SOP Library

SOP NO: TS-ES07

Mission: Stabilization

Area: Technical Services (TS)

Activity:

Title: SOP on Cooperative Development Incentive Fund (CDIF)

Date Approved/Issued: 12/26/96

Date Effective: 01/01/97

Digest:

NFA ‘s thrust towards stabilizing the grains industry involves a number of

programs that will enhance the farmers’ productivity and marketing of their
produce.

Farmers’ Organizations (FOs) are the beneficiaries of these programs. These

aggrupations are government assisted until they can fully stand on their own.

To promote membership in FOs, the NFA embarked on giving incentives to

farmers who sell their produce to NFA, one of which is the Cooperative
Development Incentive Fund Program. It is a monetary incentive given to FOs
who sell their produce to NFA, and is meant as a revolving fund for the
acquisition or rental of Post Harvest Facility (PHF) / production facilities ,
purchase of production inputs, investment / equity in Area Marketing
Cooperatives and as subsidy for training expenses of the FOs .
 1. Provide the policies and procedures relative to the implementation of the
CDIF program.

2. Serve as a guide to the personnel involved in the implementation of the

program.

3. Make field offices more active in encountering FO s to utilize their CDIF

funds.

This SOP covers the mechanics on the granting and withdrawal of the Cooperative
Development Incentive Fund.

1. SOP No. GM-PR15 issued June 6, 1995, entitled Cooperative Incentive Fee.

2. Memorandum N0. AO-94 - 05 -016 re: Grains Procurement Package for

Drying Facility Build-up.

3. NFA Council Resolution dated January 10, 1996 and July 01, 1996.

4. NFA Council Resolution dated December 2, 1996.

A. STATEMENT OF POLICIES

1. All Cooperative Incentives Fees (CIFs) both regular and upgraded shall be
integrated immediately and shall henceforth be termed as Cooperative
Development Incentive Fund (CDIF).

2. The CDIF shall accrue to the farmer organization and shall be taken from
the General Operating Expense (GOE).

3. Only FOs who have legal juridical personalities, and are registered with
appropriate government registering agencies (e.g. Cooperative
Development Authority (CDA), Securities and Exchange Commission (SEC)
or DOLE -Bureau of Rural Workers (BRW), Livelihood Corporation
(LIVERCOR) shall be granted CDIFs.
 4. CDIF shall be applied to FO deliveries which are in accordance with the
approved NFA standard grains specification for palay and corn . Only
palay / corn deliveries with not more than 18% moisture content level shall
be accepted under the program.

5. The CDIF rate shall be approved by the NFA Council upon the
recommendation of the Administrator.

6. Only FOs who are non FLGC III/MLGC beneficiaries can withdraw their CDIFs .

7. Monitoring and supervision of CDIF Program implementation shall be

under Extension Department (EXD). EXD shall monitor the utilization and
CDIF fund balances of the field offices.

8. Implementation of the CDIF program in the field offices shall fall under the
functions of the Extension and Business Development and Promotions
Section (EBDPS) or the Marketing EBDPS in the province.

9. The utilization coverage of the CDIF for FOs shall be for the acquisition
/installation/repair and maintenance/registration of PHF and as subsidy for
training expenses of the FO s . Other ancilliary services such as installation
and transportation cost of the facility so acquired shall be included in the
utilization of the CDIF.

a. Specific programs of utilization of the accumulated CDIF are as

follows:

Program A - FOs may utilize the accumulated CDIF for the acquisition /
installation / repair and maintenance / registration of their preferred
PHF/s.

Program B - The accumulated CDIF may be used as payment of FO for

the rental or amortization of any facility availed of under any NFA PHF
Assistance program.

Program C - If the FO is eligible to avail of any PHF loan from any

lending institution (Land Bank of the Philippines, Development Bank of
the Philippines, Philippine National Bank, etc.), the CDIF shall be
used as the FO's equity for PHF acquisition or for the amortization of
their loans from lending institution /s.

Program D - The accumulated CDIF may be used by FO ‘s as deposit

for empty sacks (MTS) to be borrowed from NFA.
 Program E - The Accumulated CDIF may likewise be used by FO for
their training expenses to be conducted in coordination with the
concerned field office.

PHFs covered under Programs A. B, and C above shall be as follows:

Driers
Threshers
Shellers
Moisture Meters
Weighing Scales
Rice Mills
Corn Mills
Warehouses
Tarpaulins
Empty Sacks
Equipment for the control of storage pests
Other PHF that may be deemed necessary

Likewise , the CDIF may be utilized by the FO s for the following :

1. Payments for the acquisition of production facilities like portable tractors

and farm implements including the rehabilitation and replacement of
production facilities and parts;
2. Production inputs like fertilizers and chemicals; and

3. Investments or equity infusion in Area Marketing and Bank Cooperatives.

B. GRANTING OF CDIF TO FO’S

1. The CDIF shall be earned everytime FO s sell their produce to NFA under
its regular procurement program. It shall be computed per kilogram net
weight (PO.50 / kg ENW
of palay/corn ). Total CDIF shall be reflected in the PR.

2. The CDIF shall be treated as a trust liability in the NFA books.

3. Upon granting of the CDIF , the NFA an FO shall enter into a Memorandum
of Agreement (MOA) regarding the utilization of the CDIF

4. An Advice re : Accumulated CDIF granted shall be sent to FO s monthly .

The EBDPS/MOS of the concerned NFA P.O shall prepare the advice in
consultation with the Accounting Section and shall disseminate the said
statement to the FOs cc: R.O.

C. REMITTANCE OF CDIF TO PROVINCIAL OFFICES

 1. To facilitate the granting / withdrawal of the CDIF , 20% of the total balance
of the amount granted to FO s for both the regular and upgraded CIF
shall be remitted by DTBFM to the NFA field offices concerned based on the
recommendation of EXD.

2. Initially, all Provincial Offices shall be required to submit to EXD not later
than the 15th of January 1997 ; a Statement of CDIF Granted. This shall
serve as basis of EXD in the remittance of the 20% of the CDIF granted.

3. Subsequent request for additional CDIF remittance shall also be the

responsibility of EXD.

D. WITHDRAWAL FROM THE CDIF

1. Initial withdrawal from the CDIF shall require submission of an assembly

resolution supported by an application for CDIF withdrawal. Subsequent
request for withdrawal shall require the submission of a board resolution
signed by all board members , application for withdrawal and a Statement
of Expenses Supported by certificate s / receipts or any proof certifying
that the amount previously withdrawn was properly utilized in accordance
with the purpose for withdrawal.

a) The Provincial Investigator shall verify the authenticity of the FO ‘s

Board/ Assembly Resolution before the withdrawal from CDIF is
effected.

2. Withdrawal shall be made through the usual disbursement voucher system

to be prepared by the EBDPS/MOS .

a) For the Acquisition / installation of facilities and purchased of inputs ,

the dealer from whom the facility / inputs shall be purchased of inputs ,
the check shall be made payable to the dealer from whom the facility /
inputs shall be purchased .

b) For equity purposes, the check shall be made payable to the Bank
or Area Marketing Cooperative .

c) For the repair, maintenance, transportation cost and registration of

facilities, the check shall be made payable to the Farmer
Organization.

3. Different FOs may agree to consolidate their CDIF amounts to

proportionately share the acquisition cost of the common PHF, to come up
with sufficient funds to cover the price of a desired PHF.
 4. All request for withdrawals from CDIF shall be approved by the Regional
Manager. A letter Request shall be prepared by the concerned provincial
office for this purpose. The Regional Manager shall inform the EXD thru
wire of all instances of approved requests and PHFs purchased.

a) The FO shall present canvass made on the PHF purchased, and the
EBDPS/MOS shall check the authenticity of canvass.

b) The Regional Manager shall approve the written application for CDIF
withdrawal to allow the purchased / installation / repair and training
expenses

c) The EBDPS/ MOS shall confirm the purchased / turn -over of PHF . The
Provincial Manager shall validate and see to it that PHF . purchased
was the one stated in the canvass.

5. If the amount of CDIF being requested is P50,000 and above , instead of a

board resolution. the Provincial Manager should require an assembly
resolution.

E. TREATMENT FOR INACTIVE CDIF

1. The CDIF shall be considered inactive when they show no transaction for a
period of two (2) years . After this period , said CDIF are considered
forfeited in favor of NFA. This shall be stated in the MOA between FOs and
NFA.

2. The EBDPS/MOS shall check with the Accounting Section at least

monthly in order to determine if any CDIF is nearing forfeiture..

3. Three (3) months prior to forfeiture, a Notice For Inactive CDIF shall be
sent to all FOs with inactive CDIF

4. A Notice of CDIF Forfeiture shall be sent to all FO s if they did not

respond or act on the notice stated in D.3 and two It shall be prepared in
four (4) copies for distribution as follows:

Copy 1 - FO
Copy 2 - EXD
Copy 3 - RO
Copy 4 - PO - File

F. MONITORING SYSTEM
 1. The CDIF Performance Report shall be prepared monthly by the
EBDPS/MOS. It shall serve as reference for monitoring CDIF balances
and use. It shall also reflect the amount of mature CDIF granted and
forfeited. It shall be submitted to EXD cc: RO and PO Accounting Section
not later than the 15th of the succeeding month. the Accounting Section
shall reconcile their record based on the report and prepare a journal
entry to take up the amount of forfeited CDF.

2. The EBDPS/MOS shall monitor the CDIF balances by maintaining an index

card per FO. Their CDIF balances should tally with that of the Accounting
Section.

3. A CDIF Utilization Report shall be submitted by Regional Office

monthly to AO cc : OAA/DMO/DTBFM/EXD. This contains the status of
the CDIF program, Its balances , amount and number of FO s granted /
withdrawn and the type of facilities acquired.

4. EXD in coordination with DMO , DAS and MSD shall conduct a semestral
evaluation on the utilization and problems encountered under the CDIF and
prepare Evaluation Report on CDIF Funded PHF

G. ACCOUNTING TREATMENT

1. Financial transactions relative to this special procurement package shall be

closely monitored by the Accounting Unit . Likewise, financial records and
reports shall be maintained to account for the programs .

2. Accounting entries procurement shall be as follows:

a) To record procurement of stock /replacement of Disbursing Officer

(DO) / Special Disbursing Officer (SDO)

DR : Inventory IFS- Appropriate

Inventory Account XXX

DR/CR: Vouchers Payable XXX XXX

DR/CR: Cash with DO/SDO-CPF XXX XXX

CR : Cash - Other Banks

Current -CPF XXX

b) To record /set up the Cooperative Development Incentives Fund

(CDIF)
 DR : Invty. IFS- Appropriate Account XXX
CR : Invty . Cost - CDIF XXX

c) To record payment of CDIF to FO s based on the disbursement

voucher processed.

DR : Trust Liabilities -Misc. Farmer’s CDIF XXX

CR : Vouchers Payable XXX
DR : Vouchers Payable XXX
CR : Cash - Other Banks - Current Account - GOE XXX

d) To record payment of CDIF to FOs based on the disbursement voucher

processed

DR : Trust Liabilities - Misc.Farmer's CDIF XXX

CR : Vouchers Payable XXX
DR : Vouchers Payable XXX
CR : Cash - Other Banks-Current Account-GOE XXX

e) To record forfeited CDIF

DR : Trust Liabilities -Misc. Farmer’s CDIF XXX

CR : Misc. Income XXX