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I.

Intro
II. Globalization has exposed the economy to vulnerabilities that can trigger economic
reverses, in turn affecting the poverty situation. One economic reversal cause by the
1997 Asian Financial Crisis has led to an increased poverty incidence in the
Philippines and “the problem is more pronounced in the rural sector” (Malaluan &
Dacio, 2001). Republic Act 8435 or the Agriculture and Fisheries Modernization Act
of 1997, simply known as AFMA, was enacted on December 22, 1997. The law
responds to the need to address problems in the agriculture sector to make it better
prepared for globalization and facilitate a considerable reduction in poverty in the
sector.
III. Status of Environment (NEDA, Philippine Development Plan)
a. During the period 2004-2010, the average growth, while positive at 2.6 percent
annually, has been below the target of the previous Plan, which is a sustained
growth of 4.4 percent to 5.4 percent. The occurrence of the global financial crisis,
a fuel price spike in 2008, and climate-related events in 2009 (e.g., El Niño,
typhoons) all contributed to the nonattainment of the target. The devastation from
the typhoons Ondoy and Pepeng resulted in damage to agriculture and fisheries
estimated at PhP24.7 billion in 2009 pulling down the sector’s growth to only
one-tenth of a percent in the same year.
b. Despite positive growth and gains in productivity in some subsectors, there has
been almost no change in the welfare of almost 6.4 million farmers, fisherfolk and
other workers dependent on the sector. The poverty incidence of families has
changed slightly between 2003 and 2009 at 20.0 percent and 20.9 percent,
respectively (Table 4.10), while poverty in terms of population has increased from
24.9 percent to 26.5 percent, respectively. This is despite an increase in average
income of the bottom 30 percent of families of 8.3 percent in real terms from
2006 to 2009.
c. The country actually has a revealed comparative advantage (RCA)2 not only in its
lead exports such as coconut, banana, mango, pineapple, but also in sugar, abaca,
papaya, dried tropical fruit, fresh fruit and fresh vegetables (Table 4.7). Despite
the export potential of these commodities, however, particularly the emerging
crops, the country’s share (8.3%) and value of agricultural products (US$3.2
billion) to total exports is among the lowest in comparable ASEAN countries.
d. For the period 2004-2010, domestic rice production has met only 84.71 percent of
the country’s annual average rice requirements, notwithstanding substantial public
investments in the rice sector (DA, 2011). During the global food crisis in 2008,
the Philippines imported some 2.4 million MT of rice valued at US$1.9 billion to
supplement its domestic rice stocks.
e. The productivity of municipal fisheries, such as small-scale capture fisheries (less
than 3 gross ton boats), has been declining. This can be partly attributed to
overfishing and poor enforcement of fishery laws. The national stock assessment
of the Bureau of Fisheries and Aquatic Resources (BFAR) suggests that two-
thirds of the 12 major fishing bays in the country are already overfished.

IV. Objectives (Sec.3)


a. To modernize the agriculture and fisheries sectors by transforming these sectors
from a resource-based to a technology-based industry;
b. To enhance profits and incomes in the agriculture and fisheries sectors,
particularly the small farmers and fisherfolk, by ensuring equitable access to
assets, resources and services, and promoting higher-value crops, value-added
processing, agribusiness activities, and agro-industrialization;
c. To ensure the accessibility, availability and stable supply of food to all at all
times;
i. Particularly sensitive for its implication for food security is the conversion
of prime agricultural lands to nonagricultural uses (i.e., residential,
commercial and institutional) and the rising demand for industrial crops
(e.g., biofuel). Alternative land use activities have also encroached upon
ecologically fragile lands (NEDA).
d. To encourage horizontal and vertical integration, consolidation and expansion of
agriculture and fisheries activities, group functions and other services through the
organization of cooperatives, farmers' and fisherfolk's associations, corporations,
nucleus estates, and consolidated farms and to enable these entities to benefit
from economies of scale, afford them a stronger negotiating position, pursue more
focused, efficient and appropriate research and development efforts and enable
them to hire professional managers;
e. To promote people empowerment by strengthening people's organizations,
cooperatives and NGO's and by establishing and improving mechanisms and
resources for their participation in government decision-making and
implementation;
f. To pursue a market-driven approach to enhance the comparative advantage of our
agriculture and fisheries sectors in the world market;
g. To induce the agriculture and fisheries sectors to ascend continuously the value-
added ladder by subjecting their traditional or new products to further processing
in order to minimize the marketing of raw, unfinished or unprocessed products;
h. To adopt policies that will promote industry dispersal and rural industrialization
by providing incentives to local and foreign investors to establish industries that
have backward linkages to the country's agriculture and fisheries resource base;
i. To provide social and economic adjustment measures that increase productivity
and improve market efficiency while ensuring the protection and preservation of
the environment and equity for small farmers and fisherfolk; and
j. To improve the quality of life of all sectors.

V. Provisions of law implementing the objectives


 The AFMA has five major components: (1) production and marketing support services;
(2) human resource development; (3) research development and extension; (4) rural
non-farm employment; and (5) trade and fiscal incentives.
a. Production and Marketing Support Services (Sec 5-64)
Central to having a focused, adequate and rational delivery of social services is the
identification of a Network of Protected Areas for Agriculture and Agro-industrial Development
(NPAAAD), from which the Strategic Agriculture and Fishery Development Zones (SAFDZ) shall
be selected.
All lands suitable for economic and commercial development of the Agricultural and Fisheries
industries will be designated as the NPAAAD and protected from unwarranted conversion. From
this, the SAFDZs will be identified based on their competitive advantage brought about by their
agro-climatic and environmental conditions, strategic location, and the presence of agrarian reform
beneficiaries and small farmers and fisherfolk in the area. SAFDZ sites are declared as the
country’s food basket and shall constitute the zone of investments for modern technologies and
infrastructure. NPAAAD areas not classified as SAFDZ will still be protected from conversion for
future expansion of SAFDZ. Model farms, chosen among the SAFDZs, will be developed to
showcase the modern methods of production, processing and efficient marketing of farm products.
Having identified the strategic development areas, the AFMA mandates the Department of
Agriculture (DA) to formulate and implement a medium- and long-term Agriculture and Fisheries
Modernization Plan. This plan shall focus on the concerns of food security, poverty alleviation and
income enhancement, global competitiveness, and sustainability. The plan will weave together the
support services intended for the network of areas for agricultural and agro-industrial development,
as well as the other components of AFMA.
 AFMA also contained a particular command and control provision which is
advantageous to the fisheries environment. Section 12 of the law stipulated the
preservation, at all times, of important watersheds, a move which should help lower the
inflow of wastes from upland sources into coastal marine areas and improve the
viability of rivers, lakes and other inland water bodies.
Irrigation. The development of effective, appropriate and efficient irrigation and water
management technologies shall continue to receive government support. National irrigation
systems shall remain under the management and authority of the National Irrigation
Administration (NIA), but with a view to gradually turning over the operation and maintenance of
the national irrigation system's secondary canals and on-farm facilities to Irrigators' Associations.
The DA, for its part, shall devolve the planning, design, and management of communal irrigation
systems, including the transfer of NIA's assets and resources in relation to these systems, to the
LGUs. The Government shall also encourage greater private sector participation in the
construction of irrigation facilities through the various build-operate-transfer schemes.
 As of 2009, the total area provided with irrigation service is 1.54 million hectares wherein
765,000 hectares are under the National Irrigation Systems (NIS). Communal Irrigation
Systems (CIS) cover around 558,000 hectares. The total service area represents 49 percent of
the potential irrigable area of 3.126 million hectares. However, the pace of irrigation
development in the country has been estimated at less than 1 percent per year.
 The use of mechanization in Philippine agriculture has been low. The current mechanization
level of the sector, which is 1.68 horsepower (hp)/hectare, is far below other Asian countries
such as Korea (4.11 hp/hectare) and China (3.88 hp/hectare). Among rice and corn farmers,
only 21.7 percent have mechanized while the rest continue to use manual labor and farm
animals in production activities (UPLB, 2009)
b. Human Resource Development (Sec. 65-79)
The human resource development component of AFMA gives priority to the development
of education-related programs oriented towards agriculture and fisheries. Three programs are
identified in the law. First, the Commission on Higher Education (CHED), in coordination with
the DA and other government agencies, shall establish a National Agriculture and Fisheries
Education System (NAFES) that shall be integrated in the elementary, secondary and post-
secondary education curricula.
At the elementary and secondary levels, the program shall aim to: develop appropriate
values that form the foundation for sustained growth in agriculture and fisheries modernization;
increase the attractiveness of agriculture and fisheries education to make agriculture and fisheries
an acceptable options for career and livelihood; promote appreciation of science in agriculture and
fisheries development; and develop among students positive attitudes towards entrepreneurship
and global competition.
At the post-secondary education level, the TESDA shall develop and implement a program
that includes the following: a mechanism for a flexible process of curriculum development;
integration of the dual training system in the various agricultural curricula and training programs;
integration of entrepreneurship and global competitiveness in the agro-fisheries curricula;
institutionalizing agriculture and fisheries skills standards and technician testing and certification;
regular upgrading of learning/training facilities, school buildings, laboratory equipment; and
development of a system for the strict enforcement of school regulations regarding standards and
requirements.
Second, the law establishes a Network of National Centers of Excellence in Agriculture
and Fisheries Education at the tertiary level. The network shall comprise of qualified public and
private colleges and universities, duly accredited as National Centers of Excellence (NCE) in the
field of agriculture and fisheries under an accreditation system formulated and implemented by the
CHED. These NCEs shall receive financial support from the national government and the LGUs.
The CHED, in coordination with the DA and other agencies, shall develop and implement an
integrated human resource development plan in agriculture and fisheries which shall serve as a
guideline in the setting of priorities in curricular programs, enrollment, performance targets, and
investment programs. A complementary skills development program shall be made available to
teachers, professors and educators in agriculture and fisheries.
Finally, the law creates an Agriculture and Fisheries Board in the Professional Regulation
Commission to upgrade the Agriculture and Fisheries profession. The Board shall develop and
implement a professional examination for B.S. Fisheries and Agriculture graduates.
c. Research Development and Extension (80-95)
Research and extension shall receive greater resources from the DA. The law provides
budget allocation floors for these expenditure items. Research excellence and productivity shall be
promoted and national guidelines in evaluating research and development activities and
institutions shall be evolved. Research information and technology shall be communicated through
the National Information Network (NIN).
Extension services to the farming and fishing community shall include training services,
farm or business advisory services, demonstration services, and information and communication
support services. Extension services shall be integrated into a system involving the DA, LGUs,
and the private sector. The LGUs shall be responsible for the direct delivery of extension services.
The DA and state colleges and universities shall implement programs that will enhance the
capacity of LGUs to provide quality extension services to agriculture. The DA shall encourage the
participation of farmers and fisherfolk cooperatives and associations and others in the private
sector in training and other complementary extension services such as organizing and the
popularization of technologies and management systems.
d. Rural Non-Farm Employment (Sec. 96-107)
Opportunities for rural non-farm employment shall be increased to increase household
income in the rural sector. This will be done through basic needs programs that directly create
employment, promoting greater integration of agriculture and fisheries to manufacturing and
industries, and developing the skills of workers in rural communities. Greater integration shall be
facilitated by giving priority in the grant of incentives to business and industries with linkages to
agriculture through the BOI. LGUs will make available useful information to these businesses and
industries, and support investment and marketing missions. Various workers and entrepreneurs
training programs shall be implemented by the DA, Technological Education, Skills and
Development Authority (TESDA) and Department of Environment and Natural Resources
(DENR), and the Technology and Livelihood Resource Center (TLRC).
e. Trade and Fiscal Incentives
The AFMA provides a limited tax exemption scheme to certified enterprises engaged in
agriculture and fisheries. For a period of five years from the effectivity of AFMA, these enterprises
shall enjoy exemption from the payment of tariff and duties for the importation of all types of
agriculture and fisheries inputs, equipment and machinery such as fertilizer, insecticide, pesticide,
tractor, trailers, trucks, farm implements and machinery, harvesters, threshers, hybrid seeds,
genetic materials, sprayers, packaging machinery and materials, bulk-handling facilities such as
conveyors and mini loaders, weighing scales, harvesting equipment, spare parts of all agricultural
equipment, fishing equipment and parts thereof, refrigeration equipment, and renewable energy
systems such as solar panels.
Funding
The AFMA will be funded by an initial appropriation of P20 billion, which can be achieved
though the re-alignment of the appropriations of the DA. The law prescribes resource allocation
percentages for the different components of AFMA. Thereafter, the DA is mandated to include in
its annual appropriation program for the next six years an amount not less than P17 billion for the
implementation of AFMA.
VI. Remedies and Sanctions
a. Section 10. Preparation of Land Use and Zoning Ordinance
Within one (1) year from the finalization of the SAFDZ, in every city and
municipality, all cities and municipalities shall have prepared their respective land
use and zoning ordinance incorporating the SAFDZ, where applicable. Thereafter,
all land use plans and zoning ordinances shall be updated every four (4) years or
as often as may be deemed necessary upon the recommendation of the Housing
and Land Use Regulatory Board and must be completed within the first year of
the term of office of the mayor. If the cities/municipalities fail to comply with the
preparation of zoning and land use plans, the DILG shall impose the penalty as
provided for under Republic Act No.7160

b. Section 11. Penalty for Agricultural Inactivity and Premature Conversion.


Any person or juridical entity who knowingly or deliberately causes any irrigated
agricultural lands seven (7) hectares or larger, whether contiguous or not, within
the protected areas for agricultural development, as specified under Section 6 in
relation to Section 9 of this Act, to lie idle and unproductive for a period
exceeding one (1) year, unless due to force majeure, shall be subject to an idle
land tax of Three Thousand Pesos (P3,000.00) per hectare per year. In addition,
the violator, shall be required to put back such lands to productive agricultural
use. Should the continued agricultural inactivity, unless due to force majeure,
exceed a period of two (2) years, the land shall be subject to escheat proceedings.

Any person found guilty of premature or illegal conversion shall be penalized


with imprisonment of two (2) to six (6) years, or a fine equivalent to one hundred
percent (100%) of the government's investment cost, or both, at the discretion of
the court, and an accessory penalty of forfeiture of the land and any improvement
thereon.