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Group 3
Agri Scholars


What is a Agriculture?

from Late Latin word agricultura "cultivation of the land" agri, genitive of ager "a field"/ acre "tilled field, open land,"+ cultura "cultivation" Agriculture is the science, art and occupation of cultivating the soil, producing crops and raising livestock.

What is a Agriculture? (contd)

Comprehensive Agrarian Reform Law of 1988 of the Philippines: Agriculture, Agricultural Enterprise or Agricultural

Activity means the cultivation of the soil, planting of crops, growing of fruit trees, including the harvesting of such farm products, and other farm activities and practices performed by a farmer in conjunction with such farming operations done by persons whether natural or juridical.

Labor Code of the Philippines: Agriculture includes farming in

all branches and, among other things, includes the cultivation and tillage of soil, dairying, the production, cultivation, growing and harvesting of any agricultural and horticultural commodities, the raising of livestock or poultry, and any practices performed by a farmer on a farm as an incident to or in conjunction with such farming operations, but does not include the manufacturing or processing of sugar, coconuts, abaca, tobacco, pineapple or other farm products.

What is a Agriculture? (contd)

Philippine Accounting Standard (PAS) 41: It

is the management of the biological transformation of biological assets (living plants and animals) into agricultural produce (harvested product of the entity's biological assets).


Neolithic Bronze Age European Colonial Age- Start of Improvement Industrialization- Science and Mechanization 20th Century- Green Revolution; Development Excellence of Agri in the Philippines

Pigafetta & Miguel Lopez de Legazpi

Branches of Agriculture


Agriculture in the Philippines

The Philippines is an agricultural country with a land area of 30 million hectares, 47% of which is agricultural land. In the Philippines, prime agricultural lands are located around the main urban and high population density areas. Philippine exports in tropical fruits like banana, pineapple, mango and papaya are international benchmarks in global trade; The sector is also highly competitive in the exports of fishery products, banana chips, coconut oil, sugar and abaca as well as in hogs and poultry products.

Agriculture in the Philippines (contd)

The Philippines exports its agricultural products around the world, including the United States, Japan, Europe, and ASEAN countries (members of the Association of Southeast Asian Nations).

Agriculture in the Philippines (contd)

Major export products are coconut oil and other coconut products, fruits and vegetables, bananas, and prawns (a type of shrimp). Other exports include the Cavendish banana, Cayenne pineapple

The Department of Agriculture

History June 23, 1898 - President Emilio Aguinaldo

established the Department of Agriculture and Manufacturing 1901 - establishment of the insular Bureau of Agriculture - Adriano Hernandez, first Filipino to head the Bureau under the American occupation. November 18, 1916 enactment of "An Act to Reorganize the Executive Department of the Government of the Philippine Islands

The Department of Agriculture (contd)


act provided for the establishment of the Department of Agriculture and Natural Resources (DANR)

1932 - DANR became the Department of Agriculture and Commerce 1942 - the Department was re-organized again, becoming the Department of Finance, Agriculture and Commerce 1947 - it was renamed again as the Department of Agriculture and Natural Resources by virtue of Executive Order No. 94 by Pres. Manuel Roxas

The Department of Agriculture (contd)

May 1974 - Presidential Decree 461, signed into law by Pres. Ferdinand Marcos, the DANR was split into two departments: the Department of Agriculture

and the Department of Natural Resources (which later became the current DENR).

The Department of Agriculture (contd)

Secretary Proceso "Procy" Alcala

Performance of the Philippine Agriculture (jan-sept 2013)

Agriculture produced 1.10 percent more output in the first nine (9) months of 2013.

Performance of the Philippine Agriculture (jan-sept 2013) The crops subsector which accounted for 50.57 percent of total agricultural output contracted by 0.85 percent.

Performance of the Philippine Agriculture (jan-sept 2013)

The fisheries subsector recovered from last years slump and came up with a 3.38 percent production increase during the period.

Performance of the Philippine Agriculture (jan-sept 2013)

The livestock subsector which shared 16.01 percent in the total agricultural output grew by 1.89 percent in the first nine (9) months of 2013. The poultry subsector which contributed 15.00 percent to total agricultural production expanded by 4.31 percent.

Performance of the Philippine Agriculture (jan-sept 2013)

On the average, farmgate prices in the first nine (9) months of 2013 inched up by 0.54 percent.

Importance of Agriculture in the Philippine Economy

Agriculture provides food Agriculture provides raw materials needed to create another product Agricultural sector contributes to the economic progress through exports Agricultural sector provides employment to a large number of Filipinos A progressive agricultural sector can support other sectors of the economy


Rampant conversion of agricultural land Environmental damage Inadequate Resources

Facts & Trivias

Facts & Trivias

Agriculture is a major contributor to the Philippines economy, accounting for 21.5% of its gross domestic product (GDP). It is providing one third of all employment, or 11 million jobs. The Pinoy Farmers Mobile Internet Bus Agriculture land provides food and habitat for 75% of the nation's wildlife. Agriculture is Part of Your Life

Current Events

Current Events

Agri Dept. sees palay output growing slower at 4% post-Yolanda Grains industry sectors unite toward rice selfsufficiency Militant group slams fake pork probe NOT JUST PORK | 3 Napoles NGOs involved in P728M fertilizer scam - Benhur Luy Organic farming: The future of Philippine agriculture World Bank may increase grants to poor in typhoonhit Philippines DA grants Leyte P10M for agriculture projects

Current Events

Typhoons Double Dead Meat Rice Importation Fish Kill Avian and Swine Influenza



Philippine Agriculture, Agrarian Reform and Natural Resources (AARNR) Policies


Government of the Philippines introduced policies and measures on sustainable manage of natural resources and promotion of rural development.

Memorandum Circular of 1999 Comprehensive Agrarian Reform Program (CARP) of 1988: National Integrated and Protected Areas System (NIPAS) Act of 1992 Philippine Fisheries Code of 1998 DENR Department Administrative Order (DAO) 2010-07 (2010)


Republic Act (RA) 1199 Agricultural Tenancy Act of the Philippines RA 3844 Agricultural Land Reform Code RA 8434 Agriculture and Fisheries Modernization Act RA 8435 The Agriculture and Fisheries Modernization Act of 1997 RA 8550 Philippines Fisheries Code RA 10068 Organic Agriculture Act of 2010 Executive Order 481 Promotion and Development of Organic Agriculture in the Philippines


PAS 41

The objective of this Standard is to prescribe the accounting treatment and disclosures related to agricultural


Agricultural activity

activity covers a diverse range of activities; for example, raising livestock, and forestry. Common features:

to change. Management of change. Measurement of change.

PAS 41

Definition Agriculture, is a small standard with a wide scope and a significant impact on those entities within its scope. It applies to most (but not all) entities that grow or rear biological assets for profit. The principle of the standard is that increases in value are recognized as the asset grows and not solely on harvest or sale.

PAS 41

Agricultural activity the management by an

entity of the biological transformation and harvest of biological assets for sale or for conversion into agricultural produce or into additional biological assets. Agricultural produce the harvested product of the entitys biological assets. Biological asset a living animal or plant.

PAS 41

Biological transformation comprises the processes of

growth, degeneration, production, and procreation that cause qualitative or quantitative changes in a biological asset. Group of biological assets is an aggregation of similar living animals or plants. Harvest is the detachment of produce from a biological asset or the cessation of a biological assets life processes. Costs to sell the incremental costs directly attributable to the disposal of an asset, excluding finance costs and income taxes.

PAS 41

b. c.

Biological assets; Agricultural produce at the point of harvest Government grants related to biological assets

Biological assets

Agricultural produce

Result of processing after harvest

Fruit Trees Plants Dairy cattle

Picked fruit Cotton Milk

Yarn, carpet
Processed fruit Thread, clothing Cheese

PAS 41 does not apply to :


related to agricultural activity Intangible assets related to agricultural activity Government grants of biological assets measured at cost less accumulated depreciation and impairment loss.

PAS 41: Measurement & Recognition

An entity shall recognize a biological asset or agricultural produce when, and only when:



the entity controls the asset as a result of past events; it is probable that future economic benefits associated with the asset will flow to the entity; and the fair value or cost of the asset can be measured reliably.

PAS 41: Measurement & Recognition

A biological asset shall be measured on initial recognition and at the end of each reporting period at its fair value less costs to sell, except when the fair value cannot be measured reliably. Agricultural produce harvested from an entitys biological assets shall be measured at its fair value less costs to sell at the point of harvest.

Determining fair value

If an active market exists, fair value is the quoted price in such market. If an active market does not exist, an entity uses one or more of the following, when available, in determining fair value: a. The most recent transaction price b. Market prices for similar assets c. Sector benchmarks d. Present value of expected net cash flows

When Fair Value could not be measured reliably




The asset is measured at cost less accumulated depreciation and impairment losses All other biological assets of the entity still must be measured at fair value. If FV becomes reliably measurable, the entity must switch to fair value less point-of-sale costs.

Initial Recognition

When an animal is born:

Biological Asset Gain from change in fair value

xx xx

When purchased:

Biological Asset Cash or A/P

xx xx

Gains & Losses

A gain or loss arising on initial recognition of a biological asset at fair value less costs to sell and from a change in fair value less costs to sell of a biological asset shall be included in profit or loss for the period in which it arises. A gain or loss arising on initial recognition of agricultural produce at fair value less costs to sell shall be included in profit or loss for the period in which it arises. A gain or loss may arise on initial recognition of agricultural produce as a result of harvesting.

Gains & Losses

When an animal is born, gain arises from biological transformation

Biological Assets (FV POS cost) Gain from change in FV less cost to sell xx

Gains & Losses

Losses can arise on the initial recognition of the purchase, as the fair value less estimated point-ofsale costs are likely to be less than the total purchase price plus transaction and transportation costs.

Biological Assets xx Loss xx Cash (purchase price)



Carrying amount of biological assets Description of an enterprise's biological assets, by broad group Change in fair value during the period Fair value of agricultural produce harvested during the period Description of the nature of an enterprise's activities with each group of biological assets and non-financial measures or estimates of physical quantities of output during the period and assets on hand at the end of the period Information about biological assets whose title is restricted or that are pledged as security


Commitments for development or acquisition of biological assets

Financial risk management strategies Methods and assumptions for determining fair value Reconciliation of changes in the carrying amount of biological assets, showing separately changes in value, purchases, sales, harvesting, business combinations, and foreign exchange differences


If fair value cannot be measured reliably, additional required disclosures include:

Description of the assets An explanation of the circumstances If possible, a range within which fair value is highly likely to fall Gain or loss recognized on disposal Depreciation method Useful lives or depreciation rates Gross carrying amount and the accumulated depreciation, beginning and ending

Government Grants
Related to Agriculture

Government Grants - Agriculture

An unconditional government grant related to a biological asset measured at its fair value less costs to sell shall be recognized in profit or loss when, and only when, the government grant becomes receivable. If a government grant is conditional, an entity shall recognize the government grant in profit or loss when, and only when, the conditions attaching to the government grant are met.

Government Grants - Agriculture

An entity shall disclose the following related to agricultural activity covered by PAS 41:



the nature and extent of government grants recognized in the financial statements; unfulfilled conditions and other contingencies attaching to government grants; and significant decreases expected in the level of government grants.

NestFarms, Inc.

Nestfarms, Inc.

A subsidiary of Anflo Management & Investment Corporation (ANFLOCOR) The company was incorporated in the Philippines on May 25, 1977 It is engaged in the development, propagation, culture and selling of livestock.

Peculiar Accounts

Biological Assets livestock


as current assets in the Statement of Financial Position as these are expected to be sold as live animals or to be transferred to breeding stocks within one year. Carried at fair value less estimated cost to sell at reporting date. The fair value is determined based on the current market price .

Peculiar Accounts (contd)

Biological assets breeding stocks


as part of noncurrent assets as these are expected to have an estimated productive life between two to three years. Carried at accumulated costs and expenses less accumulated amortization and any impairment in value and are amortized over the assets estimated productive life


A herd of ten 2-year old animals was held at Jan. 1, 2013 for 3,000. One 2.5 Y/O animal was purchased on July 1, 2013 for 3,500, and one animal was born on July 1, 2013. No animals were sold or disposed of during the period. Per unit fair values less estimated POS costs were as follows:

January 1, 2013: 2 year old animal July 1, 2013: New born animal 2.5 year old animal

3,000 2,800 3,500

Dec. 31, 2013: New born animal 0.5 year old animal 2 year old animal 2.5 year old animal 3 year old animal

2,850 2,900 3,100 3,700 4,000

To record the purchase on January 1

Biological Assets Cash 30, 000
30, 000

To record the purchase of one animal aged 2.5 years on July 1

Biological Assets Cash 3, 500

3, 500

To record the birth of one animal on July 1.

Biological Assets Gain from change in fair value 2, 800
2, 800

To record the change in fair value

Biological Assets Gain from change in fair value 10, 600 10, 600

Fair value of 10 animals on January 1 (10 x 3,000) New born animal on July 1 Acquisition cost of one animal on July 1 Carrying amount December 31 Fair Value of 3 year old animals on December 31 (11 x 4,000) Fair Value of 0.5 - year old animal on December 31 Total Fair Value Carrying amount Increase in fair value

P 30, 000 2, 800 3, 500 P 36, 300 P 44, 000 2, 900 P 46, 900 36, 300 P 10, 600

Change In Fair Value due to price change

10 two year old animals (3, 100- 3,000 = 100 x 10) 1 2.5 year old animal (3,700-3,500 = 250 x 1) 1 new born on July 1 (2,850-2,500 = 350x 1) Total P 1, 000 200 350 P 1, 550

Change In Fair Value due to physical change

10 three year old animals (4,000- 3,100 = 900 x 10) (1) 3 year old animal acquired (4,000-3,700 = 300 x 1) (1) 0.5 year old animal (2,900-2,850 = 50 x 1) 1 new born (2,800 x 1)

P 9,000 300 50 2, 800

P 11, 850


PAS 20


Government grants is defined as an assistance by government in the form of transfers of resources to an entity in return for part or future compliance with certain conditions relating to the operating activities of the entity.

A forgivable loan from the government is treated as a government grant when there is reasonable assurance that the entity will meet the terms for forgiveness of the loan. Government grants do not include government assistance whose value cannot be reasonably measured, such as technical or marketing advice. A government grant may take the form of a transfer of a non-monetary asset, such as land or other resources, for the use of the entity. In these circumstances it is usual to assess the fair value of the non-monetary asset and to account for both grant and asset at that fair value.


Government grants, including nonmonetary grants at fair value shall be recognized when there is reasonable assurance that:

entity will comply with any conditions attached to the grant and the grant will be received.

Classification of government grants:

1. Grants related to assets May be reported as a. as deferred income, or b. by deducting the grant from the asset's carrying amount. 2. Grants related to income May be reported as a. other income, or b. deducted from the related expense.

The grant is recognized as income over the period necessary to match them with the related costs, for which they are intended to compensate, on a systematic basis.

A grant receivable as compensation for costs already incurred or for immediate financial support, should be recognized as income in the period in which it is receivable. If a grant becomes repayable, it should be treated as a change in estimate.


related to income, the repayment should be

first against any related unamortised deferred


credit any excess should be dealt with as an expense.


related to an asset, the repayment should be treated as


the carrying amount of the asset or reducing the deferred income balance.

The following must be disclosed:



the accounting policy adopted for government grants, including the methods of presentation adopted in the financial statements; the nature and extent of government grants recognised in the financial statements and an indication of other forms of government assistance from which the entity has directly benefited; and unfulfilled conditions and other contingencies attaching to government assistance that has been recognised.

It is not required to disclose the name of the government agency that gave the grant along with the date of the grant by that government agency and the fate when cash was received in case of monetary grant.


An organization receives a grant of P30 million to defray environment costs over a period of five years. Environment costs will be incurred by the organization as follows:

Year 1 2 3 Total

Cost P2M P5M P8M P15M

Grants in recognition of specific expenses are recognized as income in the same period as the relevant expense.

We apply the grant as follows:

Year Cost 1 P30M x (2/15) = 4M 2 P30M x (5/15) = 10M 3 P30M x (8/15) = 16M Total P30M


Cash 30,000,000 Deferred income from government grant 30,000,000 Deferred income from government grant 4,000,000 Income from government grant 4,000,000

Environmental expenses Cash

2,000,000 2,000,000

Deferred income from government grant Income from government grant Environmental expenses Cash 10,000,000 10,000,000 5,000,000 5,000,000

Deferred income from government grant Income from government grant Environmental expenses Cash 16,000,000 16,000,000 8,000,000 8,000,000