishery products can have the competitive edge in terms of product
quality, price, and volume of output produced with the greatest relative
efficiency in the use of resources, as needed by the domestic and global
markets.
77. The analysis of the trade and fiscal incentives component of AFMA
indicated the following:
(a) The trends in the export and import of agricultural outputs and inputs
showed that the Philippines had consistently become a net importer
during AFMA implementation period;
(b) There were no major changes in the market destinations of Philippines’
major product exports before and post AFMA period. Some of the little
changes in market destinations occurred in pineapple and pineapple
products, tobacco and to some extent, tuna during AFMA implementation
period;
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(c) The agriculture export performance of the Philippines was partly stymied
by the WTO-Agreement. The difficulty in the negotiations emanates from
the operationalization of the key pillars of the agreement itself: a) Market
access of tariffs and tariffications including special safeguards and tariff
quotas; b) Domestic support which centers on the interpretation of the
green box, blue box, and development programs, and amber box
including the di minimis principles; c) Export Competition covering export
subsidies, anticircumvention (e.g. state agency exports) and export
prohibitions and restrictions; and d) other rules: special and differential
treatments, peace clause (now expired), commitments to reforms, Non
food importing developed country decision, and agreement on the
application of Sanitary ad Phytosanitary measures;
(d) The interlocking issues related to market access, domestic support and
export competition has directly affected the agricultural export
performance of the Philippines. A recent study of Gonzales (2007) on
trade performance of 11 less developed countries (LDCs) and 10
developed countries (DCs) of the Asia Pacific Region indicated that the
Philippines and Peru were laggards in terms of export performance
during the periods 1996-1999 and 2000-2005. The average export
receipts in the Philippines did not reach US 3 billion during the period. In
contrast other LDCs like China, Thailand, Russian Federation, Indonesia,
Malaysia Chile and Mexico had export revenues ranging from US$10 to
28 billion in 2005;
(e) The Philippines is also faced with difficulties in accessing markets of
developed countries due to strict implementation of Sanitary and
Phytosanitary (SPS) measures The study done by Gonzales, Lacson
and Marges (2005) indicated that Philippine export products such as
mango (to Japan) and pineapple and banana (to Australia) have been
constrained by SPS requirements by these two countries. Preliminary
estimates of the Authors on the impact of Japan’s SPS measures and the
current “positive list” were unrealized export receipt of US$127million,
loss of corporate income tax revenue of US$ 20 million, and forgone farm
employment income opportunities close to US$ 12 million. In the
Australian case the indicative estimates of opportunity losses were US$
64million in export receipt, US$ 11 million in corporate taxes, and US$ 12
million in farm employment opportunities
(f) Availment of Tariff Exemptions on Fisheries and Agriculture
Modernization (TEFAM) was dominated by firms in Regions 4-A and 3,
during the post AFMA period. Likewise, big agribusiness firms were the
major recipients of TEFAM. Tariff waiver for soya bean meal imports
shared the major value (66 percent) of agricultural input imports, because
70 percent of the top ten agribusiness firms were engaged in poultrylivestock
production and feedmilling activities.
(g) The Agriculture Competitiveness Enhancement Fund (ACEF), although
not a direct provision of AFMA, is supposed to augment AFMA’s thrust in
modernizing agriculture. However, it is beset with operational problems.
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Around P 2.7 billion of ACEF credit facility are still unallocated and must
be disposed by 2007 if its existence is not extended beyond this period.
(h) The results of stakeholders’ interviews and 16 Regional
consultation/workshops indicated that trade as component of AFMA was
not ranked “high” by stakeholders in the Region. The major reason for
this, was the inadequacy of physical infrastructures and support services,
and “low” level of agricultural development in the countryside that
constrain the competitiveness of agricultural products in global trade;
(i) The general impact of trade as AFMA component, indicated generally
“none” and “low” impact and “poor” level of implementation across the
commodity subsectors. However, bright spots of export competitiveness
are emerging in high value crops and fishery subsectors in some of the
regions. The common ingredients of some of the more successful
programs relative to trade are active private sector participation and
market-driven orientation.
78. Given the empirical findings of the trade and fiscal incentives analysis, the
following recommendations are suggested:
(a) Pursuance of a more vigorous macro and subsectoral policy reforms and
law enforcement relative to agricultural trade, to enhance the evolving
gains in export competitiveness during AFMA implementation period.
Enforcement of existing laws (e.g. anti-smuggling, quarantine) and
enhancement of domestic support measures to gain competitiveness are
in the right directions.
(b) Continue stronger trade negotiation initiatives with other members of the
LDCs (Group of 20, Group of 33 and AFTA) of WTO to level the playing
field in agricultural trade. This Implies strengthening of the Policy
Analysis Division of DA to backstaff trade negotiations.
(c) Assist small-medium enterprises and cooperatives in the regions to avail
of tariff exemptions of imported agricultural inputs, to enhance their
competitiveness in the export market. The feasibility of removing all
forms of tariff that constrains agricultural modernization should be
explored as a policy.
(d) Revisit the ACEF, extend its economic life if necessary, and study
alternative strategies to make it more effective as an enhancing
mechanism to global competitiveness in the agriculture and fisheries
sector;
(e) Reprioritize the remaining budget of ACEF so that it can provide funding
for strategic public investments closest to the major project areas of
already ongoing ACEF projects and allocate grants to special projects for
technical assistance (Feasibility Studies, Management Guidance, etc)
among small farmers’ organizations and cooperatives applying for
funding under ACEF Facility.
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(f) Revisit the implementation mechanisms of ACEF to separate the policy
and oversight functions with the management /implementation of the
facility. Some of the delays in project approvals in the past were due to
unclear interpretations of these functions.
(g) Trade issues should be integrated in the national development agenda,
especially those related to poverty reduction, increasing productivity and
competitiveness, providing compensation and human development
safeguards, and diversification of exports and markets. At the regional /
international development levels, trade issues should build credible
alliances, achieve fairer terms of trade, target technical assistance,
strengthen the SDT provisions of the WTO Agreement, offer aid for trade
and focus on human development.
(h) To make trade work for human development (UNDP 2007) the following
eight (8) point national agenda are recommended:
• Invest for competitiveness – This implies public investment in
infrastructures, human capital, R & D and ICT;
• Adopt strategic Trade Policies – select strategic goods / services with
great potential linkage with other industries;
• Restore focus on Agriculture- agriculture should be the core of
development strategy to combat poverty and food insecurity;
• Combat Jobless Growth – Target agro industries that promote
sustainable rural employment not for short term growth;
• Prepare a new tax regime – progressive tax structure that doesn’t hurt
the poor (customs tax, corporate taxes) should be encouraged to fund
the process of adjustment under trade liberalization
• Maintain stable exchange rate – realistic rates to encourage
investments;
• Persist with Multilateralism – avoid bilateral trade, go for multilateral
trade arrangements; and
• Cooperate with neighbors- Regional Trade Agreements complemented
with other forms of cooperation (e.g. financial arrangement).
(i) Finally, since the findings on the general impact of AFMA are not as
robust as envisioned by the law, revisiting the law’s IRR is in order,
including a strong political will to provide budgetary allocation to the
agriculture and fisheries sector to make it more competitive.
4.3 Irrigation
79. The Agriculture and Fisheries Modernization Act (AFMA), or Republic Act
8435 was signed into law in December 1997. The law became effective in
July 1998 when its Implementing Rules and Regulations (IRRs) were
issued by the Department of Agriculture (DA). The effectivity of the law
was for five years but in February 2004, its implementation was extended
until 2015.
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80. The law mandates that five years after the effectivity of the Act, an
independent review panel composed of experts to be appointed by the
President, shall review the policies and programs in the AFMA and shall
make recommendations, based on its findings, to the President and to
both the Houses of Congress. The Contract of Service for the review
panel was signed on July, 2005, the effective starting date of the review.
81. This report of irrigation expert of the review panel covers the irrigation subsector,
a major component of AFMA. As stipulated in the Terms of
Reference for irrigation of the review panel, the review work on irrigation
involved the following: (1) a review of AFMA’s provisions and stipulations
for irrigation and their corresponding Implementing Rules and Regulations
(IRRs); (2) review of the performance of irrigated agriculture and different
modes of irrigation from 1993 onward; (3) assessment of the compliance
with the stipulations and IRRs on irrigation by all parties concerned; (4)
assessment of the impact of AFMA on irrigation development; (5)
formulations of recommendations for the effective and timely
implementation of AFMA’s provisions on irrigation including needed
amendment to AFMA provisions and IRRs and a program framework for
accelerated and sustained irrigation development that is in harmony with
the provisions, intent and spirit of AFMA; and (6) assistance to the review
team in assessing the accuracy and adequacy of the method or rationale
used in delineating the Strategic Agriculture and Fishery Development
Zones (SAFDZ).
82. In the course of finalizing the report on irrigation and after analyzing the
SAFDZ as delineated, it became evident that the SAFDZ were delineated
not in accordance with the criteria, stipulations, intent and spirit of AFMA.
Since the review panel has no expert on SAFDZ, the TOR of the irrigation
expert was expanded to cover compliance with the SAFDZ concept and
formulation of recommendations for improving the process of SAFDZ
delineation and implementation of the SAFDZ concept. Hence, the first
four sections of this report cover only irrigation. The rest of the sections
(on compliance, impacts, and recommendations) cover both irrigation and
SAFDZ. For this reason (wide coverage, long report) and partly due to
varied interests on the part of the intended readers, the last two sections
were written as stand alone sections (The readers need not read the other
sections to be able to appreciate the information in these sections).
Hence, some information presented in earlier sections had been restated
in the last two sections.
83. Section 1 reviews the provisions and stipulations on the irrigation of AFMA
and their corresponding IRRs. Sections 2, 3 and 4 present the state of
irrigation development in the country, the trends in irrigation development
and the performance of irrigated agriculture. Section 5 analyzes the
compliance with and impact of the irrigation and SAFDZ components of
AFMA while Section 6 presents the recommendations on irrigation and
SAFDZ.
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84. The general policies of AFMA on irrigation are as follows: (1) prevent the
further destruction of watersheds and aquifers; (2) rehabilitate existing
irrigation systems; and (3) promote the development of effective,
affordable, and efficient irrigation systems. The guidelines for
implementing these policies include the following: (1) identification and
specifications of the mandates of the agencies concerned with the
protection of watersheds and aquifers to insure dependability of water
supplies; (2) vigorous pursuance of irrigation research and development
(R & D) with emphasis on the development of effective, appropriate, and
efficient irrigation and water management technologies; (3) that the
selection of appropriate irrigation scheme for development or rehabilitation
shall be technical feasibility, cost-effectiveness, affordability, sustainability
and simplicity of operation, operation and maintenance (O&M) cost
recovery, efficiency in water use, length of gestation period, and potential
for increasing unit area productivity; (4) the turnover of the O&M of
national irrigation system’s (NIS’s) secondary canals and on-farm facilities
to irrigators associations by June 1999; (5) the devolution within five years
of implementation of the Act, of the planning, design, and management of
communal irrigation systems (CISs) to the LGUs; and (6) the formulation
and implementation of a plan for the promotion of a private sector-led
development of minor irrigation systems.
85. A review of available information on potential land area for irrigation
development points to a total potential irrigable area of about 6.15 million
ha. Of these, approximately 4.66 million ha is potentially rice- or corn-
based growing areas. The rest (1.49 million ha) is for sugar cane,
horticultural and other crops.
86. In 1998, the National Irrigation Administration (NIA) estimated the service
areas of existing irrigation systems serving mainly rice-based cropping
systems in the different regions of the country at 1.39 million ha. This total
irrigation service area accounted for about 30 percent of the estimated
potential 4.7 million ha irrigable rice and corn growing areas. In reality, the
actual area irrigated is much less than the service area. Hence, the actual
level of irrigation development for rice-based cropped areas in 1998 was
only about 22 percent.
87. The level of irrigation development in rice and corn growing areas as
inferred from the reported irrigation service areas varies with region. In
1999, for example, the estimated level of irrigation development ranged
from as low as 9.4 percent for Region 7 to as high as 46 percent for
Region 4.
88. The NIA’s estimates on the irrigation service areas of communal and
privately developed minor irrigation systems are of doubtful accuracy
since the NIA has not been monitoring many of these irrigation systems. In
fact, the Bureau of Agricultural Statistics (BAS) estimates of the irrigated
rice area harvested were much higher than those of the NIA. The
difference may be partly explained by the existence of numerous small,
minor irrigation systems. These systems were built and maintained by
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private sector and individual farmers or groups of farmers. The BAS
cluster surveys captured the areas served by these minor irrigation
systems.
89. An analysis of the NIA and BAS statistics for 1997 pointed to a minor
irrigation service area of at least 0.65 million ha. This would put the actual
rice area irrigated during the 1997 dry season at about 1.35 million ha (0.7
million served by NIS and CIS and 0.65 million served by minor irrigation
systems such as shallow tube wells (STWs) and low-lift pumps (LLPs)
90. Of the 1.49 million ha irrigable areas for non-rice crops, the actual areas
irrigated during the pre AFMA years and at present are not known. An
educated guess for 1997 is 0.2 million ha for non-rice-based crops,
including permanent crops.
91. An analysis of the trends in irrigation development during the pre AFMA
years (1992 to 1997) revealed no significant growth in the irrigation
command area resulting from development and rehabilitation of some
410,000 ha of NIS and CIS facilities. This was due to the rapid
deterioration of existing NIS and CIS and the high cost of rehabilitation
and new systems development. In fact, a combined NIS and CIS new
service area generation and rehabilitation of about 70,000 ha each is
required just to maintain the same level of NIS and CIS development. The
growth in the irrigation service area came mostly from privately developed
STWs and LLPs. In some regions, the growth in these modes of irrigation
was more than 10 percent per year.
92. A similar trend in the growth of NIS and CIS irrigated areas was observed
in the period from 1996 to 2004. In the two years prior to the enactment of
AFMA (1996 – 1997), the annual budget actually received by the NIA
averaged to about P3.8 billion. This was increased to about P5.8 billion in
the post AFMA period from 1998 to 2004. As a result, the
accomplishment in terms of new service area generated and rehabilitated
for the period from 1996 to 2004 totaled to 173,422 ha and 1,194,546 ha,
respectively. The corresponding annual average accomplishments for new
area generation and rehabilitation were about 21,678 ha and 149,318 ha,
respectively. Yet in spite of these massive efforts at rehabilitation and new
systems development, the total irrigation service area increased only from
1.323 million ha in 1996 to 1.402 million ha in 2004 or by a mere 79,000
ha. The increase of about 10,000 ha per year in irrigation service area was
less than 1 percent of the total irrigation service area as the rate of
deterioration of existing NIS and CIS increased to over 100,000 ha per
year.
93. The above considerations point to the fact that growth in irrigation service
area cannot be expected from gravity irrigation systems. The most that
can be expected would be to maintain the same level of gravity irrigation
development through massive efforts at rehabilitating existing systems.
However, there seems to be a strong case for building hydroelectric power
plants in the face of the skyrocketing cost of electricity. Such power plants
xlv

usually have provisions for other purposes such as irrigation and flood
control.
94. The growth in the aggregate service area of small farm reservoirs (SFRs),
small diversion dams (SDDs), and small water impounding projects
(SWIPs) is insignificant during the post-AFMA years. The technical
support for the development of these systems rests with the BSWM. The
BSWM estimates that many of the SWIPs need rehabilitation works and
proposes to rehabilitate starting in 2005 110 SWIPs with a total service
area of only 4,915 ha at a cost of about P89 million.
95. The growth in the minor irrigation service area slowed down considerably
during the post AFMA years not only due to non-compliance with the
provisions and stipulations on irrigation but also with the implementation of
irrigation policies and policy instruments that were exactly contrary to the
intent and spirit of AFMA. As a result, the growth in the harvested,
irrigated area slowed down considerably during post-AFMA years. For the
6-year period (2000 to 2005), the growth in the total irrigated rice area
harvested was only about 90,000 ha or an average of about 15,000 ha per
year. Hence, the impact of AFMA in as far as accelerating and sustaining
the growth of irrigated agriculture has been negative. The reasons are
obvious. This reversal was self-inflicted.
96. In 2004, the total minor irrigation command area for rice-based cropping
systems was estimated at about 0.7 million ha. The dry season command
area of NIS and CIS was approximately 0.65 million ha. Hence, the total
irrigation command area (area actually served during the dry season) was
about 1.35 million ha.
97. The performance of publicly-supported NIS and CIS systems continue to
be way below expectations. Gravity irrigation systems, for which most of
the public funds for irrigation development were spent during the past
three decades, are rapidly deteriorating (at an annual rate of over 100,000
ha at present). The cost of rehabilitation is presently in the order of P40
thousand per ha and the average cost of developing new systems ranges
from P100 to P200 thousand per ha. Their performances from
engineering, agronomic and economic standpoints were very poor. Only
about half of the expected benefits from their development are actually
being realized. More alarming is the widening gap between actual
performance and expectations with time. The bulk of the available
empirical evidence raised serious doubts over the sustainability of such
systems.
98. The privately developed and individual farmers operated minor irrigation
systems perform better. They are easier and cheaper to install (less than
P20,000 per ha). They are more amenable to crop diversification. On the
average, their associated unit area productivity is 75 percent higher than
that for NIS and CIS.
99. Compliance with the provisions and stipulations of AFMA on irrigation had
been very minimal. There was no compliance with Section 26 (Declaration
xlvi

of Policy on equitable and rational use of natural resources). Specifically,
there has been very little effort exerted at protecting and rehabilitating
critical watersheds and aquifers. Contrary to the intent and spirit of Section
27, the fund for irrigation R &D was drastically cut. In fact, no fund for R &
D was released in 1998, the first year of implementation of AFMA in spite
of the stipulation in this section that irrigation R & D shall be pursued
vigorously and that priority shall be given to the development of effective,
efficient, and appropriate irrigation and water management technologies.
The research agenda as specified in Rule 27.2 was not adopted. The
mandated Irrigation Research and Development Network (IRDN) never
materialized.
100. There was minimal compliance with the stipulations in Section 32 which
implied a shift in focus in irrigation development from NIS and CIS into
private sector-led minor irrigation systems. The mandate to prepare and
implement a plan for promotion of private sector-led development of minor
irrigation systems, such as STWs, LLPs, and other inundation systems
have yet to be carried out. On the contrary, the DA de-emphasized minor
irrigation. Funds to support minor irrigation development and to promote a
policy environment conducive to a private sector-led minor irrigation
development were drastically slashed. Very little support was given to
programs on capacity building and training of well drillers, machinery
manufacturers, and farmers; agro-industrial extension; concerted R & D;
and improved delivery of other essential irrigation support services and
functions.
101. Section 36 mandated the DA to monitor the implementation of R & D
programs and irrigation projects. Again, there was no compliance on the
stipulations of this section and its IRRs.
102. The delineated SAFDZ were of little practical use. The reasons for this are
as follows: (1) the total delineated SAFDZ area of 10.64 million ha with
only 91 percent of all municipalities and cities participating is too big for all
intent and purposes (2) the planning and implementation of integrated
development activities for the various strategic development sub-zones
can not be prioritized as the potentials for specific commodities and/or
agro-industrial activities have not been considered; (3) the delineated
SAFDZ were not based on the criteria and guidelines stipulated by AFMA
and (4) the SAFDZ as delineated can not stand even the basic
consistency and reliability tests.
103. The basic concept of SAFDZ serving as centers or foci for agriculture and
fisheries development can not be implemented. Therefore, the goal of
programming farming systems around specific SAFDZ, where the
comparative advantages of a location for a distinct set of crops/livestock
and fishery commodities are identified, and putting into operation
integrated development plan consisting of production, processing,
investment, marketing and human resources development can not be
achieved. The delineated SAFDZ were not used even in identifying the
two million ha agri-business area in the ten point agenda of President
Arroyo. Considering the importance of accurately delineating and defining
xlvii

the natural attributes of specific SAFDZ in the implementation of AFMA,
the process of delineating SAFDZ should be overhauled and the
delineation be done properly.
104. An analysis of the impact of AFMA on irrigation development and
performance of irrigated agriculture showed mixed results. In the case of
NIS and CIS, the empirical evidence cast serious doubts over the
sustainability of NIS and CIS and the efficiency with which the NIA carries
out its irrigation activities. Spending an average of about P5.5 billion a
year, it generated an average of 19,285 ha and rehabilitated 124,493 ha
irrigation service area per year (at an average cost of new area generation
and rehabilitation of about P38, 250 per ha). Yet the net impact of all of
these was an average annual increase of only 10,000 ha in the irrigation
service area. This implies either gross inefficiency in carrying out NIS and
CIS activities or rapid deterioration in NIS and CIS irrigation facilities or
both. Another disturbing implication is that without rehabilitation or new
area generation, more than 100,000 ha will be taken out of the irrigation
service area each year. Prior to AFMA, the rate of deterioration was about
70,000 ha per year. This was the primary reason why AFMA mandated a
shift in focus from NIS and CIS into minor irrigation. Yet the DA (NIA in
particular) chose to ignore this basic premise of AFMA. The inevitable
result is the rapid deterioration of NIS and CIS despite the massive
infusion of public funds for rehabilitation and new systems development.
105. The existing NIS and CIS are clearly not self-sustaining. The total area
rehabilitated during the 10-year period from 1995 to 2004 (1.246 million
ha) was larger than the total irrigation service area (about 1.227 million ha
in 2004). This implies that, on the average, part of the irrigation service
area have been rehabilitated twice. It is possible that even new service
areas generated had to be rehabilitated within 10 years notwithstanding
the fact that NIS and CIS are usually designed to have a much longer
economic life span.
106. In general, there seems to be very little or insignificant improvement in
irrigation intensity in the NIS and CIS service areas from the pre- to post-
AFMA years. Both the dry and wet season irrigation intensities remained
way below expectation. This was more so in the case of the dry season
irrigation intensity.
107. There seems to be a modest increase in the yield or irrigated rice from
pre- to post-AFMA years. The average yield in irrigated areas in 1997 -
1998 (just prior to AFMA implementation) was 3.38 t/ha. This went up to
3.81 and 4.02 t/ha in 2003 - 2004 and 2004 – 2005, respectively. This
increase may be due to a combination of the following factors: (1)
improvement in the delivery of irrigated agriculture support services by the
NIA (the NIA launched a project on irrigated agriculture support services);
(2) improvement in technology including the adoption of better rice
varieties including hybrid rice; (3) relatively good weather during the past 5
years (rainfed rice yield level also increased) and (4) the increasing
proportion of the area served by minor irrigation facilities to the total
irrigation command area.
xlviii

108. Irrigation RDE suffered the same reversal as minor irrigation development
activities. As a result, there had been very little useful irrigation R & D
outputs since 2001. Hence, the RDE institutions were unable to sustain
the momentum to support the goal of accelerating and sustaining the
transformation to irrigated agriculture through appropriate policies and
technologies.
109. The expected convergence in research, development, and extension
(RDE) agenda and network did not materialize. Philippine Council for
Agriculture, Forestry, and Natural Resources Research and Development
(PCARRD) and Bureau of Agricultural Research (BAR) were not merged
and continued to pursue separate agenda and maintain separate
networks. Hence, it has not been possible to formulate a national
extension policy and a unified research agenda.
110. We now lagged way behind most of our Asian neighbors in terms of
generation of relevant agricultural technology and baseline information for
the formulation and routine adjustments of agricultural policies and policy
instruments that are requisites to agriculture and fisheries modernization.
Contrary to the objective of AFMA to catch up with the technology train we
ran towards the opposite direction. This tendency to self-destruct will
continue to haunt us in the foreseeable future.
111. So far, the impacts mentioned are mostly physical in nature and from the
viewpoint of the entire sub-sector. The impacts of the specific provisions of
the Act on individuals and organizations are, however, just as important.
To gain insights into these impacts, the AFMA Review Team surveyed
(through questionnaire) various stakeholders that include the members of
Regional Agriculture and Fishery Council (RAFC) and industry
associations. It also carried out regional consultations. The results were
largely impressions and expectations of the stakeholders about AFMA.
Nevertheless, they are useful indicators of the impacts of AFMA on
concerned individuals and organizations. They are also useful in
amending certain provisions of AFMA and their IRRs and in planning
pending activities and fine tuning of ongoing activities.
112. In the survey, the respondents’ impressions to AFMA in general and its
irrigation, SAFDZ, and RDE components were asked. Four basic concerns
were tackled: (1) awareness; (2) satisfaction, (3) improvement, and (4)
achievement of goals. Most of the respondents (96 percent) were aware of
AFMA. The majority (70 percent) were, however, not happy with it. An
even higher percentage felt that AFMA failed to achieve it goals.
113. Fifty seven (57) percent of the respondents were aware of the Agriculture
and Fisheries Modernization Plan (AFMP). However, only 13 percent are
satisfied with it. A higher percentage (74 percent) was aware of the
SAFDZ concept but an equal percentage was not satisfied with its
implementation.
xlix

114. Less than half of the respondents were aware and satisfied with RDE
activities. Except for PCARRD, majority of the respondents were not
aware of the various RDE institutions.
115. Only about 22 percent of the respondents were satisfied with the irrigation
activities under AFMA. Except for STW irrigation, none of the respondents
felt an improvement in irrigation services. Even for STW irrigation, only 4
percent of the respondents felt that there was an improvement under
AFMA.
116. The result of the survey of the members of the producers associations
very much conform to the earlier findings on the tangible impacts of
irrigation, RDE, and SAFDZ activities on the agriculture sub-sector.
117. The stakeholders’ consultations on AFMA were carried out by the Review
Team in collaboration with National Agricultural and Fishery Council
(NAFC) and the AFMA oversight committee (Congressional Oversight
Committee on Agriculture and Fisheries Modernization or COCAFM). In
every region the participants include members of RAFC and Provincial
Agriculture and Fishery Council (PAFC), officials and staff of the regional
offices of the DA, Department of Land Reform (DLR), and Department of
Environment and Natural Resources) DENR; representatives from local
government units (LGUs), AFMA Review Team, COCAFM, and other key
stakeholders.
118. For most regions, the perceived general impact on rice and corn were low
to moderate, and low or none for high value commercial crops (HVCC),
fisheries, livestock and poultry. The implementation of irrigation-related
activities was generally judged as poor although the participants in a few
regions (e.g., CAR) rated the performance for rice, corn, and fisheries fair
to good.
119. In general, the participants perceived positive impacts on yield and
production area except for rice. The perceived impacts for the other
commodities were mixed. For each commodity, at least 3 regions reported
no positive impact. This was in spite of the fact that many of the
participants play key roles in the implementation of AFMA. As usual, the
participants are unanimous in their perception of inadequate budget.
120. The review pointed towards one main conclusion, that is, the irrigation and
SAFDZ components of AFMA were not implemented. One is tempted to
make a sweeping recommendation – implement AFMA! That is, however
easier said than done. Although some of the stipulations on SAFDZ and
irrigation can be implemented if the key players have the political will and
commitment to do so, this is not the case with other stipulations due to a
host of interrelated problems that are beyond the capability of concerned
institutions and individuals to overcome within the specified time frames of
AFMA activities. These problems or constraints include inadequate
baseline information, unrealistic time frames, ambiguity in specific
provisions of AFMA and their corresponding IRRs, inadequate budget for
crucial activities, inadequate institutional arrangements and mechanisms
l

as well as lack of depth and breadth of technical staff for planning and
implementation of mandated activities, and frequent changes in the middle
and top level management of key institutions.
121. Four general sets of recommendations were formulated for the effective
and speedy implementation of the irrigation and SAFDZ components of
AFMA. These include the following:
(a) Jump starting the implementation of stipulations and their corresponding
IRRs that are within the capability of existing institutions and institutional
mechanisms to carry out.
In more than half of the IRRs, there was no compliance due to inaction or
indifference of the agencies concerned. These include rules under
Section 26 to 30.
(b) Amending sections and IRRs of AFMA for clarity of objectives, targets,
budgetary provisions, adequacy of baseline information and institutional
mechanisms, and realistic time frames.
The stipulations and IRRs are beyond the capability of the concerned
institutions and individuals to accomplish within the specified time frames
of AFMA activities should be reviewed for clarification of budget,
objectives, and targets, amendments in terms of more realistic time
frames, and data adequacy as well as institutional arrangements,
strengthening, and reorganization. These include mandates under
Sections 5 and 9.
(c) A Program Framework for Accelerated and Sustained Irrigation
Development.
The Team Expert has formulated a framework that is still very relevant
today in his book Averting the Water Crisis in Agriculture: Policy and
Program Framework for Irrigation Development (David, 2003). This
includes a strategic vision for the transformation of high-risk, rainfed
agriculture into highly productive, intensive and diversified irrigated
agriculture.
(d) A procedure for the identification of NPAAAD, SAFDZ, and model farms
based on the stipulated criteria and implementation of the SAFDZ
concept has been proposed.
4.4 Credit
The root cause of the non-compliance with the SAFDZ concept was
flawed process of delineating the SAFDZ. There is an urgent need to
accurately and expediently delineate the SAFDZ on the basis of the
criteria stipulated by the Act (Section 6 and its IRR).
li

AFMA credit policy reforms
122. Together with Executive Order No. 138, the AFMA laid down the policy
framework for government credit and financing programs and defined the
role of government in the rural financial markets. The AFMA law
mandated the termination of thirty-nine directed credit programs (DCPs) in
the agriculture sector within a period of 4 years from the date of the
enactment of the law and the consolidation of all outstanding loan funds
including new funds for on-lending into the Agro-Industry Modernization
Credit and Financing Program (AMCFP). Executive Order No. 138
terminated all directed credit programs in the non-agriculture sector.
123. The AFMA and EO 138 prohibit government non-financial agencies to
implement credit programs or lend to target beneficiaries. The government
financial institutions shall manage and implement AMCFP. The GFIs shall
wholesale the loan funds under the AMCFP to private financial institutions,
which shall take care of lending directly to end-borrowers in the agriculture
and rural sector.
124. The market-based reforms under AFMA were a radical departure from the
subsidized credit programs and direct intervention of the government in
rural financial markets. Key policies espoused by AFMA and EO 138
include: (i) the promotion of greater participation of private banks and
other financial institutions in rural/agricultural/micro financing; (ii) marketbased
interest rates to ensure recovery of costs, sustain availability of
credit funds, and enhance outreach of financing to the target sector; (iii)
wholesale lending role for government financial institutions; (iv) prohibition
for government line agencies to provide loans and (v) longer grace
periods for long-gestating agriculture and fisheries projects.
125. It can be recalled that in the seventies, the government followed a supplydriven
and subsidized commodity-specific approach in agricultural lending.
This approach failed to provide the expected outreach to small farmers
and was stopped in the late eighties because of the huge fiscal cost of the
subsidies and the very low loan repayment rates. In 1987, the government
terminated 20 subsidized agricultural credit programs and consolidated
them into the Comprehensive Agricultural Loan Fund (CALF), which was
used to provide a guarantee cover of as much as 85 percent of the
outstanding loan of a farmer-borrower with private banks. The CALF failed
to provide small borrowers with the expected greater access to formal
credit. The private banks used the loan guarantee as additional security
on top of the traditional collateral, e.g., real estate mortgage that they
asked borrowers to provide. Toward the late nineties, the National Credit
Council of the Department of Finance sponsored a survey of DCPs, which
were revived in the late eighties. The survey reported as many as 86
subsidized (directed) credit programs (DCPs) more or less equally shared
by the agricultural and non-agricultural sectors, which suffered from low
repayment rates and loan defaults. The 63 DCPs that had financial
reports showed their combined initial fund allocations amounting to as
much as Pesos 40.5 billion. The majority of those DCPs received funding
from annual budgetary allocations and loans and grants from foreign
lii

lenders. The survey also revealed that the DCPs implemented by
government non-financial agencies had lower outreach compared to those
implemented by government financial institutions. In 1996, the total default
subsidies of 20 DCPs that gave information were estimated by the survey
team at Pesos 507.3 million. The conclusion was that the DCPs were
ineffective because outreach was small and that they were inefficient due
to the high fiscal cost of implementation and very low loan recovery rates.
These were the motivations for the credit policy reforms under the
Agriculture and Fisheries Modernization Act of 1997 and Executive Order
No. 138 issued by the government in 1999.
Status of Directed Credit Programs
126. As of February 2006, the ACPC reported that 25 DCPs have already been
terminated while 28 DCPs have been transferred to the GFIs. The funds of
DCPs in the agriculture sector that were transferred to the AMCFP
amounted to P1.3 billion as of 31 December 2005. The Land Bank of the
Philippines and Quedan Credit and Guarantee Corporation implement the
AMCFP.
Status of AMCFP Implementation
127. In June 2003, Quedan Credit and Guarantee Corporation (Quedancor)
obtained Pesos 300 million from AMCFP to wholesale loans in support of
DA priority programs. As of September 2004, Quedancor had released a
total of approximately Pesos 174 million to 33 private financial institutions,
comprised of cooperatives and rural banks, in 9 regions. There were
5,304 end-borrowers who reportedly used their loans for corn, sugarcane,
rice, soybean, and other agriculture and fishery projects. By the end of
2005, there were 16,173 farmer beneficiaries with total loans released
amounting to Pesos 445 million. Eighty private financial institutions in 14
regions participated in the loan program managed by Quedancor. Its total
loan portfolio, inclusive of the AMCFP loans stood at Pesos 5.3 billion lent
to 212,000 farmers, fisherfolk, retailers, agricultural workers and small
enterprises mainly through its retail lending window.
128. LandBank’s direct lending to small farmers and fisherfolk forms part of its
commitment and support in modernizing the sector as envisioned under
the AFMA. Land Bank reported a substantial increase in credit and
technical assistance to small farmers/fisherfolk, from almost 14 billion
pesos in 2001 to about 21 billion pesos in 2005, or a growth of roughly
11.0 percent per annum. By the end of 2005, Land Bank has granted a
cumulative total of 89.6 billion pesos in loans and technical assistance,
which constitute roughly 28 to 30 percent of its total priority sector loans.
On a yearly basis, Land Bank assistance in support of AFMA amounted to
almost 18 billion pesos, which benefited 354,398 farmers and fishers. On
a cumulative basis, total jobs generated were estimated at 693,874 jobs in
the last five years (2001-2005).
Contribution of microfinance to rural lending
liii

129. The AFMA, EO 138, the National Strategy for Microfinance and the
General Banking Act of 2000 supported the growth of micro-financing
operations, which benefited countryside borrowers. As of 30 June 2005,
one hundred eighty seven rural and cooperative banks were engaged in
micro-financing operations, with a total loan portfolio of P3.3 billion and
572,320 borrowers based in urban and rural areas. The Microfinance
Council of the Philippines reported that as of April 2006 its network of 34
microfinance institutions composed of NGOs and rural banks have
provided micro-loans amounting to Pesos 4.2 billion (on a cumulative
basis) to as many as one million small borrowers, mostly women. Those
loans were provided without the usual collateral demanded by private
commercial lenders.
130. Commercial banks provide the largest amount of loans to the agriculture,
forestry and fishery sector. As of 2005, commercial bank financing
amounted to Pesos 95 billion as compared against the loans provided by
thrift banks (Pesos 9.6 billion) and the rural/cooperative banks (Pesos
28.5 billion). However, commercial banks generally finance commercial or
large farms and leave the financing of the smaller farms to the Land Bank
of the Philippines, rural banks and cooperatives. Client-wise, commercial
banks prefer to lend to agribusiness corporations rather than small
farmers. Commodity-wise, they prefer to finance high value crops, cash
crops, poultry and livestock rather than basic commodities like rice and
corn.
Overall assessment
131. The credit policy reforms introduced by AFMA, EO 138, General Banking
Act of 2000 and the National Strategy for Microfinance have improved the
efficiency of rural financial markets. The government also realized savings
because of the termination of costly and ineffective directed credit
programs. All these paved the way for greater private sector participation
in rural financial markets and more efforts on the part of the Land Bank of
the Philippines and the Quedancor to utilize private financial institutions in
providing small farmers, fisherfolk and micro-entrepreneurs with access to
formal loans. Microfinance institutions provide finance services to a
growing number of rural households. One phenomenon observed in the
field was the gradual shift in the source of small farmer loans from
traditional informal lenders to formal lenders. Nevertheless, informal
lenders such as traders, agro-processors, agri-businesses and input
suppliers can play a more significant role in the rural and agriculture sector
not only by providing small rural-based borrowers with loans but also by
linking agricultural primary producers to the emerging global supply
chains. Thus, there remains the great task of expanding access to
financial services in the rural and agriculture sector. For this to happen, a
strong collaborative effort among government agencies/financial
institutions, private business, informal lenders of the type discussed above
and primary producers has to arise. The Department of Agriculture and the
Agricultural Credit Policy Council can play significant catalytic roles in this
area.
liv

Outstanding issues
132. Several key issues and challenges remain in rural financial markets. The
following enumeration is not exhaustive but they obviously merit the
immediate attention of policy makers: (a) the problem of lack of
investment-credit, (b) inadequate financing of smallholder agriculture,
typically rice and corn; (c) the phenomenon of the ‘missing market for
finance services in rural areas; (d) the negative impact of agrarian reform
on land and credit markets, (e) inability of rural lenders to deal with
systemic risks, and (f) missing out the great potential of agriculture supply
chains.
133. Thus, the following are recommended:
Issue Recommendation
Lack of investment
credit
Inadequate financing
of smallholder
agriculture
Missing market for
finance services
Systemic risks in the
rural areas
Small farmer access
to the global supply
chains
1. Strengthen Land Bank’s capacity
to evaluate and finance long-term
projects.
2. Promote collaboration among
GFIs and private banks/business
and the farming community to
develop appropriate loan
products and services for long-
term projects
3. Re-examine lending policies,
processes and products of Land
Bank and Quedancor, e.g.
wholesale and retail lending,
participation of rural financial
institutions
4. Identify barriers or constraints
and devise incentives for
investors and lenders.
5. Develop innovative pilot projects
to improve access to formal
lending
6. Introduce a better package of
risk-reducing instruments, e.g.,
critical rural infrastructure, access
to research and development,
technology and information
7. Provide technical assistance to
small farmers/rural producers
8. Provide budgetary appropriations
for critical rural infrastructure and
other support services
9. Link agricultural primary
producers with agro-processors,
agri-businesses, marketing
agents
Government
Agency/Institution
Responsible
Land Bank of the
Philippines
Agricultural Credit Policy
Council, Department of
Agriculture, Land Bank
and Quedancor
Land Bank of the
Philippines
Quedancor
Agricultural Credit Policy
Council
Department of
Agriculture
Department of
Agriculture
Department of Trade
Government financial
institutions
Impact of agrarian 10. Re-examine policies affecting Department of Agrarian
lv

eform on land and
credit markets
land market transactions Reform
Agricultural Credit Policy
Council
4.5 Other Infrastructure and Post-harvest Facilities
134. The main objective of the other infrastructure component of the AFMA is to
expand rural infrastructure systems by providing the required farm-tomarket
roads (FMRs) in major production areas; communications
infrastructure; water supply system; research and technology
infrastructure; public market and abattoirs; essential fishery-related
infrastructure and facilities, and improved services that can generate
employment, increase productivity and marketability, and improve the
quality standards to make the Philippine agricultural and fishery products
globally competitive. Post-harvest facilities and other post-harvest related
infrastructure are also recognized as critical investments in order to reduce
post-harvest losses, extend the shelf life, and maintain the quality of
agricultural and fishery products.
AFMA Targets and Accomplishments
135. There are 12 provisions of other infrastructure and post-harvest facilities
under AFMA which are partially accomplished or unfinished and four are
accomplished. The 12 provisions that need to be fully accomplished are
(1) finalization of the agriculture and fishery infrastructure plan and
monitoring system; (2) finalization of the criteria for prioritization of
government resources for rural infrastructure; (3) strengthening of
agricultural and fisheries engineering capacities; (4) recommendation on
agriculture and fisheries infrastructure which may be incorporated in the
following: public work program under the GAA, priority infrastructure
projects of DPWH, infrastructure programs of LGUs and legislators; (5)
inventory, appraisal and determination of priority fishports, seaports and
airports; (6) provision of a minimum of 10% counter-part funding by LGUs
for the construction of farm- to-market roads (FMRs); (7) formulation of a
long-term program of development and commercialization of appropriate
agriculture and fisheries mechanization; (8) establishment of appropriate
quarantine, sanitary and phytosanitary centers in major fishports, seaports
and airports; (9) identification and installation of rural energy infrastructure;
(10) establishment of mechanisms of cooperation, information sharing and
consultation to ensure that adequate telecommunications facilities are
provided in support of agro-industrial activities; (11) assessment of the
state of telecommunications services for agro-industry; and (12)
preparation of a program aimed at the turn-over of abattoirs and public
markets by LGUs to vendors’ or suppliers’ cooperatives.
lvi

136. Four AFMA provisions related to other infrastructure and post-harvest
facilities which are finished or complied include (1) assessment of the state
of energy supply to agro-industry; (2) identification and installation of water
supply system; (3) prioritization and facilitation of funding for R&D
infrastructure; and (4) formulation of a post-harvest technology
development and promotion program.
137. The DA prepared the Agriculture and Fisheries Modernization plan
(AFMP) in compliance with AFMA. AFMP commitments for FMRs and
other related infrastructure for the period 2001-2004 include: (1)
construction of 1,597 km and rehabilitation, repair and improvement of 601
km of existing FMRs; (2) rehabilitation of two regional fishports and 19
municipal fishports; and (3) establishment of 16 mariculture parks, 14
seaweed village ecozones, and 280 seaweed nurseries. On the other
hand, the set targets for post-harvest facilities as stated under AFMP are
(1) distribution of 21,863 assorted post-harvest machinery and equipment,
and (2) construction of 14,810 other post-harvest related infrastructures.
138. The DPWH, in collaboration with the DA-FOS, RFUs and LGUs completed
the construction, rehabilitation, repair and improvement of about 1,149 km
of FMRs or 52.3% of the total target of 2,198 km (1,597 km for
construction and 601 km for rehabilitation, repair and improvement) set by
the DA under the AFMP for the period 2001-2004. FMRs
constructed/rehabilitated amounted to P2.49B involving a total of 1,763
projects nationwide. Under CY 2002 and 2003, three projects with a total
budget of P11M were put on hold due to right of way problem, revision of
program of work, and some are still in the preconstruction stage.
Moreover, 65 projects with a total budget allocation of P108M under CY
2002 were not implemented due to the delay in release of SARO.
Additional projects worth P3M under the CY 2003 program were not also
implemented due to disapproval of the request for realignment of road
section by the DBM.
139. DPWH reports on AFMA-funded FMRs submitted to DA seldom provide
updated data on the quality of roads constructed or repaired. The
coordination between DA and DPWH is weak as indicated by limited
number of meetings by these agencies, late release of updated
information on number and condition of FMRs, and absence of strong
monitoring and evaluation team that will determine whether the ongoing
and completed projects are in compliance with the proposed quality of the
projects.
140. By the end of 2004, 15 municipal fishports were constructed,
accomplishing around 79% of the total targets. In case of the regional
fishports, 7 were already rehabilitated/repaired, about 3.5 times greater
than the original target. The establishment of 16 mariculture parks, 14
seaweed village ecozones, and 280 seaweed nurseries was also included
in the AFMP commitments for the period 2001-2004. As of December
2004, the DA has established or maintained nine mariculture parks or 56%
of the total target in nine selected areas of the country.
lvii

141. For the period 2001-2004, 409 seaweed nurseries were established,
accounting for nearly 1.5 times higher than the original target of 280
seaweed nurseries. In addition, 275 marine cages were also established.
The establishment of 14 seaweed village ecozones was not accomplished
due to lack of budget allocation under the GAA.
142. On water transportation, two major transportation projects were
accomplished by PPA: (1) Social Reform Related Feeder Ports
Development Project and (2) PPA Batangas Port Development Project-
Phase II and the Philippine Ports Development Packages. Five locallyfunded
port projects were also completed.
143. The DA did not meet its target distribution of post-harvest equipment and
construction or improvement of post-harvest facilities mainly due to
insufficient funds. DA report shows that only 33% of the AFMA budget
appropriation was provided for post-harvest facilities in 2001, which further
reduced to a meager share of only 17% in 2002, 13% in 2003, and 17% in
2004. As a result, the post-harvest component distributed only 885 postharvest
machineries/equipment and constructed/improved 1,763 postharvest
related infrastructures, equivalent to only 4% and 12% of the total
target, respectively.
144. Insufficient budget allocation for post-harvest development program has
also resulted to limited collaborative works between BPRE and PHTRC.
Their joint activities under AFMA focused only on the (1) conduct of loss
assessment of selected agricultural products; (2) provision of technical
expertise as task force members on cold chain; (3) evaluation of
containers and transport system during transportation and storage of
horticultural products; and (4) conduct of training on post-harvest handling
practices/technologies for fruits and vegetables.
145. Activities undertaken related to post-harvest with BPRE as the lead
implementing agency in coordination with other government institutions,
LGUs and farmers/industry associations are: (1) implementation of a
collaborative project with BFAR to enhance dried fish quality through
MCSTD; (2) completion of the development of BPRE window-based
economic feasibility software for corn mechanization; (3) conduct of an
agricultural machinery expo; (4) conduct of a series of technical symposia
on different PH technologies; (5) establishment of three units of tramline
system in Kabayan, Benguet and one unit in Alimodian, Iloilo; and (6)
implementation of a national cold chain project.
146. On public markets and abattoirs, NMIS (then NMIC), assisted by the
AMAS, CDA and DILG prepared a joint DA-DILG-CDA AO No. 1 Series
2001 about guidelines in the transfer of operation and management of
public markets and abattoirs, and operation of allied services to market
vendors, and also conducted two-seminar workshops.
Trends in Development of Other Infrastructure and Post-harvest Facilities
lviii

147. As of September 2004, the PFDA turned over 33 municipal fishports to
LGUs for sole management of the latter in compliance with government
devolution. The distribution of these municipal fishports is as follows: 6
each in Regions 2, 4, and 5; 5 in Region 6; 4 in Region 7; 2 in Region 8; 3
in Region 9; and 1 in Region 10. The PFDA also has jointly managed with
LGUs three municipal fishports in Region 4 and one municipal fishport in
Region 9 usually under a 50:50 income-sharing arrangement.
148. The Philippine port system is dominated by the PPA, which assumes a
triple role as major developer, operator and regulator of public ports in the
country. At present, there are 115 public (PPA-owned) and 400
private/commercial and non-commercial/industrial ports. Private ports, on
the other hand, are established mainly for industrial use and seldom
compete with PPA ports.
149. PPA regulates private ports and awards contracts for cargo handling
services to the private sector in government-owned ports. It also sets and
approves rate increases in port charges and cargo handling rates for both
public and private ports. Although PPA has no investment in private ports,
it also receives shares from port charges of privately operated ports (i.e.,
50% cargo handling revenues of public and private ports). PPA also
regulates entry of the private sector through issuance of permits to
establish and operate ports. Starting in 1997, PPA has liberalized the
construction and operation of private industrial ports but not its operation
for commercial purposes.
150. Reforming the port system, particularly the PPA, is not an easy task
because of the strong resistance of the PPA workers and its direct clients.
The recent UNDP-NEDA study suggests two reform agenda for the
Philippine port system: (1) correcting the flaws in the PPA Charter and (2)
allowing the conversion of support to the establishment of parallel port
system (i.e., RRTS) that would enhance competition with the PPA system.
151. The budget released for FMRs during AFMA (1999-2003) totaled P5.79B
compared to P2.21B before AFMA (1996-1998). Region 5 received the
biggest share of the budget for FMRs before AFMA while Region 6
obtained the largest share during AFMA. Region 4-A consistently ranked
second in terms of the regional budget release during the two periods.
Before AFMA, budget allocation at the regional level was much higher in
Luzon and Visayas. This trend in budget allocation was partly corrected
during the implementation of AFMA with Regions 10, 11 and 13 getting a
bigger share of the budget than before AFMA.
152. The Philippines lags behind other Asian neighbors in terms of road
network and road condition. The road network in Thailand and Indonesia is
twice as much longer than the Philippines and the ratio of paved national
roads is also remarkably higher. Vietnam and Sri Lanka have less
extensive network than the Philippines but these countries focus more on
constructing concrete and asphalted national roads so their ratios of paved
national roads are also higher than the Philippines.
lix

153. The distribution of telephone lines showed an upward trend from 1995-
2001, with 2001 having the most telephone lines installed. The opposite
happened from 2002-2004 due to high demand for cellular mobile phone
subscription. Cellular phone subscribers exhibited a dramatic increase
from 493,862 in 1995 to 32.94 million in 2004. Despite this development,
some leading vegetable production areas in the country cannot be
reached by cellular phone in the absence of cell sites (e.g., Lantapan in
Bukidnon).
154. The 2003 DA-BPRE’s inventory of existing post-harvest facilities
nationwide showed that the country experienced a surplus in the number
of rice threshers, corn shellers, and rice and corn mills. In contrast, the
country registered a deficit in drying facilities and warehouses/storage
facilities for both rice and corn. Among the rice producing regions, only
ARMM encountered a deficit in threshers while Regions 1, 4 and 5
obtained large surpluses of threshers. All the provinces in these regions
also indicated excess in number and capacity of threshers. For corn
shellers, only three regions (CAR, Region 1 and ARMM) had a shortage in
number of units and capacity while the majority registered a surplus.
Regardless of the type of drying facilities, Regions 6 and 3 had the largest
shortage in supply of dryers for rice and ARMM and Region 2 for corn in
2003. The deficit in the number of mechanical dryer was much higher
than the multipurpose drying pavement (MPDP) for both crops. With the
exception of Guimaras, all the provinces in the above major rice and cornproducing
regions encountered a shortage in supply of drying facilities.
155. Rice milling facilities exceeded in number and capacity in 11 regions but in
shortage in 5 regions including the major rice production centers (Regions,
3, 2, 12 and ARMM). Corn mills also registered s surplus in the number of
units and capacity in 9 provinces and inadequate in 6 provinces
particularly in leading corn supply areas (Regions 2, 12 and ARMM). A
deficit in number and capacity of warehouse/storage facilities was highest
in the main rice producing regions (Regions 6, 2, 3 and 12) and corn
(Regions 2, 12, and 10) while minor growing areas for the two crops
reported an oversupply of these facilities.
156. There are 51 registered cold storage facilities with an aggregated capacity
of 52.53 thousand mt operating in the country. These cold storage facilities
are highly concentrated in Luzon with a share of 91% and the remaining
9% of the total capacity is located in Visayas and Mindanao. Metro Manila
in NCR and Nueva Ecija in Central Luzon are the dominant sites for these
cold storage facilities in Luzon, Cebu and Iloilo in the Visayas, and South
Cotabato (General Santos) and Misamis Oriental (Cagayan de Oro) in
Mindanao.
157. Benguet, Cebu and Bukidnon are the three major producing provinces of
high value vegetables that received cold storage facilities and equipment
from DA-BPRE, DA-RFUs and LGUs for the period 2001-2005. Among
these provinces, Benguet received the most number of refrigerated trucks,
cold rooms and plastic crates and incurred the biggest project cost.
lx

158. For the period 2002-2003, 19 trading posts were cost-shared by GMA-
HVCC and concerned LGUs in five regions for the benefit of
farmers/industry associations. Among these regions, Region 11 received
the most number of trading posts (9 units) followed by Region 9 (5 units)
and Region 10 (3 units) while Regions 1 and 5 had one unit each. There
are reports that some of these trading posts are not strategically located
and therefore remain underutilized or non-operational. An Agribusiness
Service Center with common service facility in Iba, Zambales is also
underutilized and not well maintained. Instead of using the building for
actual trading, it serves only as a place for market matching and storage
area for the organic fertilizer (which emits bad odor) and hot water bath for
both mango and plastic crates.
159. There are 155 livestock ‘oksyon’ markets in the Philippines and majority of
them are found in Iloilo and Negros Occidental in Region 6, Negros
Oriental and Cebu in Region 7 and Batangas and Quezon in Region 4. An
assessment of ‘oksyon’ markets throughout the country must be done to
determine which of these are operational and non-operational and also the
ones that need upgrading/rehabilitation.
160. The latest NMIS data show that 955 abattoirs are located throughout the
country with Region 3 having the highest number of abattoirs (118 units),
followed by Region 4-A (112 units) and Region 6 (96 units). Of this total,
only 195 are accredited by NMIS based on its accreditation system, 700
abattoirs are non-accredited and 59 have no available information. The
total number of rehabilitated abattoirs is only 147 abattoirs or 15% of the
reported abattoirs in the country.
161. For the period 2001-2004, 117 new abattoirs were constructed to cater to
the growing demand for these facilities by the livestock industry. Heavy
rehabilitation work was also done in this period. On regional basis, Region
1 registered the highest number of abattoirs that have been rehabilitated
followed by Regions 2 and 8.
162. NMIS has identified five major issues confronting abattoir development: (1)
absence of standards in establishing abattoirs, (2) inadequate and poor
abattoir facilities, (3) poor maintenance of abattoirs, (4) presence of
settlers within abattoirs creates health problem in the absence of
environmental and health measures, and (5) inadequate Halal abattoirs.
163. A recent report of RNAM indicates that the level of agricultural
mechanization in the Philippines is relatively lower compared to other
Asian countries. The contributory factors for this situation are: (1) limited
access to appropriate and affordable machinery equipment. (2)
proliferation of substandard agricultural machinery, (3) inadequate
extension and promotion programs, and (4) inadequate support services
and policies necessary for the promotion of mechanization. The same
observation was made by NAFC-AFMeC, UPLB-AMDP and AMMDA.
lxi

164. The NAFC-AFMeC with various consultations conducted has drafted a
proposed Agricultural and Fishery Mechanization Law to address the
issues and problems affecting the Philippine agri-fisheries modernization.
Stakeholder’s Perceived Impact of Other Infrastructure and Post-harvest
Facilities
165. Out of 180 stakeholders consulted, only 38% of them expressed
satisfaction with the provision of other infrastructure and post-harvest
facilities while 36% were not satisfied. Some 16% were indifferent and
10% were not aware if it has improved under AFMA.
166. Less than half of stakeholders perceived that the provision of FMRs (42%),
rural electrification (37%) and telecommunications infrastructure (32%)
have improved under AFMA. Region 2 showed the highest number of
stakeholders who claimed that FMRs were much better during AFMA
followed by Region 6. For rural electrification and telecommunications
infrastructure, many stakeholders in Region 10 believed that these have
improved during AFMA. On fishports and seaports, about 17% each of the
respondents perceived that these were upgraded under AFMA particularly
in Regions 10, 5 and 6; and close to 14% and 16% of the respondents
observed the opposite. Two-thirds of the surveyed regional stakeholders
were not aware of any improvement in fishports and seaports.
167. For post-harvest facilities, only 27% of the stakeholders believed that such
facilities were provided to target beneficiaries with Region 2 getting the
highest positive answer, followed by Regions 10, 6 and 5. Nearly 26% of
the respondents did not agree. The same perception was given for
agricultural machinery.
168. The proportion of regional stakeholders who perceived that airports (18%),
water supply (24%), public markets and abattoirs (24%) have not shown
remarkable improvement under AFMA was slightly higher than those who
answered positively. For research and technology infrastructure, the
proportion of respondents (22%) who agreed that SCUs benefited from
this infrastructure was equal to those who did not agree. Positive
perception on the provision of research and technology infrastructure was
mostly given by respondents in Regions 2, 4-A and 9 and those that
believed the opposite originated from Regions 1, 3, 10, 13 and ARMM.
169. Industry stakeholders believed that other infrastructure provided under
AFMA has moderate impact on the growth of several commodities covered
in the regional consultations. The number of regions that received a
moderate impact evaluation for other infrastructure by type of commodity
is distributed as follows: 9 regions for rice, livestock and poultry, and
HVCC; 7 regions for fisheries and aquaculture; 3 regions for corn; 2
regions for grains and 1 region each for coconut and abaca.
170. Based on the perception of some stakeholders, the impact of other
infrastructure on five commodities was low in 4 regions each for corn,
HVCC, livestock and poultry, and 3 regions each for grains and fisheries
lxii

and aquaculture. There was limited number of regions where
stakeholders rated other infrastructure with high impact on five
commodities, namely: 4 regions for fisheries and aquaculture; 2 regions
each for rice and corn, and 1 region each for HVCC and livestock and
poultry. A few respondents claimed that other infrastructure projects have
no impact on corn, HVCC, livestock and poultry, and fisheries and
aquaculture.
171. The general impact of post-harvest facilities was perceived to be lower
than other infrastructure because of limited budget earmarked under
AFMA. The impact of post-harvest facilities was rated lowest in 7 regions
engaging in fisheries and aquaculture, HVCC, and livestock and poultry;
and 6 regions producing corn. There were also stakeholders who claimed
that these facilities have no impact on the development of the fisheries and
aquaculture industry in 5 regions. Similarly, respondents also believed
that post-harvest facilities have moderate impact on 8 rice-growing regions
and 7 regions raising HVCC and livestock and poultry. High impact rating
was given only to 3 regions each cultivating a particular commodity (corn,
grains or fisheries and aquaculture).
172. Inadequate budget allocation for the establishment of other infrastructure,
substandard quality of FMRs due to poor design and construction, and
poor/lack of maintenance of FMRs are the common issues and concerns
perceived by stakeholders in different regions producing rice, corn, grains,
HVCC, and livestock and poultry. Other major issues and concerns raised
by stakeholders from the rice, corn and grains producing regions include
(1) inadequate FMRs and other appropriate infrastructure, (2) wrong
location of FMRs due to political intervention, (3) inadequate
communication facilities at the barangay level, and (4) non-involvement of
the community including AFCs/NGOs in the identification and
implementation (maintenance and monitoring) of other infrastructure
projects.
173. In HVCC growing areas, other issues and concerns identified by
stakeholders include (1) inadequate infrastructure (e.g., FMRs, buying
station for mango, and research and technology center); (2) noncompletion
of FMRs in ARMM due to insurgency; and (3) inadequate
supply of electricity in some areas. For livestock and poultry, other
pressing issues and concerns were (1) weak collaboration between LGUs
and NGAs in the construction of FMRs, (2) bureaucratic red tape in the
construction of other infrastructure in Region 3; (3) low priority given to
FMRs in the livestock area in Region 1; (4) poor water supply/inadequate
water facilities in Region 7; and (5) limited participation of the private
sector in infrastructure development.
174. Stakeholders from fisheries and aquaculture raised the following major
issues and concerns on other infrastructure: (1) inadequate R&D
equipment, fish landing and fishing wharf in Regions 1, 5 and 6; (2) lack of
loading points and barges in CAR; (3) lack of coastal roads that link to
market centers in CAR, Region 5 and ARMM; (4) non-involvement of
coastal community and stakeholders in the identification and
lxiii

implementation of other infrastructure in Regions 5 and 11; (5) lack of
integrated fishport, market and fish laboratory facilities in Region 8; (6)
inadequate demo and training centers for fishery entrepreneurships in
Region 8; (7) lack of participation of the private sector and other investors
in infrastructure development in Region 9; (8) lack of fast-moving
unloading equipment in ports in Region 9; (9) non-concreting of FMR/foot
bridge in Region 10; and (10) lack of FMRs in fish ports/landing areas, lack
of water facilities, and inadequate supply of electricity in ARMM.
175. On coconut and abaca, stakeholders reported the lack of funds for FMR
establishment/rehabilitation, insufficient power supply and immediate need
for upgrading/rehabilitation of research centers in Region 4-B.
176. Inadequate government funds allocated for post-harvest facilities (PHF)
under AFMA, limited post-harvest facilities, and lack of technical expertise
at the local level on PHF repair and maintenance and/or inadequate
training on post-harvest technology were the common issues and
concerns raised by stakeholders in different regions producing rice, grains,
HVCC, livestock and poultry, and fisheries and aquaculture.
177. For rice, other concerns of stakeholders included (1) low quality of
PHF/substandard quality of MPDPs in Regions 1, 5, 7 and 4-B; (2) under
utilization of PHF and lack of consultation with the target beneficiaries in
Regions 1 and 2; (3) lack of demonstration on how to properly operate and
maintain PHF in Region 1; (4) lack of after sale service by suppliers in
Region 4-B; and (5) lack of maintenance of MPDP and inadequate supply
of improved design of MPDP/flatbed dryer in Region 9. Respondents in
Region 6 also perceived the difficulty of testing PHF by AMTEC because
some PHF are located in far-flung areas.
178. Stakeholders representing corn areas also complained about (1) the lack
of lot donor to establish MPDPs; (2) non-strategic location of some storage
facilities in Region 1; and (3) low drying efficiency of existing dryers in
Region 5. On grains, other issues raised included (1) high operating and
maintenance costs of PHF in Regions 10, 11, 13 and CAR; (2)
underutilization of PHF because it did not meet the farmers’ choice (e.g.,
mechanical dryers) in Regions 10, 13 and CAR; (3) few favored recipients
availed of PHF in Region 12 and CAR; and (4) lack of small farmers’
capability (technical and financial) to invest on PHF.
179. Respondents in HVCC growing regions believed that fruit processing
facilities, collection centers, trading posts, multi-line processing plant and
cold storage facilities have remained inadequate in CAR and Regions 1
and 2. This is a clear indication that some stakeholders are not aware of
the available post-harvest facilities in their respective region. Other issues
and concerns mentioned were (1) obsolete PHF in Region 2; (2) limited
attention to provision of PHF due to relative proximity of Region 4-A to
Metro Manila; (3) poor planning on the proper location and operation of
PHF in Region 3; (4) unaffordable equity required from target beneficiaries
including small HVCC growers; (5) lack of government support for village
level equipment/processing facilities in Regions 8 and 12; (6) non-strategic
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location of PHF in Region 5; (7) technical design of PHF is not what the
users need in Region 7; (8) high cost of post-harvest service facilities (e.g.,
VHT) in Region 11; and (9) limited number of stripping machines and lack
of budget to operate processing facilities in Region 13.
180. For livestock and poultry, the list of PHF which stakeholders perceived to
be inadequate included cold storage, slaughterhouse, cutting equipment to
standardize meat cuts, and test laboratories in Regions 1, 2, 3, 4-A, 8, 9
and 11. Other issues included (1) substandard PHF like slaughterhouse in
Regions 3 and 5; (2) inefficient use of PHF (e.g., storage, abattoirs and
processing plants) in Region 5; (3) weak LGU support/commitment to have
access to PHF in Regions 4-B, 8 and 9; (4) non-strategic location of
slaughterhouses in Regions 5 and 13; (5) lack of product standardization
and common safety measures in Regions 6, 11 and ARMM; (6) low
capacity utilization of slaughterhouses because each municipality
established small slaughterhouse in Region 10; (7) lax in implementing
rules and regulations in Regions 4-B and 8; and (8) dirty abattoirs due to
limited supply of water in Region 11.
181. On fisheries and aquaculture, other issues and concerns identified by
stakeholders included: (1) no concrete guidelines/framework for the
establishment of PHF in Regions 7 and 8; (2) lack of information
dissemination on available value adding and packaging technologies in
Region 7; and (3) improper identification and implementation of some
projects in Region 1. For coconut, inefficient processing machine and
poor quality copra was the other concern of stakeholders in Region 4-B.
In the same region, stakeholders reported the limited number of stripping
machines, dryers and warehouses in abaca areas.
General Recommendations
182. Based on the results of the review of the AFMA targets and
accomplishments and feedback generated from regional consultations of
key stakeholders, the following general recommendations are suggested:
183. Finalize an integrated agriculture and fishery infrastructure plan. This
plan will serve as the blue print in identifying priority post-harvest facilities,
FMRs, research and technology infrastructure, and other implementing
mechanism based on effective organizing frameworks by the DAconcerned
agencies in partnership with LGUs during the period of AFMA
extension. The Planning Service (PS) should assist the infrastructure
units/agencies in the preparation of the plan, as the infrastructure plan
must be aligned with the AFMP. It is noted that the preparation of the
strategic plans per MFO, one of which is the Infrastructure and Postharvest
Facilities Strategic Plan has been started by BPRE, in
collaboration with the PPD-PS. The DA should also coordinate with the
officials of DAR and DENR to determine the convergence of FMRs and
other related infrastructure.
184. The Secretary of Agriculture will also continue coordinating with DPWH,
PPA, DOTC and LGUs so that FMRs, fishports, RORO ports/terminals,
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and communication facilities are properly identified and established by the
latter in the right places with the end-goal of improving access to market
and enhance the competitiveness of agricultural products. This will
minimize the establishment of other infrastructure in non-strategic areas or
diverting it to non-priority areas. Many stakeholders consulted in some
regions have complained about the diversion of infrastructure-related
projects and underutilization of some post-harvest facilities because they
are not strategically located. The DA-PS as the lead agency in the
formulation of the framework should coordinate with the other agencies
concerned. The plan should also incorporate agriculture and fisheries
infrastructure that may be included in the public work program under the
GAA, priority infrastructure projects of DPWH, and infrastructure programs
of LGUs and legislators.
185. Review and finalize the guidelines for the prioritization of
government resources for the other infrastructure and post-harvest
facilities. DA-FOS, BPRE and DA-PDS have initially prepared the
guidelines for the prioritization of government resources for the other
infrastructure and post-harvest facilities. In view of the extension of AFMA,
DA-OSEC and concerned agencies must review the said guidelines to
determine whether these are still relevant given the changing needs of the
agriculture and fisheries sector, and if not formulate a more appropriate
guidelines/criteria.
186. Designate a Department Assistant Secretary to take charge of agrifisheries
infrastructure. Rule 46.2 of AFMA states that the DA Secretary
should designate a DA Assistant Secretary to take charge of the DA’s
program of infrastructure support for agriculture and fisheries
modernization. At present, there is no DA Assistant Secretary assigned to
assume such function.
187. Institutionalize the agricultural engineering groups of DA and LGUs.
The agricultural engineering groups of DA and LGUs which have been
existing for so long should be mainstreamed in the DA structure and LGUs
to effectively and efficiently provide the necessary technical and
engineering support in the implementation of agri-fishery infrastructure and
mechanization projects under AFMA as well as in the provision of the
needed assistance by farmers concerning the operation and maintenance
of their post-harvest facilities and machinery projects.
188. Enforce and continue developing the Philippine agricultural
engineering standards. Although the DA has already adopted five
volumes of the Philippine agricultural engineering standards, these should
be fully enforced as part of the implementation of agri-fisheries
infrastructure, mechanization and post-harvest facilities projects. Likewise,
other standards particularly on the machineries and agricultural facilities
for other agricultural and fishery commodities which are not yet existing
should also be developed. This will address the issues and problems on
low quality, substandard and underutilization of post-harvest facilities,
slaughterhouses, farm machineries and other agri-fisheries facilities.
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189. Design and implement an effective monitoring system for AFMA.
Although there is already a monitoring scheme for FMRs and expectedly
for post-harvest facilities and agricultural machinery, it is important that
NAFC will serve as the overall agency responsible for integrating the
progress reports submitted by concern agencies and monitoring of other
infrastructure that has no designated DA-agency to assume such function.
RFUs through RAED can manage the monitoring and inspection of FMRs.
BPRE, on the other hand, can spearhead the monitoring of post-harvest
facilities in close coordination with NAFC and DA-RFUs. NAFC will also
conduct training workshops on AFMA web-based monitoring system. It is
important to allocate a regular budget of at least 1 percent of the total
budget to be earmarked for other infrastructure and post-harvest facilities
for monitoring purposes. A consultant may be hired to assist in the design
of the monitoring system for other infrastructure and post-harvest facilities.
Specific Recommendations: Other Infrastructure
190. Continue the implementation of the counterpart funding scheme
between the LGUs and the national government for FMR
construction/rehabilitation as stipulated in the IRR. During the AFMA
extension, LGUs should continue providing a minimum of 10 percent
counterpart funding for the construction/rehabilitation of FMRs. The first
class municipalities have initially provided the counterpart funds during the
period of evaluation. However, there is a need to pursue this modality with
more vigor. There are foreign-assisted projects that have introduced the
70:30 cost-sharing arrangement, with the foreign donors shouldering 70
percent of the construction cost and the remaining 30 percent by LGUs.
191. Involve the target beneficiaries in the construction/rehabilitation and
maintenance of FMRs. Farmers/industry associations and people’
organizations (POs) that will benefit from the construction/rehabilitation of
FMRs can be partners of the LGUs with the former providing their labor at
minimum wage while the latter shouldering the cost of the construction
materials. In order to sustain the maintenance of FMRs, farmers/industry
associations may provide free labor as their counterpart because wellmaintained
FMRs can facilitate the mobility of people and agricultural
products in their municipalities.
192. Adopt the proposed amendments/addendum on the existing policy
guidelines on FMR development. The DA and DPWH jointly proposed
amendments/addendum on the existing policy guidelines on FMR during
the DA-Planning Workshop in February 2005. The first amendment
suggests an increase in scope of FMRs—including access roads that lead
to agricultural storage facilities, agro-processing centers and other vital
facilities within the designated production areas under the DA-GMA
Programs (rice, corn, HVCC, livestock and fisheries). Road network in the
new open lands for agribusiness (coconut, corn, sugar, abaca, HVCC,
livestock and fisheries) must also be part of the definition/scope of FMRs.
193. The second proposed addendum requires that (1) FMRs for funding and
approval by DA-CO should come from the validated sites of the RFUs; (2)
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FMR approved projects should have complete information (specific road
station/benchmark) indicated in the SARO; (3) the inclusion of Section 52
of AFMA-“the DA shall coordinate with the LGUs and the resident farmers
and fisherfolks in order to identify priority location of FMR that takes into
account the number of farmers and fisherfolks and their families who shall
benefit there from and the amount, kind and importance of agricultural and
fisheries products in the area”; and (4) selection/prioritization criteria and
guidelines shall be developed and adopted by DA. This addendum will
address the issues and concerns raised by stakeholders about the nonconsultation
of farmers and fisherfolks in the identification and selection of
priority location of FMRs.
194. On detailed engineering, the proposed amendment states that DPWH
standard design, specification and cost estimates shall be
reviewed/updated by DPWH with inputs from DA and shall form part of in
the FMR standard to be prepared by DA; and program of work should be
concurred by RAED and be a requirement before proceeding with the
bidding and construction. The suggested addendum on the construction of
FMRs are (1) labor-based equipment supported technology shall be used
in the construction (by Administration), (2) DA should be copy furnished
with the evaluation result of DPWH on the capacity of the LGU to
undertake construction, and (3) DA through its RFUs shall likewise be
involved in the bidding process conducted by DPWH and LGUs
(Government Procurement Reform Act).
195. The proposed amendments on project monitoring and inspection are (1)
DA-CO technical staff shall also conduct spot monitoring and evaluation,
(2) guidelines and procedures on Project Monitoring and Inspection will be
formulated/adopted, and (3) a joint committee will be created at the
regional level to enhance coordination.
196. On program management, the proposed amendment is to fully
operationalize the monitoring and inspection of FMR implementation by
RFUs through their RAED under DA AO No. 11 Series of 2004 as well as
DA-DILG Joint MC No. 1, in connection with the LGUs.
197. The required amendments on fund release and allocation are (1) DA,
particularly the RAED and CO-Technical Staff shall also be allocated a
share of the total engineering and administrative overhead expenses,
which they use in the validation of sites, etc.; (2) funds for FMR master
planning shall also be allocated; (3) inclusion of Section 52 of
AFMA-“Construction of FMR shall be a priority investment of the LGUs
which shall provide a counterpart of not less than 10 percent of the project
cost subject to IRA level”; and (3) a meeting with DA, DPWH, and DBM
shall be conducted on funding issues particularly on MOOE requirement of
the DA for FMR implementation.
198. Conduct policy studies on shipping services. Focus areas of policy
studies cover an assessment of the quality and efficiency of services,
policies and regulations governing shipping, arrastre, port infrastructure
and services, charges and tariffs, safety and related matters. Results of
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the policy studies will provide feedback on the sources of inefficiencies
and recommendations on how to improve the shipping services for
considerations of the PPA. DA-FOS, DA-PS, DA-PAS and DA-PDS are
the agencies that can handle this activity.
199. Assess the state of telecommunication services for agro-industry.
The DOTC, in collaboration with ITCAF must continue undertaking this
activity to identify and provide the required telecommunications facilities in
priority areas in support of SAFDZs and agro-industrial activities. However,
DOTC should look for funds to finance projects of this concern.
200. Fast-track the validation, approval and adoption of the Action Plan on
quarantine and regulatory services. An Action Plan on the
rationalization of the quarantine and regulatory services of the DA has
been initiated/prepared by BAFPS through the DFIMDP. The said Action
Plan aims to strengthen the provision of required laboratories and facilities
of regulatory member agencies to ensure food safety and quality of
agricultural and fishery products. The Plan also identifies the critical role of
each regulatory member agency.
201. Finalize the program that will encourage the LGUs to turn over the
management and operation of public markets and abattoirs to
qualified vendors’ or suppliers’ cooperatives. The DA-AMAS assisted
by NMIS and in consultation with DOF, DILG, DBM and appropriate
agencies should finalize the program. Some leg works have already been
done like the guidelines in the transfer of operation and management of
public markets and abattoirs to market vendors’ cooperatives and conduct
of two seminar-workshops.
Specific Recommendations: Post-harvest Facilities and Agricultural and
Fishery Mechanization
202. Develop a national post-harvest development plan. There is a need to
revisit the post-harvest technology development and promotion program
used during the first phase of AFMA implementation. With the availability
of the latest inventory of post-harvest facilities done by BPRE and the
perceived need for post-harvest equipment, machineries and facilities in
different regions, BPRE together with PS, PhilRice and PFDA in
collaboration with the UPLB-PHTRC ( in case of perishables) can develop
a national post-harvest development plan that will match the right type of
post-harvest equipment/machinery and facilities needed by major
producing regions, identify the role of each of the concerned agencies and
areas of collaboration, time frame, type of assistance, budget and
strategies during the second phase of the AFMA implementation.
203. In the development plan, the areas of cooperation and the kind of
assistance to the private sector (e.g., linking with the financial institutions,
training and demos) and to the farmers/industry associations on a costsharing
arrangement should be part of the plan. Given the limited
government resources, the counterparting arrangement between the DA
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and the target beneficiaries is a good strategy that will sustain the
development of the post-harvest sector both for agriculture and fisheries.
204. Fast-track the passage of the agricultural and fishery mechanization
law. The bill proposed by NAFC-AFMeC on Agricultural and Fishery
Mechanization needs immediate approval by Congress. Agricultural
mechanization is a vital component in the agricultural and fishery
modernization process. The proposed legislation seeks to increase the
level of agricultural mechanization in the country which is relatively lower
as compared to other countries. It will also address the following issues
and problems: (1) limited access to appropriate and affordable machinery
and equipment; (2) proliferation of substandard agricultural machinery; (3)
inadequate extension and promotion program; and (4) inadequate support
services and policies necessary for the promotion of agri-fishery
mechanization.
205. Provide adequate training and extension support. Training and
extension support on farm mechanization, agro-processing and the proper
operation and maintenance of post-harvest facilities and farm machineries
should be given priority in the DA’s overall training and extension program.
206. Continue the conduct of a nationwide inventory of post-harvest
facility and agricultural machinery. BPRE in collaboration with LGUs,
DA-RFUs and PSAE should continue this activity with adequate budget.
BPRE has completed the installation of PH Facility Inventory System in
different regions and conducted trainings on how to do the inventory.
Updated information on the availability and condition of post-harvest
facilities and agricultural machinery by municipalities/province/region will
provide valuable information to DA, other agencies and legislators on
where to establish or distribute them considering the areas with deficit and
surplus number and capacity. The required specific types of post-harvest
facilities identified by stakeholders can be counter checked from the list of
BPRE’s inventory of post-harvest facilities.
4.6 Budget
207. The budget/financial evaluation of the AFMA implementation focused on
the fund requirements mandated under the law as translated into AFMP
2001 – 2004 vis-à-vis the recorded stream of budgetary support from the
national government. This was carried out within the overall context of
providing workable policy and program recommendations to enhance the
realization of the vision and goal of a modernized Philippine agriculture
and fishery sector enunciated in the AFMP.
208. Difficulties were encountered in gathering budget/financial data inputs.
Records at the DA were not updated, incomplete and not reconciled with
the DBM’s. The DA was remiss in their compliance with their reportorial
functions mandated by law for the establishment and utilization of the
AFMP Special Purpose Fund. Material differences in budget/financial data
reported by the DBM against those of DA and DAR exist but no
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econciliation of records was ever attempted due to the perceived long and
tedious processes involved. Lastly, there was apparent lack of
understanding or non-acceptance of the budget attribution method used by
the DBM in recording AFMA allocations hence, the differences in recorded
amounts. For purposes of this study, the DBM figures were used since it is
the official government agency tasked to officially report on the overall
government budget.
209. An analysis of compliance with the budgetary allocations prescribed under
the law was not possible. The DA and other AFMA implementing agencies’
budget and accounting systems are not structured to generate the
required monitoring reports and the corresponding level of details needed.
Question on the integrity of available data was raised mainly due to the
process of arbitrary attribution being employed by the DA in determining
allocation of funds utilization.
The AFMP and the Budget
210. The AFMP provided the strategic framework to harmonize and unify the
various agriculture and fishery development programs, projects and
activities. It likewise afforded the Congress and DBM the sound bases for
the review and support of the annual budget proposals in support of
agriculture and fisheries sector modernization.
211. As provided for under the AFMA, an initial year (1999) funding of P20
billion in addition to the 1998 DA budget was provided. For the subsequent
years 2000 to 2004, the DBM was mandated to include in the President’s
budget program, and correspondingly release, P20 billion (at least P17
billion per year in addition to the DA’s 1998 appropriation of P2.771
billion). The P20 billion a year was projected to provide for the needed
steady flow of public investment support to the agriculture and fisheries
sector.
Planning and Financial Management Organization for AFMA
212. AFMA also called for the corresponding rationalization in the planning and
financial management systems of the DA and other AFMA implementing
agencies along the lines of the AFMP. The DA had taken positive steps to
implement the called for reforms in the planning and financial/budgeting
systems and processes within the agriculture bureaucracy. Several
organizational studies were conducted and detailed implementation plans
were prepared with the end in view of reorienting and even restructuring
the DA agencies and operations towards functional lines in accordance
with the AFMA and the public expenditure management reforms of the
government. To date, the rationalization plan of the DA and its attached
agencies are still awaiting approval for implementation.
213. The obvious disconnect between the DA’s planning and budgeting
systems had resulted in the incongruence between what it needs to do
and what it actually does. The much needed changes and improvements
in the planning and financial systems, particularly in developing close
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linkages between its operational plans/targets and its financial and other
resources are yet to be implemented and institutionalized.
Total Funding Support to Agriculture: 1993 – 2005
214. For the 13 year period 1993 – 2005 a total of P226.59 billion new
appropriations was provided under the DA regular budget and GATTrelated
adjustment measures/AFMA. Fund utilization was about 89 percent
with total expenditures recorded at P210.81 billion. Budget expenditures
growth rate over the 13 year period was recorded at 24.73 percent. The
growth was much higher at 57.25 percent during the pre-AFMA years
compared with only 1.15 percent during the 1999 to 2005 AFMA period.
Disbursement during 1999 to 2005 showed an improvement of about 8
percent compared with the 1993 to 1998 period. Appropriations and
obligations were only slightly higher during the1999 to 2005 AFMA years
at 53 percent and 55.28 percent, respectively compared with the 1993 to
1998 pre-AFMA years. Among the regions, Regions 3 and 8 received the
largest budget of a little over P5.0 billion each, while CARAGA, ARMM and
CAR received the lowest totals at P795 million, P878 million and P894
million, respectively over the 13-year period.
Pre-AFMA Years: 1993 - 1998
215. For the period 1993 to 1998, total appropriations amounted to P106.50
billion of which P23.935 billion was for DA regular programs and the bulk
of P82.565 billion was for the implementation of the intended safety nets.
Fund utilization was registered at 88.67 percent of appropriations. The
highest utilization in terms of peso value was in 1995 when a total of
P28.998 billion was spent. This is equivalent to 85.43 percent of
appropriations. 1994 and 1997 both registered utilization rate of 104.04
percent and 103.98 percent, respectively. This was possible because of
the continuing nature of the additional appropriations under the GATTrelated
measures special funds.
216. At least 90 percent of total budget was controlled at the DA Central Office
(DACO) with only 10 percent or less going to the regions: 42.44 percent of
regular budget expenditures was under the DACO operations while the 47.
64 percent was for the implementation of the nationally funded production
programs for rice, corn, livestock, high value commercial crops, etc. The
amounts were sub-allotted to the DA Regional Field Units (DARFU). In
terms of expenditures of the GATT-related measures special funds 67.45
percent went to nationwide operations while only 25.30 percent went to the
DACO support to operations.
217. The DARFUs were highly dependent on the DACO for actual releases of
sub-allotments and the corresponding cash for the use of nationallyfunded
production programs. Regions 4, 6, 8 and 9 received the highest
budget allocations – from around P800 million to P1.30 billion, for the
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period 1993 to 1998. Region 4 received the highest total amount for the
period.
218. Following the DA’s contention that budget for nationwide program
implementation went to the field offices, DACO’s overall share of total
budgets (excluding the amount set aside for national programs) was
equivalent to more than one third or 36 percent of total. Data on the actual
breakdown of expenditures to each region contained a lot of cost
attributions with the accounting reports not attuned to a more effective
AFMA program monitoring.
AFMA Years: 1999 – 2005
219. Increased inflows of financial resources to the agriculture sector did not
materialize as expected with the passage of AFMA. Total actual budget fell
below what were prescribed by the law both in terms of new appropriations
and obligations. New appropriations totaled P120.089 billion from 1999 to
2005. This is P61 billion (34 percent) less than the P181.438 billion set by
the law. The biggest budget shortfalls were experienced in 2004 and 2005
when total new appropriations amounted to only P12.25 billion for 2004
and P13.18 billion for 2005. These were equivalent to a measly 43 percent
and 45 percent of the requirements for 2004 and 2005, respectively.
220. Total obligations of P116.37 billion, was incurred over 1999 to 2005.
Except for the year 2000, annual obligations always fell way below the
prescribed budget for each corresponding year. Shortfalls during the last 3
years were 50 percent, 53 percent and 50 percent in 2003, 2004 and
2005, respectively.
Fund Utilization Efficiency, 1999 – 2005
221. Fund utilization efficiency as evidenced by the amount of obligations
incurred vis-à-vis the available new appropriations was registered at 96.90
percent for the period 1999 to 2005, 8 percent higher than the 1993 to
1998 period. Nevertheless, actual expenditures still fell short by a total of
P3.72 billion (3.10 percent). This puts to question the DA’s absorptive
capacity to manage and disburse the tremendous increases in financial
resources. For the years 2000, 2002 and 2003 DBM recorded unutilized
AFMA appropriations at 10 percent, 23 percent and 29 percent,
respectively.
Fund Distribution: DACO and DARFUs
222. In terms of geographic distribution of funds, DACO remained in control of
total funds with at least 80 percent of total allocated to nationwide
programs and Central Office operations. Only about 20 percent went to the
regions of which Regions 3 and 8 received the highest amount of funds
with a total of a little over P4 billion each over the last 7 years. ARMM
received the least followed by Region 1 at P271 million and P664.11
million, respectively for the same period.
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Fund Allocation Prioritization by AFMA Component
223. Availability of data prevented the conduct of an analysis of compliance
with the budgetary allocations prescribed under the law. However, regional
consultation workshops conducted showed the stakeholders’ preferences
in allocating AFMA resources to components that they envisioned will
result to increasing crop production and yield, improving the quality and
quantity of produce, increasing incomes of stakeholders, generating more
jobs and the overall modernization of the agriculture sector.
224. Overall, provision of post harvest facilities was identified as the most
important intervention. Second was credit assistance and third was
irrigation closely followed by provision of other infrastructure including
farm-to-market roads, foot bridges, cold storage, abattoirs, etc. Taking the
regional perspective, provision of post harvest facilities likewise emerged
as the most important support, followed by the other infrastructure
facilities. Likewise, the commodity sectors selected post harvest facilities
as their priority focus area specially the corn, coconut/abaca, livestock and
poultry and fisheries sectors. Only the rice sector ranked irrigation as its
main priority area, while the grains sector in general, identified marketing
assistance as the primary focus area.
Hindering Factors to AFMA Implementation
225. The major hindering factors to AFMA implementation were identified as
follows: political intervention, delayed releases of cash allocation and
institutional problems.
226. Political interventions resulted in having a substantial portion of AFMA
funds utilized for activities/projects not within the AFMP’s identified
strategies and activities. On the other hand, the much delayed payment of
calendar year 2003 accounts payable resulted in the DA’s tremendous
problems with the seed production industry. Related to this were the
DARFUs’ complaints about unfunded sub-allotments.
227. Institutional problems are numerous. First, the bulk of AFMA budget for
extension/training went to pay for incentive allowances of LGU agriculture
technicians instead of going to actual production program interventions.
For example, approximately P200 million under the GMA-Rice program
were used to pay incentive allowances. Second, the LGU counter-parting
scheme did not materialize as expected. The planned cost-sharing with
LGUs was not well accepted by majority of local chief executives (LCEs)
who remained heavily reliant on the DA as provider of funds. Third, in
some DARFUs, good working relationships between and among DARFUs,
LGU-provinces/municipalities did not exist. The devolution of agriculture
extension workers to LGUs hindered their full utilization in the
implementation of DA programs and projects at the field level. The LCEs’
priorities did not always jibe with those of DA’s. Fourth, the lack of LGU
support to its agriculture extension workers (in terms of traveling
allowances, supplies and materials), prevented the implementation/
monitoring of DA programs. Fifth, the COA ruling that suspended the
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utilization by the DA of the seed collection under the DA-NFA Seed
Subsidy Component of the GMA Rice program and the remittance of
collections to the National Treasury adversely affected the cash flow of DA
and consequently caused tremendous delays in program implementation.
And lastly, the lack of appreciation or understanding of the fact that AFMA
implementation should be a concerted effort among the national
government, LGUs, and the private sector (corporations and individual
farmers) seemed to have lodged the financial burden of program
implementation on the national government or the DA in particular. The
LGUs active role in the agriculture sector modernization had been
overshadowed by the DA’s initiatives and implementation of nationallymanaged
crop production programs.
228. The following recommendations are put forward.
DA to Define its Strategic Priorities Consistent with Its Core Functions
Under the AFMA
229. For a more efficient use of its limited resources for the delivery of effective
support services and other interventions, the DA needs to clearly define its
strategic priorities and make them consistent with its core functions under
the AFMA. It should be able to direct its resources in the performance of
its mandated functions through a transparent financial budget. The
rationalization program of the national government is a major enabling
milestone for the DA to fine tune the agriculture bureaucracy to meet the
challenges posed by the AFMA.
DA to Implement Budget Reform Measures
230. DA has started instituting measures in accordance with the principles of
public expenditures management reforms espoused by the DBM. New
budget formats that will enable the DA to structure its budgetary allocation
in accordance with its Major Final Outputs (MFO) had been started. These
new formats should facilitate the reconciliation of authorized expenditures
with their MFOs, and consequently their priority areas for spending.
DA to Institutionalize Agency-wide Reforms
231. The effective implementation of the World Bank-assisted Diversified Farm
Income and Market Development should provide the much needed boost
to the institutionalization of reforms. This execution of the five interlinked
components should bolster an agency-wide change and development
process. The first three involve investing in assets needed to improve
delivery of essential public services to support competitive business
operations and strategic decision-making of the private sector: market
development; regulatory; and, research and development. The fourth
component pertains to the planning and budgeting system of the DA and
innovations needed to ensure that the allocation of budgetary resources
supports the desire to enhance DA’s effectiveness in service delivery. The
fifth component deals with rural infrastructure investments and technical
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support for DA’s clients to enhance market competitiveness of farmer
groups in selected focus areas.
Budget Allocation Priorities to Take Into Account Results of Regional
Consultations
232. The priorities defined and shown above should be given serious
consideration in the decisions on future resources allocations.
DA to Enjoin More Active Participation By the Private Sector and LGUs
233. The DA’s major role should be to encourage private sector investments
that would dynamically induce agricultural development and
modernization. It should concentrate on providing a more conducive policy
environment for the private sector initiatives to thrive. Also, concentration
on major infrastructure development, outside the ambit and financial reach
of the private sector, would result in improved symbiotic relationship
between government and private sector.
234. Relationships with the LGUs should be fostered by more consultations
between the DARFUs and the LCEs and other LGU staff. To the extent
possible, the latter should be involved starting from the planning phase of
any national programs to be implemented within the LGU concerned.
Detailed terms of reference for program and project implementations, with
particular focus on the financial arrangements and cost-sharing schemes,
should be clarified with the LCE (with commitments made) prior to any
implementation of programs or projects in the locality.
DA to Reconcile its Records with the DBM
235. It is important that efforts be made by the DA to reconcile its records with
that of the DBM. This should include all the other records pertaining to
fund attributions to the AFMA special funds. The effect of not using the
same set of data when requesting (on the part of the DA) and analyzing
and deciding on the budget approvals and fund releases (on the part of the
DBM) cannot be overemphasized.
4.7 Product
Standardization and Consumer Safety
236. The goal of AFMA is to modernize the agriculture and fisheries sectors of
the country in order to enhance their profitability, and prepare said sectors
for the challenges of globalization. Among the strategies to accomplish
this goal is the appropriation of funds for critical production and marketing
support services, including Product Standardization and Consumer Safety
(PSCS) service. The vision of AFMA is “that all sectors involved in the
production, processing, distribution and marketing of foods, and non-food
agricultural and fisheries products shall adhere to, and implement the use
of product standards in order to ensure consumer safety and promote the
competitiveness of agriculture and fisheries products”.
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237. Title I, Chapter 7, Sections 60-64 of the AFMA mandated the Department
of Agriculture (DA) to establish the BAFPS to set and implement standards
for fresh, primary- and secondary-processed agricultural and fishery
products. Specifically, the powers and functions of BAFPS are: (a)
formulate and enforce standards of quality in the processing, preservation,
packaging, labeling, importation, exportation, distribution, and advertising
of agricultural and fisheries products; (b) conduct research on product
standardization, alignment of the local standards with international
standards; and (c) conduct regular inspection of processing plants, storage
facilities, abattoirs, as well as public and private markets in order to ensure
freshness, safety and quality of products.
The State of the Philippine Agriculture and Fisheries Safety and Quality
System
238. The Philippine agriculture and fisheries safety and quality system is
characterized by numerous government units that have overlapping and
uncoordinated standards formulation and enforcement functions. There
are gaps despite the overlaps. The system is generally inefficient and
reactive. It appears to prioritize food export issues. The agriculture and
food standards formulation and enforcement functions are shared by the
Department of Agriculture (DA), the Department of Health (DOH), the
Department of Trade and Industry (DTI) and LGUs.
The AFMA PSCS and BAFPS and Its Status
239. The AFMA-prescribed creation of BAFPS with the promise of substantial
funding in addition to the DA regular budget did not help improve the agrifisheries
safety and quality system or provide adequate support for its
efficient operation. The creation of BAFPS was an attempt to integrate the
agriculture and fisheries safety and quality control functions into one
organization, the BAFPS. The authors of AFMA recognized the overlaps
of the powers and functions of BAFPS with those of other DA agencies as
well as non-DA agencies, hence the requirement for BAFPS to coordinate,
collaborate, and delineate product coverage and aspects of standards
development and enforcement functions with concerned agencies. This
was a very tall order for a brand new Bureau, with no staff, no budget, no
capability and no track record.
240. The creation of BAFPS fostered a divide especially among the DA
standards and regulatory agencies. BAFPS was perceived as a threat to
the other agencies especially because the specific product coverage and
functions with regard to standards formulation and enforcement or
regulation were not provided. In fact the IRR even made it more tenuous
when it elaborated on the functions that were clearly within the purview of
the other agencies. AFMA’s prescription was like “superimposing” BAFPS
in the existing agriculture and fisheries quality and safety system in the DA
and in other agencies.
241. To make matters worse, BAFPS was never appropriated a budget since
1998. BAFPS was added to the already long list of unfunded government
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agriculture and fisheries quality and safety agencies. Within the 7 years of
the life of AFMA, BAFPS was never really operationalized. As of the end
of 2005, BAFPS had 11 personnel, of which only one with permanent
position (the Director). The others are either contractual employees or
staff seconded from other DA agencies. Until mid-2006, BAFPS was
severely handicapped with a small office space and with limited office
furniture. Its operations practically depended on funding from the DA rice,
corn, high value, and livestock programs. Despite the obstacles, BAFPS
managed to complete the formulation of 39 product standards (29 of which
have been adopted as Philippine National Standards), and the “Code of
Hygienic Practice for the Sale of Fresh Agriculture and Fisheries Products
in Markets and Authorized Outlets” and “Guidelines for the Certification of
Good Agricultural Practices for Fruits and Vegetables Farming”.
Stakeholders’ Views on BAFPS
242. As of the mid-2006 or 9 years after the AFMA was passed, the PSCS
Component has not accomplished its objective of ensuring consumer
safety and promoting the competitiveness of agriculture and fisheries
products.
243. Stakeholders’ views gathered during the Regional AFMA Review
Workshops showed that the PSCS has moderate impact on the
commodity industries, namely, abaca and coconut, corn, grains, rice,
fisheries and aquaculture, high value commercial crops, and livestock and
poultry. Almost all the regions agreed that PSCS had inadequate budget
for all eight commodity groups. Five out of the eight commodity groupings
across all regions agreed that the PSCS implementation was poor, but
special appreciation was given to the more recent activities on mycotoxin
consultations and training, and red tide monitoring that is quite wellknown.
Priority focus for intervention include: fast track standards
formulation, enforcement of standards and regulations, promotion of the
use of standards, information and training for all supply chain participants
and provision of accessible laboratory testing facilities. There was also a
call for the review of the mandate of BAFPS, the operationalization of
BAFPS, including at the local level, and the activation of the LGUs in the
inspection system. The proposed budget allocation for PSCS is 6 percent.
244. A survey of producers groups selected from among the AFMA regional
workshop participants was conducted to determine their awareness of the
PSCS components and BAFPS and its mandate. In all regions, less than
a third of the respondents are satisfied with PSCS. More than half of the
respondents did not know that BAFPS exists. Awareness of BAFPS was
highest among the respondents from Region 4B. Of those who were
aware of BAFPS, only a little more than half of the respondents were
aware of the functions and target accomplishments. Less than one-tenth
of the respondents knew of standards done by BAFPS and other
government agencies. There were fewer respondents who were aware of
the standards enforced.
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245. The current responsibilities or mandate of BAFPS are not realistic and not
achievable. The mechanism for the implementation of BAFPS mandate is
unworkable. BAFPS should not perform a policy function (i.e., formulation
of standards) and an implementation function (i.e., enforcement of
standards) at the same time. Policy should be separate from
implementation in accordance with the requirements of current
international best practice.
Proposed Amendments to AFMA
246. AFMA Chapter 7, Product Standardization and Consumer Safety, should
be amended to strengthen the agriculture and fisheries product control,
promote uniform application of consumer protection measures, more
timely action to protect consumers and more cost efficient and effective
use of resources and expertise. The AFMA IRR and related AOs will have
to be amended as well. The proposed amendments are:
(a) Establish the Agriculture and Fisheries Safety Authority (AFSA);
(b) Modify the organization, powers and functions of BAFPS, and the
regulatory agencies, i.e., BPI, BAI, NMIS, BFAR, FIDA, CODA, PCA,
SRA, NTA, NFA and FPA.
(c) Establish a Laboratory Service (LS) and a National Reference Laboratory
(NRL) that conform to international standards and the world’s best
practice.
(d) Allocate budget for institutional and physical strengthening of the
agriculture and fisheries quality and safety control system; including
multi-year funding for infrastructure and facilities development and
research.
(e) Authorize collection of fees for services and retention of agency
collections for specific and agreed upon uses.
247. The first proposed amendment to Chapter 7, Product Standardization
and Consumer Safety, of AFMA is to provide for the establishment of
the Agriculture and Fisheries Safety Authority (AFSA). AFSA shall
integrate the agriculture and fisheries safety and quality system to achieve
effective collaboration and coordination among the different agencies of
DA, DOH, DTI and LGUs. The roles, organizational components and
activities shall be based on a typical food control agency provided in the
FAO/WHO Guidelines. A proposed structure reflects the principal
functions or key areas of responsibility.
248. This second proposed amendment concerns the function and
organization of BAFPS. BAFPS should be made the sole standards
formulation agency of government in the agriculture and fisheries
sector. BAFPS will formulate new standards, and review and update
existing standards to harmonize them with international standards. The
coverage of BAFPS function shall include: (a) product standards for fresh
and secondary processed products, both food and non-food; (b) guidelines
and codes of practices; and (c) standards of hygiene. It should prioritize
mandatory standards over voluntary standards in its work program. It will
set priorities for research needs related to standards formulation.
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Standards formulation should be carried out in close coordination with
BFAD-DOH. Likewise, BPS-DTI role should be recognized and followed.
On the other hand, roles of the DA enforcement agencies from those of
the Bureau of Customs should be differentiated.
249. The third proposed amendment is the establishment of a Laboratory
Service at the same level as BAFPS and the Inspection and Regulatory
Service. The LS will be the new management structure for all laboratories
(more aptly referred to as “service laboratories”) and a National Reference
Laboratory (NRL) that is yet to be established. The organization and
configuration of the service must be determined and carefully decided.
250. DA agencies which currently perform standards development function
should be stripped of this power. All DA regulation and enforcement
functions that are currently under BPI, BAI, NMIS, BFAR, FPA, NFA,
PCA, SRA, NTA, and CODA should be consolidated under an
Inspection and Regulation Service (IRS). The function would include
product quality and safety, and plant and animal health inspection and
regulation. The role of the LGUs in enforcement should be clarified to
avoid confusion that leads to conflict as well as gaps.
251. BAFPS should continue to act as Codex Contact Point (CCP). It should
also be host and Secretariat to the National Codex Committee (NCC), the
SPS Enquiry and Notification Point.
252. Market development and market promotion activities fall under the purview
of and should be turned over by the regulatory agencies to AMAS. For
most regulatory agencies, product research and development could be
performed by government research or academic institutions. These
activities are usually funded with resources from commodity programs or
BAR anyway. They also compete for resources within the agency.
253. The fourth amendment is the establishment of a Central Laboratory
Service (CLS) to address the critical issues of the state, utilization,
performance, staffing and funding of all laboratories that are so important
to standards formulation and regulation. The AFSA shall have overall
supervision of the CLS, but BAFPS shall have specific auditing role
consistent with the mission and functions of the AFSA.
254. For the fifth amendment, the “extended AFMA” funding should make
specific provisions for multi-year funding for infrastructure, facilities
and equipment; research for standards setting; and research related
to agriculture and fisheries safety issues.
255. To address the eternal funding constraints, some services could be shifted
to a “user fee” system which simply means user pays for services, for
example, inspection for certification/accreditation/permits, and laboratory
services. The fifth revision should authorize all concerned agencies
to retain all fees collected by the agency to be used to sustain
operation instead of being turned over to the Bureau of Treasury.
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Review of AFMA – Related Laws and Current Donor Projects
256. The review and amendment of AFMA is the best time to conduct a
comprehensive review of the Philippine agriculture and fishery safety
system, especially if the policy makers choose to adopt an integrated
system to minimize duplication and eliminate the gaps and enhance
efficiency as recommended in this report.
257. DA and COCAFM should revisit the on-going projects to review the
relevance and consistency of the current efforts under those projects with
the Agriculture and Fishery Control objectives under the proposed AFMA
amendment. DA should ensure that the projects are aligned with the
objective of strengthening of the agriculture and fishery control system to
protect the Filipino consumer as well as consumers of the Philippine
export products equally and promotes the competitiveness of Philippine
products in the domestic as well as foreign markets.
4.8 Research, Development and Extension
258. Since there will be an overall set of recommendations to be made by the
evaluation team, the ones enumerated below were derived from the
insights drawn from the assessment of research-extension linkage. As
indicated in the text, sociology of knowledge approach was utilized in order
to interpret and assess the current state of knowledge in these two
services. This was done so that research and extension would be placed
in their appropriate context. Key insights are as follows:
(a) Agriculture and fisheries are in crises. Their overall organization and
management is in disarray.
(b) This is borne out of the lack of clarity in translating its broad goals into
action.
(c) Oftentimes, centrally designed programs do not readily translate into
local action programs.
(d) The strong emphasis on outputs has led to giving limited attention to
processes.
(e) Many of the problems encountered by DA could have been easily
avoided if only more attention was given to processes.
(f) When the emphasis shifts from output to process, the role of research
and extension takes center stage.
(g) In view of the lack of clarity in the processes involved in production, the
impact of research and extension has been limited.
(h) It, therefore, becomes understandable why there is the perception that
the output of research cannot be used.
(i) It is rather urgent to elucidate in precise terms what agriculture is all
about in terms of major processes.
(j) In the report substantial attention was given to the fact that agriculture is
an organized activity of a community with definite structural relations
(k) The development and advancement of agriculture and fisheries is entirely
dependent on structural improvement and innovation.
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(l) The current state of agriculture and fisheries can be best understood by
looking into the way a community is managing its resources.
(m) The centrality of resource management has not been given enough
attention in research and extension activities.
(n) Regardless of the state of production, it must always be assessed in
terms of management.
(o) A resource management focus is completely unavoidable in the design
and assessment of agriculture and fisheries.
(p) With this focus, it is obvious that the planning and programming of
agriculture and fisheries have, indeed, neglected the social.
(q) The social aspect of production management must now be given major
attention.
(r) When one talks about paradigm shift in production, one cannot escape
the social structure of production.
(s) Embedded in this structure is a mind-set woven around the culture of
production.
(t) To talk about paradigm shift, one must likewise talk about changing mindset.
(u) When one talks about enterprise and agribusiness development, one
cannot avoid relating these to the human and structural aspect of
production.
259. It is hoped that the foregoing, however brief, has identified the major
issues discussed in this report. It is not being claimed that the foregoing
analysis has finally licked the hiatus between research and extension. The
importance of shared perspective through a common framework was the
overriding orientation of the analysis. It is quite urgent that a new mind-set
is developed from the perspective of information management.
260. It is necessary that in the implementation of AFMA, RDE takes center
stage. The entire operation of the Department of Agriculture must begin
from information and how this is translated into action. The
complementation of BAR and ATI is natural. The entire research agenda
of BAR must now be oriented toward the generation and organization of
information for decision-making. Although ATI has undergone a series of
reviews and management upgrading, the time is ripe for ATI to take a
second look at its structure and functions and focus its attention in
managing information for action.
261. BAR and ATI must combine their efforts to realize the goals of AFMA
through CPAR as Farm Model for the effective management of community
resources. The focus of the model is people’s initiative and participation.
They should likewise join hands in providing support to the Joint Project of
UPV-BFAR on Innovations in Fishery Extension Service. The focus of the
model is institutional initiative. Both Projects were developed using a
resource management framework. These are intended to illustrate how a
framework is used in developing an action oriented project. The
importance of unity, participation, empowerment and integration is
highlighted in the proposals. The centrality of RDE is also a key feature of
the proposals. The centrality of participatory decision making was
underlined.
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262. The implication of this is very clear. From now on, BAR funded projects
must make explicit in their proposals what decision issues in agriculture
and fisheries are going to solved by the project. It must be recognized that
such projects are, in general, action oriented and it is expected that these
will produce the right information at the right time for cost-effective
decision making. The key to the utility of research results are relevance,
timeliness and responsiveness to the needs of the farmers and fisherfolk.
263. The main challenge to ATI is how to translate this information into
knowledge for effective action. The translation must be executed on the
basis of a unified framework which is resource management. In other
words, ATI will have to visualize how the current resource management of
the community can be improved; what innovations are needed; and, what
changes must be instituted. In reality, while these processes can be
treated separately, these, however, go together and are complementary.
Although the goals of AFMA are abstract, their underlying theme is to
make farming profitable and, therefore, the stress is on agribusiness
development and management. BAR has already articulated that two
earlier stages must be developed before agribusiness development stage
is reached. These are enterprise development and integration of
enterprises. Successful integration of enterprises is the foundation of
agribusiness development.
264. It is clear in the foregoing, that these processes are driven not only by
information but by integrated information system. To modernize agriculture
will require the generation, organization and management of integrated
information system for effective management of community resources.
265. The Department of Agriculture must realize that AFMA has revolutionized
Philippine agriculture. It is information driven. The key is integrated
information system.
266. It is, therefore, recommended that the following should be
considered:
(a) With the paradigm shift in agriculture and fisheries, the overall
organization and management of production, as defined in the AFMA,
require that their conceptual structures be clarified.
(b) The shift from resource to technology driven approach must be clarified.
In theory, technology is only one of the resources being managed by the
community.
(c) The idea of a technology driven approach appears not to be clear to
many people.
(d) AFMA is laden with many conceptual processes that are merely
enumerated. This is not helpful. It is with a sense of urgency that these
be clarified and linked together to form a unity. The holistic approach
should be reflected here.
(e) AFMA’ recommendation of adopt and develop a model farm through
SAFDZ is good. But the idea of integrated approach is taken for granted.
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(f) There is a need to elucidate and spell out more clearly the components of
an integrated approach.
(g) There is a need to look more closely into the overall structure and
processes of BAR’s CPAR as a model farm. It is strongly recommended
that DA should endorse its adoption, DA-wide. This will be DA’s primary
contribution to poverty alleviation, equity and social justice.
(h) The two flagship programs of BAR, CPAR and Technology
Commercialization Program (TCP) must be used as the main avenue for
linking research and extension.
(i) Such linkage must be used to institutionalize enterprise development, the
integration of enterprises and their transformation / conversion into
agribusiness activities.
(j) Research and extension by their functionality are naturally
complementary.
(k) Such complementation must be enhanced.
(l) The effectiveness of the services of research and extension is enhanced
when the process orientation of production is made explicit.
(m) With this joint action of research and extension, more attention must be
given to the localization of agriculture and fisheries.
(n) AFMA’s emphasis on empowerment, participation and community-based
strategies are directly in line with the notion of localization.
(o) There is no need to amend the law because its full institutional force has
not been implemented. In fact, DA is most fortunate because it has a
legal instrument to institutionalize the required transformation of
agriculture and fisheries.
(p) It is the Implementing Rules and Regulations (IRR) that is ridden with
problems. It has no organizing framework in which to connect internally
and externally the components. Without this, the implementation of
AFMA’s components will remain fragmented and its aspiration to
integrate agriculture and fisheries will remain a distant dream.
(q) The whole IRR will have to be reworked on the basis of an agreed upon
framework.
(r) The resource management framework used in the two proposal found in
appendixes A and B should be adopted.
(s) It is strongly recommended that BAR and ATI should be tasked to
develop the AFMA framework.
(t) The validity of the framework should be tested in the implementation of
CPAR following the component orientation as detailed in the IRR.
(u) The translation of AFMA into action is complex. The inter-weaving of the
components into a unity cannot be achieved outside of a framework.
(v) The modernization of agriculture and fisheries can be hastened only if
their major components are harmonized and orchestrated with the use of
a framework.
267. The following are the comments and suggestions on AFMA’s IRR for
Research and Extension:
Research
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(a) The RDE expert has publicly recommended and was supported by
Senator Magsaysay, Jr. that the IRR must be revised and that the task of
revision must be the responsibility of BAR and ATI.
(b) The expert sees the utility of a consultative approach only if there is a
good recording and there is a task force that will integrate the results of
the consultation.
(c) The expert would like to recommend that before anything else, a
framework should be developed and it is suggested that resource
management is used as a framework.
(d) The way the expert sees it, the consultation is most invaluable in
sharpening the edges of an agreed upon framework.
(e) The pros and con of consultation. It could be said that the inherent
difficulties embedded in AFMA’s IRR is its abstract orientation and the
difficulty of translating them into action.
(f) Consultation is an interpretive action. However, the issue on how to
integrate such action is not easy to do. This could have been facilitated
and made easy if the consultation process was based on an agreed upon
frame of reference. Without this, the present IRR is fragmented and it is
very difficult to see how the different components are linked to form a
unity.
(g) The RDE component is a clear illustration of this. Many of the rules are
stated in the abstract. Take the case of research in relation to improving
research structural performance:
• Rule 81.2.1 - The term enhance shall denote the improved
responsiveness and usefulness of research and extension to the
livelihood concerns of agriculture and fisheries operators and
entrepreneurs.
The use of the term livelihood is not clear. Generally, this is used to
refer to income generation projects (IGPs). Why not productivity
and profitability?
• Rule 81.2.3 - The term consolidate means the unification in strategy,
approach and vision, of agriculture and fisheries components of the
ongoing National Agriculture Research and Extension Agenda
(NAREA) formulated by the Department of Science and Technology
Agenda for National Development (STAND) formulated by DOST, as
well as the unification of the overall management of, and responsibility
for, the research and extension system, in agriculture and fisheries
under the Department at the national level and under the LGUs at the
local level.
The use of the term unification is not clear. In theory, it is from the
vision where the strategies and approaches are derived. These can,
therefore, be integrated only on the basis of an agreed upon vision.
In other words, unify the vision to integrate action.
• Rule 81.8.1 - (The CERDAF shall) promote the integration of
research, development and extension functions and enhance the
participation of farmers, fisherfolk, the industry and the private sector in
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the development of the national research, development and extension
agenda.
For a long time now, we have been trying to integrate our
development activities to no avail. It seems that in developing the
IRR we have not brought to bear our major lessons learned in RDE.
• Rule 81.8.2 - Prepare and oversee the implementation of a
comprehensive program RDE to enhance, support, consolidate and
make full use of the capabilities of the interlinked NaRDSAP
What does comprehensive entail? There are at least two meanings
of the term: 1) comprehensive internally e.g. with commodity; and,
2) between commodities. Does the term refer to both cases? This is
not clear.
• Rule 81.9.2 - Develop methodologies and systems for effective
research, development and extension planning in agriculture and
fisheries emphasizing the quality and intensity of participation…
In view of the specific use of the concept methodology in research,
the appropriate term is strategies. Also what is meant by quality
and intensity?
• Rule 81.13.1 - Provide national leadership in the planning and
orchestration of the implementation of M & E of the RDE program.
Again this should be made more explicit since agriculture and
fisheries are multi-commodity systems
• Rule 81.14.1 - Provide leadership in the planning and orchestration of
the implementation of M & E of an integrated RDE within a farming
systems approach in coordination with the Regional Training Center
(RTC).
Extension
Again the term integrated must be spelled out. Why the sudden
appearances of farming systems approach? Is this the key to
modernization or something else? Make this clear and show how it
fits the overall RDE system.
(a) The RDE expert would consider the section on extension to be very
weak. The section is mainly focused on structural arrangement and
barely on substantive matters.
(b) The link between research and extension was hardly discussed.
(c) The precise role of research output in the design of extension service
was not specified.
(d) The basis function of information in extension was not discussed.
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(e) The transformative impact of information on agriculture and fisheries was
not discussed in extension work.
(f) The role of IEC in relation to ICT was not included in the design of
extension work. The innovative and creative role of SUCs in assisting
LGUs in institutionalization a new mode of production systems through
human resource development was not given much importance.
(g) The expert would like to recommend, therefore, that the section on
research could stand as such. What needs to be done is mainly
clarification of definitions and putting them in the right context.
(h) It is the section on extension that would require major overhaul.
(i) The substance of extension was not discussed in terms of the
complementation of innovation and improvements in information and
knowledge management.
(j) Its implications to the delivery of extension service and to the
management of agriculture and fisheries were not discussed.
4.9 Institutions and Bureaucracy
268. The Congressional Commission on Agricultural Modernization
(AGRICOM) was created by Joint Resolution No. 1 by the Philippine
Congress on December 20, 1995 to critically review and assess
agricultural policies, strategies and programs and recommend policy,
institutional and infrastructural measures to ensure the modernization of
Philippine agriculture.
269. Among its specific objectives was to restructure and streamline the
agriculture and agriculture-related bureaucracies to address their
institutional weaknesses, including the relationship between and among
national, provincial and local governments, to effectively implement
agricultural policies and programs.
270. Based on the recommendations of the AGRICOM, the Philippine Congress
enacted the Agriculture and Fisheries Modernization Law (R.A. 8435) on
December 22, 1997. R.A. 8435, known popularly as the AFMA law,
became one of the most significant policy initiatives of the Ramos
administration and was passed with overwhelming bipartisan and
bicameral support rarely seen in the country.
271. Unfortunately, while all the major policy and program recommendations
contained in the AGRICOM Report were incorporated into R.A. 8435, the
accompanying reorganization bill for the DA was not passed in the 10 th
Congress. As a result, the DA was saddled with the difficult task of
modernizing Philippine agriculture using a bureaucratic structure that was
not geared towards the new policy directions provided by R.A. 8435.
272. In the absence of a reorganization law, agriculture officials attempted to
reorganize the Department during the Estrada administration through the
Implementing Rules and Regulations (IRR) of R.A. 8435, and several
executive orders designed to create a DA oriented along functional lines,
rationalize commodity corporations and attached agencies, develop strong
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egional field units, and institutionalize linkages with local governments
and other agricultural stakeholders. These efforts did not significantly
rationalize the DA bureaucracy to enhance the implementation of the
AFMA.
273. The legislative records of the 13 th Congress show that there are at least
fifty nine (59) DA organization/institution-related bills pending in the
various committees of the Senate and House of Representatives. No
organization/institution-related bills have been enacted into law in the 13 th
Congress. Legislators have filed bills to address at least three AGRICOM
and AFMA recommendations: 1) reorganization of the DA; 2)
rationalization/privatization of the National Food Authority; and 3)
increasing stakeholder’s participation in DA governance.
274. Only one bill, SBN 240 (Osmeña), has been filed to initiate a general
reorganization of the DA along the framework adopted in the AFMA. SBN
240 has no counterpart measure pending in the House of Representatives.
There are eight bills that seek to reorganize the National Food Authority
along the recommendations proposed in the AGRICOM Report and at
least six (6) legislative measures have been filed to increase stakeholder
participation in the governance of the Department and its attached
agencies.
275. The majority of organization-related legislative measures filed in the 13 th
Congress create new agencies and offices. At least thirty seven (37)
House and Senate bills create new agencies or reorganize existing offices
to promote commodity development, tropical fruits, focus attention on
small-ruminants, or increase the mandate of existing agencies. There are
more than twenty (20) bills pending in the House of Representatives to
create research centers, breeding stations, cattle-fattening stations,
hatcheries, and processing plants in various municipalities all over the
country.
276. While these bills can be justified as valid legislative responses to
constituency demands, the intent of these measures run counter to the
policy of devolution and AFMA, tend to dissipate the already scarce
resources of the DA, and can be questioned in terms of its long-term
sustainability as the allocation for the establishment of these institutions is
sourced from the DA.
277. Current efforts at reorganizing the Department of Agriculture are anchored
on Executive Order No. 336 entitled Directing A Strategic Review of the
Operations and Organizations of the Executive Branch and Providing
Options and Incentives for Government Employees Who May be Affected
by the Rationalization of the Functions and Agencies of the Executive
Branch which was signed by President Arroyo on October 4, 2004.
278. The broad language of E.O. 366 allows government agencies sufficient
latitude to significantly shift functions, programs, and activities. The DA
Rationalization Plan recommended the clustering of department services,
bureaus, and agencies along five functional lines – core line functions,
lxxxviii

staff functions, councils, credit and investment and the regions. The
current rationalization proposal is similar to those done under the Estrada
administration except for the new effort to strengthen the regulatory
functions of the department, rationalize the various councils, and
strengthen the regional offices. The Plan creates six new agencies,
transforms six agencies, and abolishes or deactivates seven agencies.
279. The rationalization of commodity agencies and government corporations
along the functional lines was not undertaken by the DA in its
rationalization plan due to legal, procedural, and substantial issues raised
by these agencies during the plan formulation. The BFAR has resisted
inclusion in the rationalization plan asserting its mandate under the
Fisheries Code.
280. While agricultural stakeholders are represented in the councils and boards
of almost all commodity corporations and attached agencies, stakeholders’
participation in DA governance remains problematic due to uneven
representation across agencies, unclear or multiple agency mandates, and
the unwieldy number of council-members that make decision making
difficult. Several councils have taken on implementation functions making
it difficult to measure institutional accountability. The leagues of local
governments are not represented in most councils and boards even as the
responsibility for delivering agriculture programs has been devolved to
local governments.
281. The DA leadership has attempted and failed to substantially reorganize the
regional field units (RFU) since 1999. RFU institutional linkages with its
key partners – local government units, state universities and colleges, and
civil society organizations – are ad-hoc and not well defined indicating
either poor internal coordination or a reflection of unclear mandates or the
role of regional offices in agricultural modernization.
282. In addition to the RFU, many other DA bureaus, attached agencies, and
corporations provide production support, extension, R & D, regulatory and
other agriculture services at the regional level. As many as 8-9 agricultural
agencies conduct extension support, education, training, production
support services, and research and development through their regional
offices. These agencies perform their tasks independent of each other
resulting in the duplication and overlapping of activities, and wastage of
human and financial resources. The current set-up at the regional level
has resulted in confusion, if not chaos, among its stakeholders and
partners as they deal with several DA units in the region without clear
delineation of roles and tasks.
283. The AFMA consultations also identified institutional problems that affect
the delivery of agriculture and fisheries programs at the regional and local
levels. The most identified problems include poor coordination among
agencies, lack of information on AFMA and agricultural programs, lack of
transparency in government operations, and graft and corruption. The
stakeholders also criticized the intervention of politicians in project
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implementation and weak monitoring of agricultural programs as problems
that affect effort to modernize agriculture.
284. The blueprint for a reorganized RFU was formulated by the DA as early as
February 2000 through the Agricultural Bureaucracy Reorganization Plan
(ABRP). Under this model, the DA Regional Executive Director exercises
over-all management of all agricultural agencies, programs and projects in
the region. The structure is geared towards developing direct linkages with
local governments and agricultural stakeholders at the local level. The
RFUs will work principally with provinces to enhance province-wide
coordination and rationalization of agricultural programs.
285. Fifteen years after the enactment of the Local Government Code, there is
ample evidence to show that the management capabilities of LGU
agriculture offices and personnel continue to be weak in several areas –
agriculture and fisheries information, planning, RD&E, regulation, financial
management and reporting.
286. Some of the major reasons for the poor delivery of agricultural services are
the isolation of many province-based and municipal-based agriculture
offices from RFUs because of political intervention, the unsustainable
incentive system of the DA, inadequate travel allowances to agriculture
personnel, low pay given to PAOs and MAOs, lack of funds for agricultural
programs, and the low priority given by local authorities to agriculture.
287. On the other hand, there are also studies showing that resources are
available at the local level but many LGUs are unwilling, rather than
unable, to fund devolved services. Many local governments are not
complying with the requirement of the LGC to prioritize funds for devolved
services and instead allocate funds as they see fit. The national
government continues to directly fund many devolved services and about
14 percent of non-IRA expenditures went to agriculture and DPWH
projects that include agriculture infrastructure.
288. Current RFU-LGU linkages are pursued by RFU officials and local
executives on an informal, ad-hoc, and personal basis. In most areas,
local executives go to the RFUs, and other commodity agencies with
regional offices, to look for projects for their constituents and choose from
a menu of projects based on DA flagship programs. There are few legal
instruments, such as MOAs, or written systems and procedures to guide
RFU-LGU relations.
289. The challenge for the DA is to reconfigure the RFUs to maximize RFU-
LGU linkages in several areas: 1) planning; 2) research, extension and
development; 3) institutional development; 4) infrastructure; 5) regulation;
6) resource mobilization; and 7) advocacy. These linkages need to be
formalized and institutionalized through appropriate legal instruments
executed between DA-RFU officials and local governments.
290. The RFUs rationalization framework adopts the AGRICOM
recommendation on improving local capacities and providing expertise to
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local governments. The RFU-LGU linkages, however, are not clearly
spelled out and LGUs continue to be seen as clients that need be assisted
through national programs. Moreover, agriculture and fisheries services at
the RFU continue to be central government-driven rather than clientdriven.
Thus, the rationalization of the RFUs and the proposed RFU-LGU
linkages will result in redundancy and wastage unless anchored on a
client-driven framework.
291. There are two contending views regarding the extent and limits of
executive reorganization vis-à-vis congressional reorganization. There are
those who assert that the power to create, merge, or abolish a public office
is lodged with the legislature and reorganization of the DA can be pursued
either through a specific law reorganizing the Department, or a general law
providing for the reorganization of the executive branch of government.
The other, and more radical, view contends that existing laws allow the
President to undertake a continuing reorganization of the executive
branch.
Recommendations
292. It is clear from the analysis of past efforts that the absence of a systemwide
reorganization law has greatly stymied efforts within the DA to
restructure its offices and agencies consistent with the requirements of
AFMA. The effort of the current administration to “reengineer” through E.O.
366 has been limited to the DA proper and attached agencies. The DA
leadership has deferred the restructuring of the more problematic
government corporations upon the enactment of a reorganization law by
Congress.
293. The most important task for the Philippine Congress is to ensure the
reorganization of the Department of Agriculture consistent with the
requirements of AFMA and the recommendations of the AGRICOM. This
task can be pursued in several ways depending on the position legislators
will take regarding the limits of executive and legislative reorganization.
294. If Congress takes the position that the power to reorganize fundamentally
or solely resides in the legislature, then it must prioritize the following:
• The enactment of a law providing for a system-wide reorganization of
the bureaucracy.
• The enactment of SBN 240 (Osmeña) which provides for the
reorganization of the DA along functional lines as provided for in the
AFMA Report and RA 8435. The main provisions of the proposed DA
rationalization plan under E.O. 366 can be incorporated as author or
committee amendments to SBN 240.
• Legislative action on bills that reorganize the National Food Authority
and the creation of a separate Department of Fisheries and Aquatic
Resources.
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295. If Congress adheres to the more radical view that the President has
continuing powers to reorganize the bureaucracy as provided for by P.D.
1416, PD 1772 and the E.O. 292, then it must:
• Support the on-going reorganization effort undertaken through E.O.
366 and impress upon the DA leadership the need for a more radical
reorganization that includes government corporations;
• Request the President to issue an executive order to rationalize the
NFA and other commodity corporations consistent with the AFMA
recommendations.
296. Congress must also exercise its oversight powers, either through the
COCAFM or through independent third-party policy assessment, to
determine:
• Whether the creation of a separate DA-BFAR regional unit and the
existence of two separate DA regional offices has actually improved
governance in the fishery sector to determine the appropriate
integration of agriculture and fisheries offices at the regional level;
• The extent of implementation of key tasks given to the BFAR by the
Fisheries Code such as the demarcation of fishing areas; updating of
the Philippine Marine map including the delineation of the boundaries
and depth of municipal waters; conduct of an inventory of rare,
threatened and endangered aquatic species; providing assistance to
local government units particularly the delineation of the boundaries of
municipal waters, establishment of a comprehensive information
network at the local level for collecting, storage and retrieval of fishery
data; and the establishment of monitoring, control and surveillance
system of Philippine waters at the national and local levels.
• The extent and quality of participation of agriculture stakeholders in the
boards and councils of agricultural agencies to increase participation in
DA governance and guide the rationalization of these agencies either
through an executive order or a reorganization law.
• The status of implementation of the provisions of the Fisheries Code
(RA 8550) on the organization of fisheries and aquatic resources
management councils and integrated fisheries and aquatic resources
management councils to guide legislative action on the institutional
arrangements that best promote stakeholders participation in the
development of fisheries and aquatic resources.
• The extent of participation of local governments through the leagues or
the Union of Local Authorities of the Philippines (ULAP) in the boards
and councils of the various commodity corporations and attached
agencies and develop the appropriate mechanisms of participation of
local governments in the governance of these institutions.
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• The expenditure pattern of local governments for devolved services in
terms of compliance with the requirements of the Local Government
Code, the level of national government non-IRA funding needed to spur
agricultural modernization, and incentives needed to convince local
governments to allocate more resources for agriculture.
• The implementation of E.O. 344 in terms of its policy objective to
determine LGU-compliance with the LGC mandates on the devolution
of agriculture functions, and the appropriate DA RFU-LGU linkages that
will help promote agricultural modernization.
4.10 Human Resource Development
297. The Human Resource Development (HRD) component of AFMA was
envisioned to establish a National Agriculture and Fisheries Educational
System (NAFES), a network of National Center of Excellence (NCEs) and
Provincial Institutions (PIs) in agriculture and fisheries education at the
tertiary level and curricular development in the sector elementary,
secondary and post secondary levels.
298. The success of Implementing HRD component of AFMA was mixed. At
the elementary and secondary levels, basic curricula on agriculture were
made integral parts of elementary and secondary education. However, at
the tertiary levels, only partial implementation was made centered on the
establishments of NAFES policies, plans and implementing guidelines.
The non full implementation was due to the lack of funds. Given the above
findings the following recommendation are made:
a. Strengthen the operational and technical working relationships
between the DA, the CHED, DepEd and TESDA in focusing prioritized
program of activities in the establishment of quality, efficient,
competitive and sustainable National Agriculture and Fisheries
Education System (NAFES) in the country.
b. The DA should take the lead role in facilitating the immediate transfer
of funds from the budget allocated to AFMA to the NAFES.
c. Revisit more intensively the NAFES Policies, Plan and implementing
Guidelines established in 2002 and select strategic core HRD activities
that can propel the effective realization of NAFES.
4.11 Rural Non-Farm Employment
299. Non-farm employment is a vital source of rural incomes. In most
developing countries, they could account for half of rural income. Under
AFMA, rural non-farm employment (Section 97) aims to: (a) promote a
basic needs approach to rural development; (b) make rural workers more
adaptable and flexible through education and training; (c) promote rural
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industrialization and the establishment of the agro-processing enterprises
in rural communities; and (d) increase the income of rural workers.
300. Rule 97.1. The DA in collaboration with appropriate entities, shall
formulate, implement and evaluate a pilot Basic Needs Program (BNP).
301. Rule 97.2. The BNP shall serve as a key feature of the SAFDZ
approach, particularly related to SAFDZ model farms under section 7, and
also be a guiding principle of the AFMP.
Status: Program design has been made, but not implemented due to lack of
AFMA funds. Another factor was the problem arising from the over-expansive
SAFDZ delineation.
Rural Industrialization and Industry Dispersal Program
302. Rural Industrialization and industry dispersal programs shall be based on
the interplay of market forces. The Board of Investments (BOI) is hereby
required to give the highest priority to the grant of incentives to business
and industries with linkages to agriculture. The appropriate government
agencies, under the leadership of the LGUs concerned, shall provide
integrated services and information to prospective enterprises under the
one-stop-shop concept.
303. The Department shall coordinate with the Department of Trade and
industry, in particular, the Board of Investments, in the formulation of
investment priorities for rural areas. The Regional Wage Boards shall
consult participating enterprises in this program before they issue wage
orders.
Status: There is no progress to date on the IRR
304. Rule 101.1.2. Skills training programs for employment creating and
livelihood enhancement organized by the ATI, DSWD, DECS, TESDA,
SUCs, DA, DTI, DOLE and other agencies, including the identification and
promotion of alternative sources of livelihood, to be operational on or
before March 30, 1999.
Status: Skills training program directed towards BNP is limited at best. It is not
even BNP-focused. Funding is the main constraint.
305. Rule 101.1.3. The highest priority accorded to the grant of incentives by
the BOI to businesses and investments with linkages to agriculture and
fisheries. The BOI will formulate a program of investment incentives and
registration for enterprises and investments in the BNP areas and
SAFDZs, to be operational on or before December 30, 1998.
Status: The BOI has continuously formulated incentives on national basis. The
focus on BNP and SAFDZ is not feasible because of their undefined boundaries.
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306. Rule 101.1.4. The expansion into the BNP areas and SAFDZs of the
agriculture, fisheries and rural portfolios of the various micro-finance,
lending and loan guarantee programs implemented by government
agencies, subject to the principles contained in Section 98.
Status: No progress to date.
307. Rule 101.1.5. Close and regular consultation with the affected enterprises
and industries by the DOLE and the Regional Wage Boards in the process
of formulating wage orders.
Status: The Regional Wage Boards conduct consultation on wages increases.
308. Rule 101.1.6. The promotion of rural industrialization, particularly small
and medium scale enterprises (SMEs) in rural communities by the BOI,
DTI, LGUs, the AMAS and other agencies, as appropriate.
Status: Ongoing under each agency’s initiatives.
309. Rule 102.1. The BOI, in collaboration with the Department, shall formulate
and execute a program of incentives for agriculture and fisheries
entrepreneurs, including cooperatives, NGOs and Pos, who wish to
diversify into agribusiness, off-farm and non-farm ventures. The BOI shall
submit the proposed program for approval by the BOI and the Secretary
on or before September 30, 1998.
Status: The BOI has been supportive of investments under its various industrial
priorities plan (See www. boi.gov.ph).
Training of Workers
310. TESDA shall organize local committees that will advise on the scope,
nature and duration of training for above-mentioned programs. TESDA is
authorized to request the additional budgetary resources for these
programs: Provided that after a reasonable period, the task of coordinating
the training is transferred to the LGUs concerned.
311. Rule 104.1. The TESDA shall expand the functions of the existing TESDA
regional and local committees to serve as the local Technical Committee
in the BNP areas.
Status: TESDA has organized regional and local committees with private sector
industry associations.
312. TESDA has developed a program of skills certification covering training
regulations, competency assessment tools, and competency-based
curricula in: (a) crop production, e.g. agricultural crops, horticulture; (b)
animal production, including slaughter operations; (c) aquaculture; (d) fish
capture; as well as (e) food processing.
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313. The Department and the DENR shall organize the training of workers in
coastal resources management and sustainable fishing techniques.
Status: DENR has undertaken modest programs due to lack of funds.
314. Rule 105.1 The DENR and the BFAR, in coordination with the CHED,
TESDA, DECS, ATI and PFDA shall be responsible for the organization of
training in coastal resources management and sustainable fishing for the
BNP areas SAFDZs. The design and implementation of the training shall
provide optimum opportunities for the participation of NGOs, the SUCs
and LGUs. These training programs shall be operational on or before
March 30, 1999.
Status. The training programs for BNP and SAFDZs have been designed, but
not implemented due to lack of AFMA funds.
315. Rule 106.1. The TLRC shall organize courses in the BNP areas in
entrepreneurship and management for agriculture and fisheries workers.
These training programs shall be operational on or before March 30, 1999.
Status. The TLRC has been conducting training programs on agri-aqua
production even before AFMA. It has been renamed Technology Resource
Center (TRC) upon transfer to the jurisdiction of the Department of Science and
Technology since 2006. The BNP was not implemented due to funding
constraints of AFMA.
Overall Assessment
316. While some of the IRR targets have been achieved, the BNP have not
taken off due to lack of AFMA funds. But, perhaps the main factor is that
the BNP is a highly ambitious program that also tends to duplicate
activities of other Departments. It is proposed that this be revisited with
the light of the principle of subsidiarity. Also, while the BOI has provided
incentives under its priorities plan, the role of the ecozones in promoting
investments for exports is also in order.
CHAPTER 5. COMMODITY PERFORMANCE
317. Average annual production for most of the 14 commodities posted positive
growth during 1993 to 1997. The leaders were mango (16 percent p.a.),
seaweeds (13 percent p.a.), onion (9 percent p.a.), broiler (8 percent p.a.)
and tuna (7 percent p.a.). Meanwhile, corn and tilapia were the laggards
with negative growth rates of 2.4 percent p.a. and 0.6 percent p.a.,
respectively. By 1998, there were variations in the production performance
with the occurrence of El Niño. Among the adversely affected were rice,
sugarcane and tilapia. Meanwhile, during 1999 to 2004, all except onion
registered increases in output. The non-land-based agriculture – tilapia (9
percent p.a), seaweeds (12 percent p.a.), tuna (10 percent p.a.), milkfish
(9 percent p.a.) and broiler (6 percent p.a.) had the highest growths.
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318. The noticeable performance is a result of many factors. Among are the
use of good quality varieties or fry/fingerlings, improved farm/fishing
management, favorable weather conditions, growth in area harvested,
continuous support from government organizations and increasing
demand in the export market.
319. Average yield improved for rice, corn, and sugar from 1999-2004
compared to the period from 1993-1997. On the contrary, mango and
onion posted slower growth rates from 1999 to 2004.
320. In terms of trade, the country remained a net exporter of most 14
commodities. Except for sugarcane – from net importer to net exporter -
the country’s net trade status for all commodities stayed the same. Trade
performance varied over the 12-year period. For exported commodities,
there were shifts in the type of product sold abroad. This is the case for
mango, onion, milkfish and tuna.
321. Benchmarking with relevant Asian countries revealed that the Philippines
has comparatively low yield in rice, corn, coconut, banana, onion and low
production for broiler and chicken eggs. Its yield, however, was high for
sugarcane. It also registered high production levels for swine, milkfish,
tilapia, tuna, and seaweeds. The yield for mango is comparable with
selected Asian countries. In terms of producer prices, the country has high
prices for rice, corn, sugar, mango, onion, pork, broiler, chicken eggs and
low for coconut and banana.
Comparative Yields and Production of Commodities for Selected Asian
Countries, 2004
YIELD (tons/ha)
Country
Onion
Rice Corn Coconut Sugarcane Banana Mango (dry)
China 6.31 5.12 10.39 65.35 23.2 8.6 21.2
India 3.03 2.00 5.00 59.05 24.7 6.8 10.4
Indonesia 4.54 3.34 6.12 71.11 15.5 4.6 8.5
Malaysia 3.25 3.00 3.97 49.72 20.4 3.9 -
Philippines 3.51 2.14 4.41 82.28 13.6 6.1 9.1
Thailand 2.59 3.87 4.37 57.94 13.1 6.3 16.0
Viet Nam 4.82 3.49 7.01 55.33 14.7 6.1 3.0
Country
PRODUCTION (tons)
Chicken
Red
Pork Broiler egg Milkfish Tilapia seaweeds
China 48,117,789 9,895,485 23,501,250 897,276 739,948
India 497,000 1,650,000 2,464,000 139,651 288,170
Indonesia 566,500 1,190,900 857,370 241,438 339,527
Japan 1,262,600 1,241,981 194,853
Korea 1,100,000 386,000 985,176
Malaysia 203,497 825,466 431,004 25,642 30,000
Philippines 1,376,129 658,123 480,000 273,592 145,869
Singapore 20,015 68,726
Thailand 677,040 878,489 393,360 97,653
Viet Nam 2,012,021 316,409 197,000
Source of basic data: FAO
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322. Competitiveness analysis revealed that the following commodities were
generally not competitive: rice, corn, coconut, sugarcane, lakatan, pork,
broiler, chicken eggs, milkfish, and tilapia. On the other hand Cavendish
and saba banana, mango, tuna, and seaweeds are considered
competitive. Onion has some seasonal competitiveness.
323. The SWOT analysis showed that across commodities some of the
strengths include availability of high yielding varieties, planting materials
and fingerlings, presence of production technologies, and established
marketing channels. The dominant weaknesses include the high cost of
inputs, high production cost, lack of post harvest facilities, lack of farm to
market roads, low farm productivity, supply and quality problems. A lot of
opportunities still abound for these commodities given the low domestic
per capita consumption, presence of institutional markets, the growing and
untapped export market, and value added processing. However, the
threats have to be addressed like the increasing country competitors, land
conversion, discriminatory tariffs, more stringent sanitary and
phytosanitary standards, entry of cheap imports and substitutes.
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CONCLUSIONS
AFMA is a good law with rather ambitious goals but with lack of political
commitment to fund it. The AFMA elicited a lot of expectations with the additional
resources. There was, however, a weak IEC that did not indicate that all related
programs will form part of the Agriculture and Fisheries Modernization Plan. As a
result, the stakeholders felt that implementation was below par, and its impact
poor to moderate. There are at least several footnotes to the review:
1. The budget by components (in percentage terms) was not followed;
2. There was bias for production-support, and less and less in marketing, R &
D, human resources development and inter-agency linkages;
3. There was little concern for regional priorities;
4. The need for sound criteria for project selection was not explicit;
5. The role of private investments in growth and job creation was not explicit;
and
6. PBME was severely inadequate which, in part, affected the effectiveness
of the Review Team.
Looking forward, the amendments to AFMA and its IRR will be big steps forward.
However, they are insufficient conditions unless funds are forthcoming and they
are allocated with sound criteria. Lastly, there are important aspects of the
enabling environment that are not part of the AFMA Review but they are also
necessary elements to move a competitive agriculture, fishery and agri-industry
to full speed. These include:
1. Amendments to the CARP Law (e.g. free the land markets to bring
collateral value to agricultural lands);
2. Amendments to the Local Government Code (e.g. to revisit the disjointed
lines of authority between the provincial agriculture officers and the
municipal agriculture officers);
3. Review of the Fisheries Code as it relates to the AFMA;
4. Implementation of existing laws (e.g. Tarrification Law);
5. A meritocratic bureaucracy;
6. Continuity in leadership, particularly in the DA; and
7. Good local governance (e.g. sound use of IRA for agriculture
development).
These will bring agriculture, fisheries and agri-industry growth to full speed, and,
in turn, reduce rural poverty.
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