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Republic of the Philippines

DEPARTMENT of AGRARIAN REFORM

MEMORANDUM CIRCULAR

NO. 09

Series 2013

1. PREFATORY STATEMENT:

Access to affordable and timely credit is a constraint among small farmers in the Philippines. In the absence of formal credit markets, the farmers turn to informal money lenders for their capitalization requirements. The 2008 report of the Agricultural Credit Policy Council (ACPC) show that only 57 percent of farmers have availed of loans from formal lenders such as cooperatives, NGOs, including savings and loan associations (SLAs) and rural banks. Specifically, under the 2012 ALDA report of DAR, of the 1.4 million ARB households in ARCs, 64% or about 900,000 ARB households have access to different types of loans (e.g.: production, livelihood and multi-purpose) from various formal and informal sources.

In addition, some 500,000 ARBs in ARCs are still in need of various types of credit. The number becomes even more magnified when the 1.1 million ARBs outside of the ARCs in need of credit will be included. This huge number of beneficiaries is the main reason why DAR needs to put into operation financing programs that would cater to the requirements of the ARBs, to be undertaken in partnership with government financing institutions (GFIs), microfinance institutions (MFIs) and other lending organizations. This is also in compliance to Section 37 of Republic Act 9700 which directs the DAR, Department of Finance (DOF), and Bangko Sentral ng Pilipinas (BSP) to liberalize ARBs' access to credit for agricultural production.

In view of the above, DAR, DA and LBP have crafted and are jointly implementing an enhanced credit program called the Agrarian Production Credit Program (APCP). Under this program, DAR, DA and LBP pool their resources and expertise to help ARBs access affordable credit, development assistance, and marketing support.

Adopting a set of more realistic policies and procedures in extending credit, APCP is the vehicle through which financial and technical services shall be delivered to ARBs in 22 high LAD provinces, consisting mainly of credit assistance, capacity building, and delivery of technical support to ARBOs.

The package of CAPDEV interventions is expected to develop and/or enhance the knowledge, skills and competencies of individual ARBs and key ARBO leaders in meeting

their organizational development, compliance with institutional and legal regulatory requirements, and in effectively managing funded projects and other collective productive assets.

Specifically, at the end of three (3) years, the APCP shall have achieved the following:

• Develop/enhanced the knowledge and skills of the key officers, management staff and second line leaders of 422 ARBOs through the conduct of various capacity development (CAPDEV) interventions;

• Enhanced    policies, systems, structures, procedures and methods of management and control of 422 ARBOs to effectively handle operations particularly the APCP­ financed projects and enterprises;

• Established   institutional and legal framework that will help 422 ARBOs hurdle the legal and regulatory requirements that will enable them maintain their legal and/or juridical identity; and

• Documented and disseminated best, innovative, good and promising practices (BIGPs) adapted by DAR and LBP in the capacity development of ARBOs.

These Guidelines contain the mechanics for the implementation of the APCP CAPDEV Component, including the procedures and requirements for DARPO's availment of the support funds for the conduct of CAPDEV interventions.

2. IMPLEMENTING GUIDELINES:

1. CAPDEV FOR ARBOs COVERED UNDER APCP

1. Targeted ARBO Beneficiaries

The targeted ARBOs under the CAPDEV Component of the APCP are those that are covered under the APCP credit component which are either in the pipeline or those with approved credit line with the concerned LBP Lending Center.

              There are two types of ARBOs to be covered under APCP:

1. Start-up ARBOs -that are at least six (6) months in operation as evidenced by three (3) minutes of meetings conducted for the past six (6) months from the date of loan application;

2. Existing ARBOs - those operating for at least 1 year

A.2. Guide in the Utilization of the CAPDEV Fund

The menu of CAPDEV and training events that will be funded under the APCP CAPDEV component shall be based on the result of the mapping of CAPDEV needs/gaps, which is one of the outputs of the Provincial APCP Orientation Cum Planning Workshop. The ARBO representatives, through the assistance of the MAROs/DFs. shall assess the present status of their organizations and identify their CAPDEV needs based on the ARBO pre-qualification criteria   and   other requirements of the APCP using Annex 1: Form 1- ARBO Assessment Form.

Based on the current status of the ARBOs and corresponding CAPDEV needs, the following CAPDEV/training interventions shall be prioritized to ensure that the targeted ARBOs will meet the criteria set in availing of the APCP loans:

1.    CAPDEV Interventions for Start Ups and Existing ARBOs (Pre-Credit Availment)

1. One-day live out Orientation on APCP which can be done on a per ARBO basis or in batches comprising of several ARBOs, should there be more than 5 ARBOs expressing interest for program availment at the same period

2. One-day live out Workshop re: Crafting or Review/Enhancement of ARBO's Credit/Lending Policy

3. One-day live out Technical Assistance Workshop in the Amendment of Articles of Incorporation and By-laws, specifically for those ARBOs registered with SEC and DOLE

4. One-day live out Workshop on Farm Planning and Budgeting

5. Half day Orientation on the 3Rs (Right, Roles and Responsibilities) of ARBs and as member of ARBs

6. One-day live out coaching activity on parliamentary procedures and minutes writing

7. One-day live out coaching activity on bookkeeping, accounting, auditing and other regulatory and reportorial requirements

2.    CAPDEV Interventions for Start-Ups and Existing ARBOs (During and Post Credit Availment)

1. The first four (4) CDA Mandatory Trainings for cooperatives to be conducted within the second quarter of 2013:

• Two-day live-out Basic Cooperative Course (BC);
• Three-and-a-half day live-in Cooperative Management and Governance (CMG);
• Three-and-a-half day live-in Financial Management (FM); and
• Two-day live-out leadership and Values Re-orientation (LVR)

2. Second round of CDA Mandatory Trainings, which will be conducted in the second semester of 2013, covering the following courses:

• Two-day live-out Rules Formulation
• Two-day live-out Parliamentary Procedures
• Two-and-a half-day live-in Strategic Planning
• Three-day live-in Basic Accounting for Non-accountants
• One -and-a half-day live-out Records Management
• Three-and-a     half-day live-in     Entrepreneurial and     Business Management
• Two-day live-out Cooperative Standards
• Three-day live-in Audit Management
• Three-day live-in Internal Control
• Two-day live-out Conflict Management

3.  live-in enterprise development-related interventions such as technology, promotion and marketing (Maximum of 3 days)

4.  live-In learning Expedition/Knowledge Sharing Sessions (Maximum of 3 days)

The implementation of the CAPDEV activities shall not solely be confined to formal training but shall also include hand holding activities, coaching and mentoring assistance, learning expeditions, knowledge sharing and others based on the actual needs and field realities of the ARBOs.

CAPDEV delivery will be undertaken either through direct intervention or conduct by the DARPO implementors or in partnership with service providers (e.g. CDA mandatory trainings) or outsourcing (highly specialized training programs such as enterprise development-related interventions, technology, promotion and marketing, etc.)

2. APCP CAPDEV FUND PROGRAMING

For CY 2012, the approved budget for the APCP CAPDEV component amounts to PhP23, 546,200.00. In the same year, a total amount of PhP4.436 Million was transferred/downloaded to six (6) high LAD provinces for their CAPDEV interventions and conduct of the Provincial APCP Orientations, leaving an unspent amount of PhP19.11 Million to be disbursed in CY 2013. Said amount will be used for the following APCP CAPDEV activities:

1. The amount of PhP556,000.00 shall be allocated and managed by BARBD for program management composed of the following activities:

1. Project Committee meetings
2. Program Assessment
3. Training/CAPDEV Interventions for DAR Personnel
4. Site Visits/Conduct of field level Technical Assistance Sessions

2. The amount of PhP560,000.00 has been allocated for the conduct of the APCP

Provincial Orientation and Planning Workshop for the other 14 high LAD Provinces covered by the project, at an average of PhP40, 000.00 per activity. Please refer to the Annex 2 for the Technical Guidance Notes in the Conduct of the APCP Provincial Orientation and Planning Workshop.

   To avail of the support fund, the proponent DARPO shall submit to BARBD a proposal for the conduct of Program Orientation cum Planning Session to be approved by the DAR Regional Director.

3. A total amount of PhP616,000.00 is likewise allocated for the provincial program management and monitoring covering 22 high LAD provinces, to be used as follows:

• Conduct of bi-monthly Project Management meeting - PhP2,000.00 per meeting  (total of P12,000.00 per province)
• Conduct of two (2) Project Assessment and Re-Planning Sessions – PhP5,000.00 per session (total of P10,000.00 per province)
• Documentation of best. innovative, good and promising (BIGPs) practices in the implementation of the APCP credit and CAPDEV components - PhP3,000.00 per BIGP - 2 per province (total of P6,000.00 per province)
  4. This leaves a balance of PhP17,378,000.00 for CAPDEV implementation covering 306 targeted ARBOs which is expected to secure a total of PhP62S,018,781.00 loans benefiting 21,434 ARBs/ARB household members. (Please see Annex 3: for the Validated APCP Targets per Province as of 25 March 2013).

   The amount of PhP17,378,000.00 shall be re-allocated to 306 ARBOs that will cover critical CAPDEV activities as well as CDA mandatory training for cooperatives. The cost parameters to be used in availing the said amount are as follows:

• Board and lodging for live-in activity - maximum of 3.5-day training at P800.00 per person per day with a maximum of 35 participants
• Meals and snacks for live-out training - maximum of PhP500.00 per day per person (2 snacks and 1 meal)
• Supplies and materials - Maximum of PhPl00.00 per participant for live-in training and PhP50.00 for live-out training activities

• Honorarium for invited resource persons -Maximum of PhP2500.00 per day (if applicable)

• Other expenses to be incurred during the conduct of the CAPDEV activity (e.g., POL products) shall be charged to the concerned DARPO

• The transportation cost of the ARBO representatives shall form part of the ARBO equity.

See Annex 4 for the APCP CAPDEV Component Budget Computation and Allocation

3. REQUIREMENTS FOR DOWNLOADING OF CAPDEV FUND TO DARPO

The approved amount for downloading shall be directly transferred to the concerned DARPOs subject to the following terms and conditions:

1. The concerned DARPO shall submit the Provincial CAPDEV Work and Financial Plan for CY 2013 using the cost parameters mentioned above to BARBD using the template in Annex 5.

2. BARBD, through the KMBCDD, shall review the Provincial CAPDEV Work and Financial Plan for CY 2013 based on the allocated fund per province and the parameters as mentioned above.

3. The fund to be transferred to the DARPOs shall be solely and exclusively used for the aforementioned CAPDEV activities above.

4. Within 30 days after the conduct of CAPDEV activities, DARPO shall liquidate the CAPDEV fund received based on the existing accounting and auditing rules and regulations. This shall be evidenced by the submission of the "Activity Report" (Attached as Annex 6) and "Statement of Receipts and Disbursement" verified by the Commission on Audit (Attached as Annex 7).

5. DARPO shall integrate the training accomplishments in the quarterly ETPARB report to be submitted to the Planning Service every 10^th day of the first month of the ensuing quarter.

4. PROGRAM MANAGEMENT, MONITORING AND TRACKING

As part of project management, DARRO and DARPO shall spearhead the creation of the Regional/Provincial Working   Group (R/PWG), chaired by the DAR Regional Director/PARO, and members include the CARPOs of the RSSD/BDCD, Admin and Finance Divisions.

The function of the R/PWG Is to ensure the implementation of the required CAPDEV initiatives under the APCP for targeted ARBOs in collaboration with other partner institutions/service providers. They will be responsible for field monitoring and preparation and submission of the following reports:

1. Quarterly progress report which includes the physical accomplishments based on the following Indicators:
2. No. of training batches conducted by type of training
3. No. of ARBOs covered
4. No. of ARBO participants (sex-disaggregated)

The report should also highlight the observations, issues/concerns encountered and recommendations to guide project management in enhancing project implementation.

This report shall be submitted to BARBD every 10^th day of the first month of the ensuing quarter.

2. Regular ETPARB Report incorporating APCP CAPDEV accomplishments submitted to Planning Service every 10^th day of the first month of the ensuing quarter.

For your guidance and strict implementation.

VIRGILIO R. DE LOS REYES

Secretary

LIST OF ANNEXES

• Annex 1: Form 1- ARBO Assessment Form
• Annex 2: Technical Guidance Notes in the Conduct of the APCP Provincial Orientation and Planning Workshop
• Annex 3: Validated APCP Targets per Province as of March 25, 2013
• Annex 4: APCP CAPDEV Component Budget Computation and Allocation
• Annex 5: Template for the Provincial 2013 CAPDEV Work and Financial Plan
• Annex 6: Template for "Activity Report"
• Annex 7: Template for the "Statement of Receipts and Disbursement"

ANNEX 2

TECHNICAL GUIDANCE NOTES IN THE CONDUCT OF FIELD LEVEL APCP

ORIENTATION CUM PLANNING WORKSHOP

1. BACKGROUND AND RATIONALE:

• The Department of Agrarian Reform (DAR), Department of Agriculture (DA) and Land Bank of the Philippines (LBP) are jointly implementing the Agrarian Production Credit Program (APCP).  It is aimed at strengthening the ARBOs through the provision of institutional and capability building assistance to make them eligible for agricultural production loans from formal financing institutions and enable them to sustainably manage their enterprises.

• Among the priority areas for project implementation are 22 high LAD provinces where there is a high density of CARP beneficiaries.

• The package of CAPDEV interventions is expected to develop and/or enhance the knowledge, skills and competencies of individual ARBs and key ARBO leaders in meeting their organizational development, compliance with institutional and legal regulatory requirements, and in effectively managing funded projects and other collective productive assets.

 Specifically, at the end of three (3) years, the APCP shall have achieved the following:

• Develop/enhanced the knowledge and skills of the key officers, management staff and second line leaders of 422 ARBOs through the conduct of various capacity development (CAPDEV) interventions;

• Enhanced policies, systems, structures, procedures and methods of management and control of 422 ARBOs to effectively handle operations particularly the APCP-financed projects and enterprises;

• Established institutional and legal framework that will help 422 ARBOs hurdle the legal and regulatory requirements that will enable them maintain their legal and/or juridical identity; and

• Documented and disseminated best, innovative, good and promising practices (BIGPs) adapted by DAR and LBP in the capacity development of ARBOs.

• In compliance with the PBD directives to facilitate ARBs' access to said program, the DAR field implementers and ARBOs of the 22 high LAD provinces, need to be oriented on the concept and implementation mechanics of the APCP.

2. WORSKHOP OBJECTIVES

The one day, live-out orientation and planning workshop aims to: (1) promote a common understanding on the Agrarian Production Credit Program (APCP) among ARBOs, DAR field implementers and other stakeholders; and (2) assist the ARBOs in formulating an APCP Action Plan.

Specifically, at the end of the activity, the participants will be able to:

• Acquire common understanding on the concept and mechanics of availing credit and capacity development assistance from the APCP;
• Identify the credit and capacity development needs of the CBOs in support to the effective implementation of the APCP; and
• Develop the Provincial APCP action plan.

3. MECHANICS OF THE ACTIVITY

The one-day activity shall be guided by the following process:

After the usual opening niceties, which consist of the opening prayer, national anthem, introduction of participants, and messages from DAR officials, the discussion of the rationale, objectives and mechanics of the one-day activity will ensue.

• Orientation Proper - the morning session shall focus on the discussion of the following topics for the participants to acquire a common understanding:

• Workshop Proper - the afternoon session will focus on the following workshop activities to facilitate the attainment of the major outputs of the one-day activity:

• Workshop 1: ARBOs Assessment - The ARBO representatives shall identify the status of the cooperatives based on the requirements of the APCP using Form 1: ARBO Assessment Form. The output of the workshop is the list of CAPDEV needs of the ARBOs which the APCP can fund.

• Workshop 2: Firming of Provincial APCP Targets - the output of the Credit Forum conducted last November 2012 at Ciudad Christhia, shall be presented in the plenary to validate/firm-up the list of target ARBOs that will avail of the APCP loans from LBP. These provincial targets shall be firmed-up and shall form part of the project deliverables. Form 2: APCP Provincial Target shall be used for this activity.

• Workshop 3: CAPDEV Provincial Targets - This activity shall be undertaken by the DARPO using the outputs of Workshops 1 and 2. The Provincial CAPDEV Plan contains the deliverables in terms of credit and CAPDEV interventions and shall be shall be the basis of the DARCO in transferring CAPDEV funds to the DAR PO. Form 3:  APCP Provincial CAPDEV Plan shall be used for this purpose.

The workshop will be capped by presenting the key agreements reached and proposed way forward for the implementation of APCP at the provincial level.

4. PROPOSED SCHEDULE OF ACTIVITIES

The following schedule is recommended in the conduct of the field level orientation and planning workshop:

5. PARTICIPANTS/FACILITATORS:

               The activity shall be attended by the following:

• Maximum of three (3) representatives from the target organizations/coops to be covered by APCP, particularly two (2) BOD members and one (1) General Manager.
• DARPO staff PARO, BDCD CARPO, Credit Point Person and the PBD Lawyering Team members
• DARRO staff
• Invited RPs from LBP, DA and PCIC
• Representatives from BARBD (RFD and KMBCDD Staff)

4. DOWNLOADING OF FUNDS FOR THE CONDUCT OF FIELD LEVEL APCP ORIENTATION CUM PLANNING WORKSHOP

• DARPO shall submit an activity proposal at least two (2) weeks before the scheduled activity to be approved by the concerned PARO and the Regional Director.

• Said proposal shall be reviewed by the KMBCDD and the following shall be the basis for determining the amount to be transferred to DARPO:

1. Only the direct cost for the meals and snacks of the participants and supplies will be funded by the DARCO
2. Cost parameter: maximum of P500.00 for meals and snacks per participant for 1-­day activity and Pl00.00 per participant for the supplies and materials
3. Other expenses that will be incurred in the activity shall be the counterpart of the DARPO
4. The transportation cost of the ARBO representatives shall form part of their equity

• The approved amount shall be directly transferred to concerned DARPO subject to existing conditions:

1. The fund shall be solely and exclusively used for the said activity;
2. The funds transferred shall be liquidated by the DARPO based on the existing accounting and auditing rules and regulations within 30 days from the conduct of the activity. This shall be evidenced by the submission of the "Activity Report: and "Statement of Receipts and Disbursement" verified by the Commission on Audit; and
3. In the event that the DARPO fails to liquidate the said amount, the DARCO Accounting and Cashier Office shall withhold disbursement/allotment of               succeeding fund due to the province

6. ATTACHMENTS

1. PowerPoint Presentation/Visuals of the following:

• Rationale, Objectives and Mechanics of the Activity
• APCP Credit Component (Approved IRR)
• APCP CAPDEV Component (Memorandum Circular)
• DAR-PCIC AIP for ARBs

2. Forms to be used during the Workshop Proper:

• Form 1: ARBO Assessment Form
• Form 2: APCP Provincial Targets
• Form 3: APCP Provincial CAPDEV Plan

ANNEX 3

VALIDATED APCP TARGET

CY 2013

As of March 25, 2013

Note:    Marked in blue font are targets that have not been validated, hence remain the same as the original/Ciudad Christhia output

ANNEX 4

APCP CAPDEV COMPONENT BUDGET COMPUTATION AND ALLOCATION

TOTAL APPROVED BUDGET FOR CY 2013: PHP 19,110,000.00

ANNEX 6

ACTIVITY REPORT FORMAT 1

(Title of the Activity)

General Information

Title of Activity

Proponent ARBO

No. of days (hours)

Date Conducted

Venue

Conducted by

Names of Resource Person/s and Facilitator/s and Respective Institution/s

Rationale, Objectives and Expected Outputs of the Activity

Participants Profile

Total number of participants

Classification of participants according to:

- Gender (Male and Female)

- Type of participants (officers, members, management staff)

- Age bracket (Below 20; 21-30; 31-40; 41-50; 50 and above)

Highlights of the Activity

-Schedule of day-to-day activities

-Summary of the modules discussed, expected outputs, and participants reaction to each module

Issues and Concerns

Recommendations

Prepared by:                                         Noted by:

______________________                 ______________________

Designation                                           PARO/Regional Director

______________________                 ______________________

Date                                                      Date

1Activity report submitted to BARBO not later than 30 days upon completion of conduct of activity

ANNEX 7

STATEMENT OF RECEIPT AND DISBURSEMENTS

(Title of the Activity)

Name of Province : _____________________________

Region                   : _____________________________

Receipt                                                                                               PhP __________________

LESS

Disbursements:                     PhP __________________

Balance I Refund                  ______________________  ______________________

                                                                                            ______________________

Prepared by:                                                                      Certified Correct:

__________________________                                        ________________________________

                                                                                                           Provincial Accountant

__________________________

               Date                                                                     ________________________________

                                                                                                                           Date

Verified By:

__________________________

(COA Representative)

__________________

Date