SOP Library

SOP NO: TS-ES01

Mission: Stabilization

Area: Technical Services (TS)

Activity:

Title: Implementing Guidelines on the NFA Facility Assistance Program Involving Japanese Grant
Facilities

Date Approved/Issued: 07/17/87

Date Effective: 08/15/87

Digest:

One of the strategies for strengthening farmers organizations is the implementation of a

progressive and active facility assistance program. This strategy aims to provide farmers
organizations with the necessary capability to improve the marketing and the marketability
of food commodities they produce.

The grains post harvest facilities which NFA acquired thru the JICA (Japanese International
Cooperative Agency) Program shall be distributed to farmers organizations as a project
under the NFA Facility Assistance Program. The project shall introduce improved grains
post harvest technology by making available to farmers organizations village level facilities,
namely portable warehouses, rice mills, threshers and driers.
 The project aims to provide farmers' organizations with post harvest facilities to reduce
grains losses, lessen post-harvest cost, and shorten the time period for the various in farm
operations. Such provision of the subject facilities is also envisioned to assist farmers'
organizations in venturing into profitable grains marketing business.

1. Application and Evaluation Process

2. Terms of Payment
3. Issuance of Post Harvest Facilities (PHF)
4. Utilization of PHF
5. Reporting and Monitoring System

1. IDM EXD No. C-124 on Approved Concept for the JICA Facility Assistance Program,
issued and effective October 13, 1982.

A. General Facilities

1. The intended beneficiaries of the program are farmer's organizations (FOs) which
must meet the following qualifications:

a. Farmers' Organizations must have been registered with the Securities and
Exchange Commission (SEC) or the Bureau of Cooperative Development
(BCOD) at least two (2) yeas prior to their application for availment of JICA facilities.

b. Farmer's Organizations should have been engaged in any of the following

economic activities:

b.1 production of rice, corn or other grains

b.2 post harvest handling, processing or transport of grains

b.3 provision of services by way of credit or inputs availment, or marketing

grains.
 c. FOs must have good credit standing with any private and government financial
lending institutions.

d. Local chapters of national farmers organizations who wish to avail of the facilities
shall have its national office as guarantor and its national president/head as co-
signatory to the Deed of Sale with Reservation of Title.

2. Farmers Organizations who wish to participate in the program must submit the
following application requirement:

a. Accomplished Application Form

b. Original and certified true copies of BCOD/SEC registration certificate, articles of

incorporation and by-laws (Note: Original copies shall be returned to the
applicant immediately upon verification by NFA).

c. Notarized statement of assets and liabilities of the FO.

d. Masterlist of officers and members, and their addresses.

e. Board Resolution for its authorized representative.

f. Certificate of Good Credit Standing from any private and government financial
lending institution with whom the F.O. has availed credit.

3. Facilities to be distributed under the program, with the corresponding number of units
available and their respective prices/unit shall be contained in a separate bulletin to be
prepared by the Extension Directorate and shall be disseminated to interested Farmer
Organizations.

4. Beneficiary POs could avail of the facilities under the program through the amortization
scheme. No downpayment, interest payments, collateral and service charge shall be
required from the beneficiary POs. Payment shall be made within ten (10) years, in
twenty (20) equal semi-annual payments, collectible every June 30 and December 30.
Threshers, however, shall be paid within six (6) years, in twelve (12) semi annual
payments.

5. The semi-annual payments may be in cash or in kind.

a. For payment in kind (PIK), valuation of stocks shall be based on the NFA
procurement price at the time of payment and procurement procedures and
quality standards set by NFA.

b. The beneficiary farmers organizations may use their accumulated cooperative

incentive fee (CIF) as payment for the amortization of PHF under the program
 (Refer to SOP # 05020 re Revision of the Cooperative Incentive Program to
include Management Incentive, issued and effective December 2, 1983).

6. All payments made under the program shall be remitted to Central Office, RP-Japan
Increased Food Production Program Account following existing procedures on fund
remittances:

a. The Extension Directorate shall monitor all payments made by the beneficiaries
and remittances of payments to Central Office, and shall determine the manner
by which these funds will be utilized for the further promotion of PH technology
and the development of entrepreneurial capabilities of farmers organizations.

7. A Deed of Sale with Reservation of Title shall be executed between NFA and the
beneficiary FOs. Ownership of the facilities shall be transferred to the beneficiary FOs
only upon full payment of the price of the facility, after which a corresponding Certificate
of Ownership shall be issued in favor of the beneficiary FO.

8. Application for availment of the JICA Facility Assistance Program shall be evaluated
considering among other factors the technical feasibility of the location, financial
viability of the FOs and the judicious representation of different FOs among the
beneficiaries.

a. JICA warehouses shall not be granted to FOs which do not own the land on
which the same will be set-up, or which do not have a lease contract on such
land with a duration extending to at least the next twelve (12) years. Furthers,
the land should not be less than 500 sq. m.

b. Application for availment of the JICA facilities shall be approved by the

Administrator as recommended by the Assistant Administrator for Marketing
Development and the Director for Extension Directorate.

9. Beneficiary FOs shall be required to comply with the following:

a. Secure GRAINSCOR insurance for the value of the facility/ies to cover for
losses/damages in case of fire or theft within five (5) days after signing of the
contract by both parties.

b. Secure NFA license to engage in the appropriate line of business.

c. Undergo NFA training and on the technical (for operators) and marketing (for
managers) aspects of the facilities to be amortized.

10. The NFA reserves the right to inspect the facilities at any reasonable time and to
conduct periodic technical and financial audits to assist the beneficiary FOs in the field
of management.
 11. Any of the following shall be sufficient ground for NFA's repossession of the facilities
being amortized:

a. Failing to pay amortization for two 92) consecutive payment periods;

b. Transfer of management, use, control, possession of the facilities by the

beneficiary FO to another organization, private individual or any other third party;

c. Technical alteration of the facilities as determined by NFA, without any previous

clearance from same;

d. Dissolution of the organization or any serious organizational failure/break-up;

and

e. Violation of the provision in the Deed of Sale with Reservation of Title including
but not limited to non-payment of penalties and insurance premiums.

12. The Extension Directorate shall supervise the overall implementation of the program to
include policy fomulation, evaluation and recommendation for approval of application of
qualified FOs, distribution of facilities to beneficiaries , provision of technical assistance
and coordination with other directorate for services needed.

13. The Technical Services Directorate shall extend technical assistance to the Extension
Directorate in the testing and installation of certain PHFs such as ricemills and
warehouses and shall conduct periodic inspection of the facilities thru the Provincial
Office's Technical Services Unit (TSU).

14. The project shall be implemented in the field offices by the Extension and Business
Development and Promotion Section (EBDPS) under the direct supervision of the
Provincial Manager/OIC. In the absence of the EBDPS, the Operations Officer II (OO II)
of the Regional Office shall oversee the implementation of the project.

15. The accounting entries to record payments under the program are presented in Annex
A.

B. Specific Policies

B.1 Filing, Evaluation and Approval of Applications for JICA Facilities

1. The Extension directorate shall furnish NFA Provincial Offices' Extension and
Business Development and Promotion Section (EBDPS) with Application Forms
(Exhibit 1) and a checklist of requirements for the availment of the JICA
Facilities, for dissemination to interested FOs.

2. Applicant FOs shall accomplish application forms in 3 copies and submits same
with the other requirements to the NFA Provincial Office - EBDPS.
 3. EBDPS shall check the completeness of all required documents submitted by
applicant FOs. Only Applications with complete requirements shall be accepted
and forwarded to the Extension Directorate, Central Office. For applicants with
incomplete requirements, a list of the deficiencies shall be prepared by EBDPS.
The application forms, supporting documents and list of deficiencies shall be
returned to the applicant for completion.

3.1 The provincial office where the applicant FO is located shall issue a
Certification (Exhibit 2) on the existence of the organization.

4. The Extension Directorate in coordination with the Business Development and

Promotion Directorate (BDPD) shall send evaluation teams to the areas where
the applicant FOs are based, to conduct investigation on the technical feasibility
of the location, financial viability of the organization and judicious representation
of different FOs among the beneficiaries.

4.1 The Field Investigator shall assist the evaluation teams in conducting
background investigation on applicant FOs.

5. Upon approval of the application a Deed of Sale with Reservation of Title (Exhibit
3) shall be executed between the beneficiary FO and NFA. The contract shall
include among others, detailed provisions on the PHF utilization, payment, pull-
out in case of default in payment, etc.

5.1 The Administrator or in his absence, the Deputy Administrator, shall sign the
Deed of Sale with Reservation of Title.

6. The Extension Directorate shall furnish the NFA Regional and Provincial Offices
where the beneficiary FO is based with a copy each of the Deed of Sale with
Reservation of Title after it has been signed by the Administrator/Deputy
Administrator.

B.2 Payment Terms

1. Payment of the Post Harvest Facilities shall be amortized in ten (10%) years in
twenty (20) equal semi-annual payments, collectible every June 30 and
December 30. In the case of threshers, amortization period shall be six (6) years
in twelve (12) semi-annual payments.

1.1 The first payment of JICA PHF grants covered by contracts (Deed of Sale
with Reservation of Title) executed from June 1 to November 30 shall be
due on December 30 while PHF grants covered by contracts executed
from December 1 to May 30 shall be due on June 30.

2. The semi-annual payments may be in cash or in kind.

 2.1 In case of cash payment, an Authority to Accept Payment (AAP) containing
the amount to be paid by the beneficiary FO shall be prepared by the
Provincial Office based on the Deed of Sale with Reservation of
Title.

2.2 For PIK payment of installments, stocks shall be delivered by the

beneficiary FO to the designated warehouse/buying station or to the
Mobile Procurement Team (MPT) assigned in the area if any. In the
documentation of the receipt of the stocks, "PIK for amortization on JICA
Facility Assistance" shall be indicated in the remarks portion of the WSR
and in the PR.

3. Beneficiary FOs shall be furnished with a Schedule of Amortizations which shall

be prepared by the Extension Directorate.

3.1 Failure to pay the installment on the due date shall subject the beneficiary
FO a penalty of 12% per annum based on the installment due.

3.2 As an incentive for prompt payment of amortization, a rebate of 10% of the

amortization shall be granted if payment is made one month before the
due date.

4. Failure to pay two consecutive amortizations shall be a ground for repossession

of the facility.

4.1 The beneficiary FO shall be served a notice of Delayed Payment if

payment of the two consecutive amortizations is not made within fifteen
(15) days from the due date of the second amortization. The notice shall
remind the beneficiary FO that non payment of the consecutive
amortizations plus the corresponding penalties shall subject his facility to
repossession.

4.2 NFA shall repossess the facility if payment is not made within fifteen (15)
days after the notice has been sent.

5. Beneficiary FOs can only claim ownership of the facility upon full payment of its
price after which a Certificate of Ownership shall be issued in its favor by NFA.
However, for purposes of securing the necessary NFA license/licenses to
engage in the appropriate line of business, the beneficiary FO shall be
considered the owner/licensee.

6. The Extension Directorate shall furnish the NFA Provincial Office, EBDPS with
the Schedule of Amortizations of beneficiary FOs based in the province. The
schedule shall serve as basis for collection of payments, and as reference in the
 computation of penalties for delayed payments and rebates for prompt
payments.

B.3 Issuance/Withdrawal of PHF to/By Beneficiary FO

1. All JICA facilities shall be the accountability of the Warehouse Supervisor of

designated MMO warehouse depositories where they will be initially stored upon
delivery. The Warehouse Supervisor shall be issued a Memorandum Receipt
(MR) for each PHF stored in the warehouse. (Documentation of receipts of PHFs
by NFA from JICA, issuance to accountable officers and cancellation of MR shall
follow SOP No. GS-PD-02 entitled Fixed Asset Inventory, Monitoring and Control
System issued October 15, 1984 and effective December 1, 1984.

2. The PHF shall be withdrawn by the beneficiary FO from the warehouse within a
period of fifteen days from the signing of the Deed of Sale with Reservation of
Title by both parties.

2.1 Delay in the withdrawal of the facility shall subject the beneficiary FO to
payment of storage fee as determined by the NFA Metro Manila.

3. The Authority of Issue PHF (Exhibit 4) prepared by the Extension Directorate

upon payment of the Grainscor Insurance fees and approved by the Director
shall serve as basis of the Warehouse Supervisor to issue the PHFs. The AI-
PHF shall contain the 'name of the farmers' organization to which the PHF shall
be issued, address, nature of transaction, OR/PR number, specs of the PHF to
be issued, and the authorized carrier. Copy distribution of the AI-PHF shall be as
follows:

Copy 1 - Warehouse Supervisor

2 - Extension Directorate
3 - Finance - Metro Manila Office
4 - Auditing - COA MMO

4. The beneficiary FO shall shoulder all transport costs in the withdrawal of the
facilities.

5. The PHF Issued Slip (PHF-IS, Exhibit 5) shall be prepared for all actual
issuances of PHF by the Warehouse Supervisor to beneficiary FOs. This shall
be prepared based on the AI-PHF, and shall contain, among others, the
name/signature of recipient, address, date of issue, AI-PHF number, OR/PR
number, specs of PHF issued, parts and accessories, etc. Copy distribution of
the PHF-IS shall be as follows:

Copy 1 - Recipient
2 - Warehouse Supervisor
3 - NFA Provincial Office where FO is based - Accounting Section
 4 - Finance - NFA-MMO
5 - Auditing - MMO
6 - Extension Directorate

5.1 The Extension Directorate shall furnish all Warehouse Supervisors with a
packing list containing the parts and accessories for every PHF to be issued,
with their respective part numbers and quantity.

5.2 For every PHF to be issued, the Warehouse Supervisor shall prepare the
corresponding packing list in 6 copies. Each copy shall be attached to
every copy of the PHF Issue Slip which shall be distributed as stated in
B.3.5. After checking the parts and accessories issued to them, beneficiary
FOs shall acknowledge receipt/acceptance of the facilities/ies by signing
on the pHF-IS and on the packing list.

6. Upon withdrawal of the PHFs from the warehouse, said facilities shall be
considered as delivered to and accepted by the beneficiary FO.

6.1 Liability for losses or damages that may be incurred while the facilities are in
transit or in the custody of the beneficiary FO shall be for the FO's account.

B.4 Utilization of PHF

1. Installation of the warehouses and stationary rice mills shall be the responsibility
of the beneficiary FOs. However, the NFA through TSD and Extension
Directorate may extend free technical assistance provided material costs such
as the laying of foundations, erections, and provisions for office dividers within
the warehouse, etc. shall be shouldered by beneficiary FOs.

2. Upon installation of the PHF, the beneficiary FO shall shoulder the cost for the
recommended proper maintenance and operation of the facility.

2.1 The beneficiary FO shall provide a shelter/shed to house

ricemill/drier/thresher (in case the same is/are availed of separately from
warehouse) in accordance with the minimum requirements of the plans and
specifications of NFA.

3. Immediately upon installation of stationary facilities and/or delivery to the site of

portable facilities, the beneficiary FO shall secure the necessary license/licenses
to engage in the appropriate line of business from the NFA Provincial Office.

4. The PHF shall be utilized by the beneficiary FO only for the purpose it was
applied for and issued, and under no circumstances shall any part of accessory
be used for another purpose without prior written consent from NFA.
5. Within five (5) days from signing of the Deed of Sale with Reservation of Title by
both parties, the beneficiary FO shall insure with GRAINSCOR the facility/ies
against loss or damage due to fire, theft, or any other natural calamity at an
amount equivalent to the value of the facility with NFA, as the designated
beneficiary. Portable warehouse, however, shall not be insured against loss or
damage due to theft but shall only be insured against fire or any other natural
calamity. All the facilities shall also be insured against any loss or damage while
in transit from the NFA-MMO depository warehouse up to their delivery to the
beneficiary FO's site. The beneficiary FO shall deliver to NFA the corresponding
policy within five (5) days from execution thereof.

5.1 Failure of the beneficiary FO to insure the facility and to deliver the policy
properly endorsed to NFA within five days from execution of contract
shall give right to NFA to secure the necessary insurance policy. The
beneficiary FO shall pay NFA the corresponding premium and other costs
of the insurance within five days from execution thereof.

5.2 This provision shall also apply to the insurance renewal as long as the
beneficiary FO has an outstanding balance with NFA. Succeeding
premiums shall be demandable when due.

5.3 Failure to pay the initial and succeeding premiums shall subject the
beneficiary FO to an interest of 18% per annum.

5.4 Insurance of the PHFs shall be renewed yearly at an amount not less than
the outstanding balance of the beneficiary FO with NFA.

6. Training of technicians/operators in the operation and maintenance of the PHF

shall be conducted by the NFA as may be necessary.

7. The NFA or its authorized representative has the right to inspect the facility/ies at
any reasonable time without prior notice to the beneficiary FO and to conduct
periodic technical and financial audit relative to the facilities.

8. In case of loss or destruction of the PHF and/or parts or accessories through the
fault of negligence of the beneficiary FO, he shall pay NFA the total cost of PHF
and/or parts of accessories lost or destroyed.

9. In cases of repossession of the PHFs for grounds enumerated in II.A, NFA shall
pull out the facility/ies wherever it may be found.

9.1 All previous payments made shall not be refunded but shall be considered as
rental payment for the use of the facility.

9.2 NFA shall have the right to demand and collect all amounts due and
demandable, including penalty already incurred.
 9.3 Beneficiary FOs shall also be liable to the payment of liquidated damages in
an amount equivalent to 25% of the outstanding obligations of the
beneficiary FO to NFA.

9.4 In the event of default, the NFA shall have the option to effect payment of the
obligations of the beneficiary FO out of whatever funds, securities and
properties belonging to the beneficiary FO which
funds/securities/properties may be in possession or control of the NFA,
including the accumulated Cooperative Incentive Fee (CIF).

D.5 Reporting and Monitoring System

1. The Warehouse Supervisor of the warehouse depository accountable for the

PHFs shall maintain a JICA PHF Monitoring Logbook (Exhibit 6) which shall
contain the name of beneficiary FOs, specs of PHFs issued, date and time of
issuance, AI-PHF No. PHF IS NO., Recipient's signature and the signature of the
warehouse supervisor.

2. The Warehouse Assistant of the Warehouse depository shall prepare a Weekly

Report on PHF Issuance (Exhibit 7) which shall be certified correct by the
Warehouse Supervisor and submitted to Extension Directorate until all the PHFs
had been distributed to beneficiary FOs. The Report shall contain among others,
the name of the beneficiary FOs, specs of PHF issued, date of issuance, AI PHF
No., PHF-IS No., Remarks

3. The Provincial Officers' Extension and Business Development and Promotion

Section (EBDPS) shall maintain a JICA PH Facility Amortization Monitoring
Logbook (Exhibit 8) to record semi-annual payments made by beneficiary FOs.
The Extension Directorate shall maintain the same logbook to monitor payments
made by all beneficiary FOs.

4. EBDPS shall provide the Warehouse Supervisor of the designated warehouse

with a list of beneficiary FOs under the JICA Facility Assistance Program and
their schedule of semi-annual payment in case the beneficiary FOs opts to pay in
kind.

5. The Warehouse Assistant/Field Clerk, at the end of each harvest season,

prepares a report (Exhibit 9) on PIK made by beneficiary FOs and shall be
certified correct by the WS. The report shall be submitted to the Finance Section
and the 3rd copy shall be retained by the WS.

6. EBDPS, in coordination with the Technical Services Unit (TSU) shall conduct a
Bi-Monthly inspection (every two months) of PHFs and shall prepare a Status
Report on JICA Facility Assistance Program to be verified correct by the
Provincial Accountant and noted by the Provincial Manager. This report (Exhibit
10) shall be submitted to and received by the Extension Directorate on the 15th
day of the month following the period covered by the report.