SOP Library

SOP NO: TS-ES02

Mission: Stabilization

Area: Technical Services (TS)

Activity:

Title: Revised SOP on NFA Facility Assistance Program

Date Approved/Issued: 05/01/90

Date Effective: 06/01/90

Digest:

A. Introduction of improved post production technology by making available post-

harvest facilities to farmers under several schemes, thus helping reduce grain losses,
lessen post-harvest cost, and shorten the period of the various in-farm operations.

The areas/activities covered by this SOP are as follows :

1. Application Process
 2. Payment under the Different Schemes
3. Issuance of PHF to Lessee/Vendee
4. Utilization of PHF
5. Return of the PHF by Borrower/Lessee
6. Reporting and Monitoring System

This SOP is based on the following :

1. MOM 0600 entitled NFA Facility Assistance Program, issued and effective October
13, 1982.
2. Lease/Rental of Post-Harvest Facilities with the Option to BUY, issued and effective
July 24, 1978.

A. General Policies

1. NFA shall extend facility assistance to the private sector through the following schemes:

a. Custom-Hire Service Schemes. The facility shall be operated by the NFA PHF
Operator/Mechanical Plant Operator (MPO) and payment shall be based on pre-
computed service fees on a per bag input/output basis, as the case may be. The
stocks to be processed shall be brought by the beneficiary to the NFA Provincial
Office compound/warehouse on scheduled date of service. The beneficiary shall
be held accountable for his stocks during the operation/processing.

b. Lease/Rental Scheme. The PHF shall be operated by the lessee for the agreed
case-held period. The minimum period for lease/rental of PHF shall be one (1)
day. Payments shall be computed on a daily basis, following the daily
lease/rental fee, as per approved schedule of fees for the program. All operating
expenses shall be shouldered by the lessee.

c. Amortization Scheme. The vendee/purchaser shall make a down payment

equivalent to ten percent (10%) of the total selling price of the PHF before PHF
could be released. Subsequent payment shall be due each harvest season
(twice a year) for a certain period of time, as stipulated in the Contract of Sale
with Reservation of Title to be executed between NFA and the Vendee.

d. Direct Purchase Scheme. The PHF shall be paid in full before PHF could be
released.
 1.1 All facilities for sale to the private sector under the amortization and direct
purchase schemes shall be collectively approved by the Administrator, as
recommended by the Director, Extension Directorate (EXD), Technical
Services Directorate (TSD) and Directorate for Marketing Operations (|
DMO).

2. The NFA post-harvest facilities (PHF) covered under the program are the following :

a. Custom-Hire Service Scheme - all types of driers, threshers and cornshellers

and kanoko paddy cleaners.

b. Lease/Rental/Amortization and Direct Purchase Scheme - flatbed driers,

threshers, cornshellers and platform scales.

3. The intended beneficiaries of the program are as follows :

a. Individual Farmer - farm-owner or leaseholder with or without NFA Farmer's

Passbook.

b. Farmer's Association - duly registered and recognized by NFA.

c. Millers and Traders - licensed with NFA

4. The Extension Directorate (EXD) shall be responsible for the supervision of the overall
implementation of the program. It shall be responsible for policy formulation, monitoring
analysis and evaluation of problems related to the program. The EDDPS shall be
responsible for the implementation and monitoring of the program at the field level.

5. He shall come up with an annual list of PHFs available for sale under this program to be
circulated nationwide. The listing shall be drawn up in coordination with DMO and TSD.
It shall include the type, brand, capacity, serial number, cost and location of the PHF.

6. The TSD shall recommend to EXD cc: DMO the inclusion in this program of other
facilities which are deemed to be non-performing assets which can be feasibly
transferred to the beneficiaries of the program.

7. The schedule of fees for the use/purchase of the driers, threshers and corn shellers
and weighing scales under th different schemes of the NFA Facility Assistance Program
as well as interest rates and other charges shall be determined by a Facility Assistance
Committee composed of the EXD, TSD, DMO and DAB subject to approval by the
Administrator.

8. Payment under all schemes may be in cash or in kind, at the option of the beneficiary,
with the exception of individual farmer-beneficiaries with no NFA Farmer's Passbook,
in which case payment in kind (PIK) shall not be allowed. For PIK, acceptance and
valuation of stocks shall follow the standard procedures on same.
 9. Farmer's associations duly registered and recognized by NFA may use their
accumulated Cooperative (Incentive Fee (CIF) for purchase of PHF or as payment for
the rental/amortization of PHF under the program (for details on the utilization of the
CIF, refer to SOP #05020 re : Revision of the Cooperative Incentive Program to Include
Management Incentive, issued and effective December 2, 1983).

10. All payments made under th program shall be remitted to Central Office under Savings
Account, following existing procedures on fund remittances. Said payment shall be
transferred by the Directorate for Treasury and Fund Management (DTFM) from
Savings Account to Facility Assistance Fund under General Operating Fund (GOF)
upon request of EXD.

11. The accounting entries to be made under the different schemes of the program are
presented in Annex Z.

B. Specific Policies

B.1 Application, Evaluation and Approval

1. Application form (Exhibit 1) for the use/acquisition of PHF shall be secured from
the Provincial Offices' Extension & Business Development and Promotion
Section (EBDPS) and accomplished in two (2) copies. The accomplished forms
shall be submitted to same section (i.e. EDDPS) for screening/evaluation as to
qualification of applicant and availability of the needed PHF.

2. For Custom-Hire and Lease/Rental Schemes, applications shall be evaluated by

the EBDPS Head in coordination with the Marketing Operations Section (MOS)
on the basis of availability of the required PHF and considering NFA
requirements for such facility.

2.1 For lease/rental scheme, a background investigation shall first be

conducted to ascertain good credit standing of applicant.

3. For amortization and Direct Purchase Schemes, all facilities for disposition thru
these schemes shall first be cleared with the Regional Office which shall
evaluate considering the facility list and the qualifications of the applicant. A wire
authority to dispose shall emanate from the Regional Director.

4. Upon approval of the application, a proforma Contract of Lease (Exhibit 2), in the
case of Lease/Rental Scheme or Contract of Sale with the Reservation of Title
(Exhibit 3), in the case of Amortization Schem, shall be executed between the
lessee/purchaser and NFA. The contract shall contain, among others, detailed
provisions on the utilization, payment, return (in case of lease) and loss or
destruction of PHF, which shall be strictly followed.
 4.1 All fees and expense necessary for the execution and registration of the
Contract and all other documents executed in connection with said
contract shall be shouldered by the lessee/purchaser.

4.2 The Regional Director shall sign pertinent contracts in behalf of the
Administrator.

5. In case the lessee would like to purchase the PHF, he leased, he shall apply
either under the Amortization Scheme or Direct Purchase Scheme.

B.2 Payment Under the Different Schemes

B.2.1 Lease/Rental, Amortization, and Direct Purchase Scheme

1. The following shall first be paid by vendee or purchaser before the PHF
could be released :

For Amortization Scheme: the down payment which is ten percent (10%)
of the PHF selling price.

For Direct Purchase Scheme: the selling price of the PHF.

2. In case of cash payment, an Authority to Accept Payment (AAP)

containing the amount to be paid by the lessee/purchaser to NFA
Provincial Cashier shall be prepared by the EBDPS Head, based on the
Contract of Lease/Contract of Sale with Reservation of Title/approved
application form for Facility Assistance (for Direct Purchase Scheme).

3. In case of PIK, the stocks shall be delivered by the lessee/purchaser to

the designated NFA warehouse/buying stastion or to the Mobile
Procurement Team (MPT) assigned in the area, if any. Particular Scheme
of facility assistance under which PIK is made shall be properly identified
in the remarks portion of the WSR and PR, using the Contract of
Lease/Contract of Sale with Reservation of Title/approved appolication
form for Facility as basis.

For Lease/Rental Scheme, "PIK for lease/rental of PHF"

For Amortization Scheme: "PIK for direct purchase of PHF"

4. For Amortization Scheme subsequent payments shall be due each

harvest season (two times a year) for such period of time as stipulated in
the Contract of Sale with Reservation of Title.

4.1 In case of failure to pay (1) amortization, the purchaser shall be

given a grace period of three (3) months within which to settle his
 account. However, a surcharge to be act by the Facility Assistance
Committee subject to the Administrator's aproval shall be added to
the purchaser's account, per month of delay. If at the end of the
grace period, the purchaser fails to settle his account, the NFA
shall pull-out the facility wherever it may be found. The expense of
locating and transporting the facility shall be charged to the
purchaser.

4.2 In case of confiscation of the facility due to the purchaser's failure

to pay, all previous payments made shall not be refunded but shall
be considered as rental payment for the use of the facility.

5. For Armortization Scheme, after the outstanding balance on the PHF's

selling price and interest thereon shall have been fully paid by the
beneficiary in accordance with the terms and conditions of the Contract of
Sale with Reservation of Title, NFA shall execute the necessary Deed of
Absolute Sale (Exhibit 4) in favor of the purchaser. For Direct Purchase
Scheme, the Deed of Absolute Sale shall be executed immediately after
the PHF's selling price as been fully paid by the purchaser.

6. In case the lessee (under the Lease/Rental Scheme) decides to buy the
PHF he leased, and his application for Amortization/Direct Purchase
Scheme (as the case may be) has been approved, the rental payment
made for the leasehold period shall be deducted from the PHF's purchase
only if the facility has been leased continuously (i.e. without any gap in the
leasehold period), regardless of the length of the leasehold period.

Custom-Hire Service Scheme

1. Payment under this scheme shall be collected immdiately after

processing/operation

2. This service fee to be charged to the beneficiary shall be

computed as follows :

Service Fee = n x s (P/bag)

Where :

n = number of bags of input (for drying)/output (for corn

shelling/
threshing)

s = service fee per bag

3. Collection of payment shall be as follows :

 3.1 In case payment shall be in cash and operation was done
within NFA Provincial Office's compound, payment shall be
given to the NFA Provincial Cashier. An AAF containing the
amount due from the beneficiary shall be issued by the PHF
Operator to the beneficiary for presentation to the Cashier
upon payment.

3.2 In case payment shall be in cash and processing was done

in a warehouse outside th Provincial Office's compound,
payment shall be given to the Special Disbursing Officer
(SDO) of the warehouse if said SDO is authorized by the
Provincial Office to accept cash payments for Custom-Hire
Service. (Refer to the provisions of Memorandum Number
159 dated July 14, 1983 regarding the designation of SDOs
as Special Collecting Officer or SDO's). In the absence of
such SDO.

3.2.1 The PHF Operator shall be authorized to accept cash

payments for Custom-Hire Service. The authority shall
come in the form of an Office Order issued by the
Provincial Manager for this purpose.

3.2.2 A Temporary Receipt (TR) shall be issued by the PHF

Operator for cash payments received.

3.2.3 The cash collections shall be remitted by the PHF

Operator to NFA Provincial Cashier at the end of the
schedule day of operation or on the first hour of the
following day. The corresponding Official Receipt (OR)
to be issued by the Cashier shall be sent/mailed to the
beneficiary.

3.3 In case of PIK, the stocks shall be accepted and

documented in the warehouse where processing was
done. The remarks portion of the WSR and PR shall
be marked, "PIK for Custom-Hire
Drying/Threshing/Corn Shelling Services".

B.2 Issuance of the PHF to Lessee/Purchaser

1. The Authority to Issue PHF (AI-PHF, Exhibit 5) duly approved by the Provincial
Manager/OIC shall serve as the basis of the Warehouse Supervisor in the
issuance of PHF to the lessee/purchaser or to another Warehouse Supervisor
Supervisor. The date to be indicated in the AI-PHF shall be the date of issuance
of the PHF. For Lease/Rental Scheme, the date of return of the PHF shall be
 indicated in the Remarks portion. For amortization and Direct Puchase Scheme,
the reference wire number (i.e. wire from Regional Director re : approval of the
disposition shall be indicated in the Remarks portion. Copy distribution of the AI-
PHF shall be as follows :

Copy 1 - Warehouse Supervisor

2- EBDPS
3- Finance
4- Auditing

2. In the case of Custom-Hire, the approved application form shall serve as the
permit in the processing of stocks. The approved application form shall be
presented to the Warehouse Supervisor and PHF Operator on the scheduled
date of service.

3. For the Lease/Rental, Amortization, and Direct Purchase Scheme, the PHF shall
either be withdrawn by the beneficiary from the warehouse where PHF is stored
or delivered to the beneficiary subject to availability of NFA vehicle and a
delivery fee to be determined by the Provincial Office's Marketing Operations
Section.

4. The PHF Issue Slip (PHF-IS, Exhibit 6) shall cover all actual issuances of PHF
by Warehouse Supervisor to lessee/purchaser under the Lease/Rental,
Amortization, and Direct Purchase Scheme. This shall be prepared based on the
AI-PHF. Copy distribution of the PHF-IS shall be as follows:

Copy 1 - Recipient
2- Warehouse Supervisor
3- EBDPS
4- Finance
5- Auditing

5. For Amortization and Direct Purchase Scheme, upon release of the PHF to the
beneficiary, a wire/radio message shall be sent by the issuing province to EXD
cc : DMO and TSD containing the following: specs of the ISIF issued: date of
issue, and under what scheme (i.e. Amortization or Direct Purchase) the PHF
was issued :

6. Issuance of PHF to lessee/purchaser and transfer of PHF to another

warehouse/buying station on a short term/temporary basis only shall be
monitored by the issuing Warehouse Supervisor using the PHF Monitoring
Logbook (Exhibit 7).

B.4 Utilization of PHF

1. Under Custom-Hire Service Scheme, the PHF shall be operated only by the
designated PHF Operator. To ensure this, spot inspection shall be conducted as
often as possible by a designated NFA personnel.

2. Under Lease/Rental and Amortization Schemes

a. The PHF shall be utilized by the lessee/purchaser only for the purpose it was
applied for and issued and under no circumstance shall any part or
accessory be used for another purpose without the written approval of
NFA.

b. The lessee/purchaser shall shoulder the cost for the recommended

proper maintenance and operation of the facility.

c. The purchaser shall assure the PHF against loss or damage by fire or any
natural calamity not less than the book value or appraised value,
whichever is higher, and shall endorse and deliver to NFA the
corresponding policy. All expenses for securing the said insurance shall
be borne by the purchaser.

c.1 For amortization scheme only, failure of the purchaser to insure the
facility and to deliver the policy properly endorsed to NFA shall give
right to NFA to secure the necessary insurance policy. The cost of
insurance shall be chargeable and added to the account of the
purchaser and shall bear the interest rate prevailing at the time the
insurance is secured. This provision shall also apply to the
insurance renewal as long as the purchaser has an outstanding
balance with NFA.

d. Training of technician/operators/mechanics in the operation and

maintenance of the PHF shall be conducted by the NFA as may be
necessary.

c. NFA shall have the right to inspect the PHF during the lease period up to
the time the unit is fully paid (in the case of Amortization Scheme).

f. In case of loss or destruction of the PHF throught the fault or negligence

of the lessee/purchaser, he shall either ;

1. Replace the lost or destroyed facility/part/accessory or

2. Pay NFA the appraised value of the lost or destroyed

facility/part/accessory for lease/rental scheme.

3. Pay NFA the appraised value less the lease payments made for
amortization scheme.
 B.5 Return of PHF by Borrower/Lessee

1. Under Lease/Rental Scheme, the PHF leased, shall be returned by the lessee to the
NFA warehouse where same was withdrawn on the day following the last day of
lease period. Detailed provisions in the Contract of Lease re: failure of Lessee to
return the PHF on date due shall be followed.

2. The PHF Receipt Slip (PHF-RS, Exhibit 8) shall document the Warehouse
Supervisor's receipt of the PHF returned by the lessee copy of distribution of PHF-
RS shall follow that of PHF-IS.

B.6 Reporting and Monitoring System

B.6.1 Custom-Hire Service Scheme

1. A Fuel Monitoring Logbook (Exhibit 9) shal be maintained by the

Warehouse Supervisor/MPO/Accountable Officer accountable for the
PHF to record the quantity of fuel contained in the bank before and after
the operation/processing.

2. A Custom-Hire Service Daily Report (Exhibit 10) shall be prepared by the

PHF Operator in three (3) copies. Said report shall be signed by each
beneficiary, certifying to the correctness of the information indicated
therein. Copy distribution of the report shall be as follows :

Copy 1 - EBDPS Head

2 - Finance
3 - PHF Operator

3. A Daily Fuel Utilization Report (Exhibit 11) shall likewise be prepared by

the PHF Operator in three (3) copies. The total quantity used plus quantity
left in bank must tally with the quantity available for use. Any discrepancy
shall be accounted for by the PHF Operator. (Refer to SOP No. GM-
PR03 effective April 1, 1985 on NFA Free-PHF Service Program for the
detailed procedures in determining the quantity of fuel used in the
processing of stocks). Copy distribution for the report shall be as follows :

Copy 1 - Finance
2 - EBDPS Head
3 - PHF Operator

B.6.2 Lease/Rental Scheme

1. A PHF Lease/Rental Monitoring Logbook (Exhibit 12) shall be maintained

by the EBDPS Head.
B.6.3 Amortization Scheme

1. The EBDPS Head shall maintain a PHF Amortization Monitoring Logbook

(Exhibit 13) to record the downpayment and the semi-annual amortization
made by the beneficiary.

2. A list of beneficiaries of the NFA Facility Assistance Program -

Amortization Scheme and a schedule of their respective semi-annual
amortization on the PHF, shall be furnished to the Warehouse Supervisor
of the designated warehouse (i.e. warehouse where stocks for PIK shall
be delivered by the beneficiary).

3. At the end of each harvest season, the Warehouse Supervisor of the

designated warehouse shall submit a report on the PHC made by the
beneficiaries of the Amortization Scheme, (Exhibit 14) to be certified
correct by the SDO, and submitted to EBDPS Head, cc: Finance Section.

B.6.4 General Reports (covering all schemes)

1. The EBDPS Head shall prepare a Quarterly Report on Facility Assistance

Program (Exhibit 15) on a per scheme basis. The report shall be verified
correct by the Provincial Accountant, noted by the Provincial Manager,
and submitted to EXD, Central Office cc: Regional Office.