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10 October 2016
Memorandum Circular
No. _____________
Series of 2016
SUBJECT:

I.

GENERAL GUIDELINES ON THE IMPLEMENTATION OF THE

CORPORATE RICE FARMING PROGRAM

Introduction

This Memorandum Circular provides the general guidelines on the

implementation of the Corporate Farming Program. Specifically, it spells out the
programs rationale, objectives, framework, eligibility criteria and scope of
participation of the different stakeholders and other implementation
requirements.
II.

Rationale

The Department of Agriculture (DA) is the government agency in-charge of food

security and making food accessible to all, especially the masses. Apart from
availability, one factor that affects access to food is affordability. Prices or
affordability is in turn a function of conditions relating to the production,
processing, marketing, distribution and handling of the commodity.
The DA is also mandated to uplift the socio-economic situation of farmers. An
organized and efficient production, harvesting and marketing process will
improve the welfare gains from farming which will make the sector attractive as
a means of livelihood, especially in rural areas.
The Corporate Farming Program hopes to address these twin objectives of
making rice, a basic staple in Filipino diet, available and accessible/affordable
and increase the income in rice farming. In the light of the imminent lifting of the
quantitative restrictions on rice by June 30, 2017, this Program is a timely
intervention to provide marketing assistance to the rice farmers.
III.

Objectives
A. General:
Make rice available and affordable, especially to the marginalized sectors
of society, without sacrificing the benefits due to the rice farmers

B. Specific:
1. Improve efficiency in rice production and harvesting thru a proven
mechanized production and harvesting protocol and other costreducing measures;

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2. Increase welfare gains of rice producers thru a secured marketing
arrangement;
3. Ensure regular supply of rice to institutional buyers;
4. Increase palay yield with the use of hybrid seeds and adoption of latest
rice production technologies.

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IV.

Program Components and Frameworks

A. LGU AS INPUT AND SERVICE PROVIDER
CORPORATE RICE FARMING
Program Components and Framework

The diagram illustrates the Corporate Farming Program Components and

Framework with the Local Government Units (LGUs) acting as the input and
service provider.
The Program is basically a rice contract growing and
distribution program. LGUs, thru an economic enterprise project, will act as a
rice contract grower/ consolidator/trader. As such, it may enter into a
memorandum of agreement with institutional buyers (IBs), such as the
Department of Social Welfare and Development (DSWD) for the supply of rice for
its beneficiaries. The LGUs may also sell rice to the public thru retail distribution
outlets within its jurisdiction. As part of an LGU capacitation program, the
Department of Agriculture (DA) may provide machineries, equipment, and other
support services such as crop insurance, loan guarantees, and technical
assistance to improve the efficiencies in rice production, harvesting, and
processing. With the cost reduction in these processes, it is hoped that income of
rice farmers participating in this Program will increase.
Under this Program, the IB may consider contracting out its long-term rice
requirement to an LGU where its beneficiaries, clients, and employees are based.
The IBs will stipulate the volume, variety, buying price, and dates and mode of
delivery in its offer to buy rice.
Based on the projected requirements both from the IBs and the public, the LGU
will then enroll the required hectarage and corresponding number of farmers
under the Program. To do this, it shall enter into a rice contract growing
agreement with the concerned farmer-cooperators, under which, the LGU shall
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provide farm mechanization, farm inputs, extension, and other support services
to ensure a successful harvest. The LGUs may apply for loans from lending
institutions (LI) to finance the implementation of this Program. Such loans may
be covered with a portfolio guarantee by the Agricultural Guarantee Fund Pool
(AGFP). The Agricultural Credit Policy Council (ACPC) will facilitate the
accreditation of the LI by AGFP.
On the part of the farmer-cooperators, they will obligate the volume of palay
indicated in their contract growing agreement with the LGU. They shall likewise
commit to follow the recommended production protocol to ensure a successful
harvest.
To assist the LGUs, the DA, subject to availability of funds, may usufruct or
donate farm machineries and equipment needed in rice production, harvesting,
processing and marketing. It is expected that the service fees to be charged to
farmer-cooperators for the use of these machineries and equipment will be
minimal, preferably only for the operation and maintenance of these equipment.
The Programs Regional Management Committee, consisting of the DA-Regional
Executive Director, representative of the RPC operators, representative of the
Irrigators Associations (IAs), and the representatives from the provincial
governments in each region, shall determine the applicable service fees for the
use of the machineries and equipment usufruct/ donated by the DA to the LGUs.
The Bureau of Agriculture and Fisheries Engineering (BAFE), the Philippine
Mechanization Center (PHILMECH) and the Agricultural Machinery Manufacturers
and Distributors Association Foundation, Inc. (AMMDA) may act as technical
consultants on this subject.
The Rice Program shall allocate funds for the crop insurance premiums of
cooperating farms. In coordination with the local government units, it shall
facilitate extension support and conduct periodic monitoring. A mid-term
evaluation and a final evaluation of the Program will be conducted on the third
and sixth year of implementation, respectively.

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B. FARMERS GROUP AS SERVICE PROVIDER
CORPORATE RICE FARMING
Program Components and Framework

The diagram illustrates the Corporate Rice Farming Program Components and
Framework with the engagement of farm service providers (FSPs). The
Program is basically a market matching program for rice. It begins with a
supply agreement between an institutional buyer (IB) and an organized
farmers group or its auxiliary operating a rice processing center (RPC). The
Department of Agriculture (DA) will principally provide farm mechanization
support in coordination with or thru the FSP as the primary mode of
intervention to boost productivity. In addition, the provision of crop insurance,
loan guarantees, and technical assistance will be facilitated to improve the
efficiencies and minimize risks in rice production, harvesting, processing and
marketing. With the resulting cost reduction in these processes, it is hoped
that the income of rice farmers participating in this Program will be increased
while ensuring rice supply and affordability.
Under this Program, the IB may consider purchasing its long-term rice
requirement for its beneficiaries, clients and employees from a chosen
FSP/RPC operator. The IB shall indicate the volume, variety, buying price, and
dates and mode of delivery in its offer to buy. The DA thru its Agribusiness
and Marketing Assistance Service (AMAS) will advertise the offers to buy rice
of the institutional buyers. It shall also broadcast these information among its
accredited FSP/RPC operators.
Once a supply agreement has been signed, the FSP/RPC operator will then
enter into a rice contract growing agreement with the farmer-cooperators
under which the RPC operator shall provide farm mechanization and

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extension services to the enrolled farmer-cooperators to ensure a successful
rice production/harvest. The FSP/RPC operator will issue purchase orders to
the farmer-cooperators which the latter will present as collaterals to secure
loans from a lending institution (LI). Such loans may be covered with a
portfolio guarantee under the Agricultural Guarantee Fund Pool (AGFP). The
Agricultural Credit Policy Council (ACPC) will facilitate the accreditation of the
LI with the AGFP.
On the part of the farmer-cooperators, they will obligate the volume of palay
indicated in his/her contract growing agreement to the FSP/RPC operator.
They shall likewise commit to follow the recommended production protocol of
the RPC operator to ensure successful harvest. To assist the FSP/RPC
operators, the DA will usufruct farm machineries and equipment needed in
rice production, harvesting, processing and marketing. It is expected that the
service fees to be charged to farmer-cooperators for the services/utilization of
the DA leased machineries and equipment will be minimal, preferably to
cover only their operation and maintenance. The Programs Regional
Management Committee, consisting of the DA-Regional Executive Director,
representative of the RPC operators, representative of the Irrigators
Associations (IAs), and the representatives from the provincial governments in
each region, shall determine the terms including the applicable service fees
for the use of the machineries and equipment leased by the DA to the
FSP/RPC operators. The Bureau of Agriculture and Fisheries Engineering
(BAFE), the Philippine Mechanization Center (PHILMECH) and the (AMDA) may
act as technical consultants on this subject.
The Rice Program shall allocate funds for the crop insurance premiums of
cooperating farms. In coordination with the local government units, it shall
facilitate extension support and conduct periodic monitoring. A periodic midterm evaluation of the Program will be conducted to determine prospects for
sustainability and long-term implementation.

V.

Eligibility and Documentary Requirements

A. LGUs acting as inputs and service providers
1. Qualifications:
a. Must be willing to enter into a Memorandum of Agreement with the
Department of Agriculture for the implementation of the LGU Corporate
Farm Program for a minimum of six (6) years;
b. Must have an economic enterprise unit by virtue of an ordinance;
c. Must have a dedicated trust account for the project;
d. Must have an ordinance allocating sufficient counterparts funds from
the LGU for the project;
e. Must have its own staffing for the project;
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f. Must have access to rice processing and storage facilities;
g. Must have an existing consultation and extension mechanism with rice
farmers;
h. Must be willing to organize the farmers in the area for palay production;
i.

Must be willing to finance the inputs and farm services requirements of

the participating rice farmers to the project;
j. Must have the capacity to operate and maintain the machinery and
equipment or have partnership/cooperation with farmers association
or private entities on this;
k. Must adhere to the project objectives and abide by the
recommendations of the Regional Management Committee pertaining
to issues and concerns affecting the project;
2. Documentary Requirements:
a. Letter of intent;
b. Project proposal/ Enterprise plan for the Corporate Rice Farm indicating
target sales and corresponding production plan;
c. Sangguniang Resolution allowing the LGU Chief Executive to enter into
an agreement with the Department of Agriculture on the LGU
Corporate Farm Program;
d. Sangguniang Resolution establishing the LGU Corporate Farm economic
enterprise unit;
e. Sangguniang Resolution allocating counterpart funds for the project;
f. Trust account information;
g. MOA with farmers associations or private organizations for subcontracted components of the project;
h. Registry of rice farmers in their jurisdiction;
i. Photos and proof of ownership / lease agreement of owned/rented
warehouse and vehicles for rice storage and transport; and
j. Template contract growing agreement with rice farmers;
B. Farmers Group as service provider
I.
a.

b.
c.
d.

e.
f.

Qualifications:
Duly registered/accredited with any of the following agencies Securities
and Exchange Commission (SEC) , Cooperative Development Authority
(CDA); Department of Trade and Industry (DTI), Department of Labor
and Employment (DOLE), Department of Social Welfare and
Development (DSWD), Technology (TESDA)
Must possess a certificate of good standing;
Must have an existing operation;
Must be willing to enter into a Memorandum of Agreement with the
Department of Agriculture for the implementation of the Corporate Rice
Farming Program for a minimum of six (6) years;
Must have a dedicated trust account for the project;
Must have its own staffing for the project;

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g. Must have access to rice processing and storage facilities;
h. Must be willing to issue surety bonds for the borrowed machineries,
equipment and facilities;
i. Must have an existing arrangement with banks for the purpose of
production loans for the farmers;
j. Must be willing and capable to issue purchase orders (PO) for the palay
volume and price to be procured from the farmers;
k. Must have an existing consultation and extension mechanism with rice
farmers;
l. Must be willing to organize the farmers in the area for palay production;
m. Must be willing to finance the inputs and farm services requirements of
the participating rice farmers to the project;
n. Must have the capacity to operate and maintain the machinery and
equipment or have partnership/cooperation with farmers association
or private entities on this;
o. Must adhere to the project objectives and abide by the
recommendations of the Regional Management Committee pertaining
to issues and concerns affecting the project;
2. Documentary Requirements:
a. Letter of intent;
b. Project proposal indicating target sales and corresponding production
plan;
c. Board Resolution allowing its representative to enter into an
agreement with the Department of Agriculture on the Corporate Rice
Farming Program;
d. Latest audited financial statement, income tax return and tax
clearance;
e. Trust account information;
f. Supply agreement with institutional buyers;
g. Registry of rice farmers in their jurisdiction;
h. Photos and proof of ownership / lease agreement of owned/rented
warehouse and vehicles for rice storage and transport; and
i. Template contract growing agreement with rice farmers;

VI.

PROGRAM MANAGEMENT COMMITTEE

A. Functions:
1. Oversees the implementation of the Program and ensures its
adherence to the Program objectives;
2. Ensures the execution of their respective agencies roles in the
Program;
3. Come-up with measures in case of force majeure due to natural or
man-made calamities;
4. Resolves and decides on issues and complaints filed by any Parties
involved in the Program;

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5. Determine/set floor buying price of rice from the farmers per season;
and
6. Recommends and implements disciplinary actions.
B. Composition:
Chairperson Regional Executive Director, DA-RFO
Members

LGU Representative

Regional Administrator, NIA

Area Manager, PCIC

-

Representatives, Farm Service Providers/

Rice Processing Center Operators

- Representatives, Institutional Buyers

-

Representatives, Farmers Associations

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VII.

Role of Stakeholders
A. LGUs/ FSPs as inputs and service providers
1. Submit documentary requirements as listed in the Guidelines;
2. Discuss with the Management Team the minimum machinery and
equipment requirements relating to project implementation/
enterprise plan;
3. Enter into a Deed of Undertaking with DA on the use of farm
machineries, equipment and facilities being lent by the latter;
4. Organize farmer cooperators for the project;
5. Coordinate with the DA, State Colleges and Universities, Research
Institutions, and Industry groups for possible technical assistance;
6. Participate in the joint testing/inspection on the delivered machinery
and equipment with the representatives from DA CAFED/ RAED;
7. Upon acceptance of the delivered machinery and equipment, issue
surety bonds to cover the possible damages/loss of the machinery
and equipment;
8. Maintain a logbook for the utilization of each machinery and
equipment;
9. Ensure the proper operation, care and maintenance of the lent
machinery and equipment;
10.Collect fees from the farmer cooperators only for the maintenance
and operation of the machinery and equipment, such as the fees for
the operator and fuel (wear and tear) as may be determined by the
Programs Regional Management Committee;
11.Facilitate/assist the enrollment of farm cooperators in the free crop
insurance premium subsidy program of PCIC;
12.Provide inputs or production loans for farmer-cooperators;
13.Render services from land preparation to harvesting and provide
protocol for plant care to farmer-cooperators;
14.Deploy agricultural/ rice technicians during the entire cropping
season to monitor the plant growth and arrest production related
problems in coordination w/ DA rice program;
15.Keep a logbook of all activities done in each respective farm
including all observations related to rice production and harvesting;
16.Immediately inform their institutional buyers and DA-RFOs of any
incidence that could affect their commitment under the rice supply
agreements they signed;
17.Pay the farmer cooperators for the palay at the agreed price as
contained in the contract, within five (5) banking days after harvest;
18.Package the rice according to specifications set by institutional
buyers;
19.Ensure the availability of the ordered rice on the agreed program of
deliveries with the institutional buyers;
20.Allow COA to conduct audit on the utilization of the machinery and
equipment;

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21.Shall be solely responsible for their obligations to the institutional
buyers and the farmer-cooperators;
22.Ensure the adoption of hybrid rice variety and its related technology ;
and
23.Abide by the decisions of the project regional management
committee.

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B. Department of Agriculture (DA)
1. Evaluate the qualifications and proposals of the applicant LGUs;
2. Introduce the LGUs to existing Rice Processing Centers (RPCs) in
their respective areas for possible partnership/cooperation;
3. Enters into memorandum of agreement with qualified LGUs on the
use of programbased farm machineries, equipment and facilities;
4. Provide rice production and processing mechanization support to
participating LGUs;
5. Provide complementary support such as premium subsidy for crop
insurance, loan guarantee and irrigation fee;
6. Conduct joint testing/inspection on the delivered machinery and
equipment together with the representatives of the qualified LGUs;
7. Conduct monitoring on the utilization of the machinery and
equipment provided by DA.
8. Conduct geo-referencing of enrolled farms and subsequent periodic
monitoring at each stage of the rice production to distribution;
9. Conduct training on hybrid rice technology; and
10.
Chairs and provide secretariat support to the Programs
Regional Management Committee;
C. National Irrigation Administration (NIA)
1. Review and comment on the production plan submitted by the LGUs;
2. Ensure the provision of irrigation support in accordance with the agreed
production plan; and
3. Perform duties and responsibilities as a member of Management
Committee.
D. Philippine Crop Insurance Corporation (PCIC)
1. Provide crop insurance to farms enrolled under the Program; and
2. Perform duties and responsibilities as a member of the Management
Committee.
E. Agricultural Credit Policy Council (ACPC)
1. Identify and link partner lending institutions for the provision of
financing support under the Program;
2. Facilitate the accreditation of partner Lending Institutions (LIs) to
the Agricultural Guarantee fund Pool (AGFP); and,
3. Perform duties and responsibilities as a member of the
management committee.
F. Farmer-Cooperators
1. Present proof of ownership/tenure of the rice farm being enrolled in
this Program;
2. Enter into a contract-growing agreement with the LGU or its
designated representative;

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3. Implement the planting protocol as provided by the LGU or its
designated representative;
4. Allow DA or its designated representatives to conduct georeferencing and monitoring of their rice farms.
5. Keep a logbook of all activities done in each respective farm
including all observations related to rice production and harvesting;
6. Allocate the volume of harvest to the LGU as indicated in their
contract growing agreement;
7. Immediately inform the LGU or its representative of any incidence
that could affect their commitment under the contract growing
agreements they signed;
8. Adopt hybrid rice variety and its related technology ; and
9. Abide by the decisions of the regional program management
committee.

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VIII.

Funding

Funding for the procurement of the required machineries and equipment

shall be charged against the funds of the DA Rice Program.

IX.

Monitoring and Evaluation

1. The concerned RFOs and the identified FSPs shall prepare and submit
status reports at each stage of crop production until harvest;
2. DA-AMAS/DA-AMADs shall prepare and submit reports on the compliance
with the supply agreements;
3. The DA-FOS and DA-RFOs shall conduct periodic project monitoring,
validation, and evaluation of project implementation; and
4. The concerned RFOs and the identified LGUs shall prepare a terminal
report on their project implementation for submission to the Office of the
Secretary.

X.

Supplemental Guidelines

Each Region may issue a supplemental guideline suited to their situation

but will be consistent with the general provisions of this guideline.

XI.

Effectivity

This Memorandum Circular shall take effect immediately upon signing and
shall supersede other issuances inconsistent herewith.

Recommending Approval:

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ENGR. ARIEL T. CAYANAN

Undersecretary for Operations

APPROVED:

EMMANUEL F. PIOL
Secretary

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