BRIEFER/UPDATES ON THE UTILIZATION OF THE AGRICULTURAL COMPETITIVENESS ENHANCEMENT FUND (ACEF)

BRIEFER/UPDATES ON THE UTILIZATION OF THE

AGRICULTURAL COMPETITIVENESS

ENHANCEMENT FUND(ACEF)

Department of AgricultureOffice of the Secretary

The Agricultural Competitiveness Enhancement Fund

Part I

The Agricultural Competitiveness Enhancement Fund • A Special Fund (Fund 183) created under RA 8178

out of the proceeds of MAV in-quota importation;

• Intended to support projects that will make the agri/fisheries sectors globally competitive;

• RA 8178 of 1996 expired last Dec. 2007;

• RA 9496, or the law extending ACEF up to 2015 was enacted last 28 Feb. 2008.

Source of ACEF

• The in-quota tariff revenues from the importation of agricultural products within the MAV; and

• Collections from repayments from loan beneficiaries. (started in 2nd qtr of 2008)

The ACEF as extended, is programmed to start 2008 and will end in 2015.

Effectivity period of the ACEF

Up to 2015, after which the collection of duties from the MAV and the setting aside of the amount collected for the purposes shall terminate;

Any remaining balance(s) at the date of expiration of the Fund shall not revert to the General Fund but shall continue to be used for the purpose for which it was collected and set aside.

Intended Beneficiaries of ACEFEligible project proponents for ACEF assistance would include any of the following:

• Filipino farmers and fisherfolk;• Micro, small and medium scale enterprises (MSMEs)

engaged in agriculture, aquaculture, and fisheries sectors;

• Agriculture and fishery cooperatives and other entrepreneurs engaged in economic enterprises related to agriculture and fisheries;

• Local Government Units (LGUs) and other implementing bureaus and attached agencies and corporations under DA; and

• State Universities and Colleges (SUCs).

Fund AllocationThe Fund shall be set aside and earmarked as follows:

•Seventy percent (70%) • for agri-based production and post-production and processing

activities (including, but not limited to, new export industries and agri-related infrastructure and equipment to achieve modern agricultural practices);

• for public information and promotion activities• for technical assistance and feasibility studies grant. • Maximum of ten percent (10%) of this will be earmarked for the

administrative expenses of the ACEF enabling committees/secretariat;

•Twenty percent (20%) • for research and development and commercialization of such,

including the upgrading of research facilities of qualified state universities and colleges; and

•Ten percent (10%) • for the funding of a comprehensive scholarship program for

agriculture, forestry, fisheries, and veterinary medicine education.

Activities that can be funded under ACEFThe ACEF shall be set aside and earmarked: (a)for the protection of farmers against unfair trade

practices such as:• Smuggling;• dumping of agricultural products; or • other similar acts of unfair trade practices

(b)for the increased productivity of farmers by providing the necessary support services such as but not limited to:• post-harvest equipment and facilities• research and development• other marketing infrastructure• provision of market information• retraining, extension services, scholarships• reduction of input cost and quality improvement• supply chain efficiency and • other infrastructure including access as well as an established

transportation mechanism towards speedy delivery of products

Criteria that tell how a project relates to competitiveness

Projects eligible for ACEF assistance should respond to the following competitiveness aspects:

• instill competitiveness in prices;

• instill competitiveness in quality;

• gives the product export potential; and

• import substitution.

• extended as an interest-free and collateral-free loan* to eligible proponents;

• shall be extended in the form of grant to finance public investments that will increase the productivity of farmers;

• Loan proponents shall be required to put up an equity to their projects.

*(except for those which the ExeCom may require to put up collaterals as loan security)

Mode of which ACEF is extended

1. Market Viability2. Technical Viability3. Organizational4. Socio-Economic5. Financial Viability

CRITERIA FOR EVALUATING PROJECTS

PROCESS FLOW

Part II

FLOW OF REPORTING/PROTOCOL

ACEF EXECOMCo Chairs –

DA Secretary;

Chair of Agri and Food Committee HOR ; Chair, Committee on Agriculture, Senate Members from Government Financing Institutions and Private Sector rganizations

DA Secretary/Co-Chair, ACEF Executive Committee

Chair, ACEF Natl Techl Committee

Policy Directions and Prioritization and Approval of projects below P15M; Loan Agreement

In consultation with the Secretary, prioritization of projects prior to NTC deliberation; Techl Evaluation prior to endorsement to the Secretary/Execom; Techl & Admin supervision of the ACEF NTS; Loan Releasing in tranches

DA Regional Field Units/ ACEF Regional Technical Committee

Techl Evaluation/endorsement to the ACEF Natl Techl Committee; Monitoring and Evaluation

COCAFM Oversight Functions

Approval of projects P15M and above

Proponent DA RFU DA-CO

ACEF NTC/NTS

DA Secretary/ACEF EXECOM

Feasibility study;Documentary requirements

Initial evaluation;Site validation;Regional prioritization;Endorsement to the ACEF NTC

ACEF RTC/RTS

Evaluation/ Validation;National prioritization;Evaluation by Technical Agencies;Background & Credit Investigation

Prioritization Approval

PROCESS FLOW OF LOAN APPLICATION

Request for SARO/NCA

DEPARTMENT OF BUDGET and MANAGEMENT

DEPARTMENT OF AGRICULTURE

LANDBANK OF THE PHILIPPINES*

DEPARTMENT OF AGRICULTURE

Issuance of SARO/NCA

Fund Transfer after Pre-Audit

PROCESS FLOW OF FUND TRANSFER (after approval by the Secretary/ACEF EXECOM)

*Land Bank of the Philippines provides the cashiering services for the releases of ACEF loan proceeds to the proponents and acceptance of payments per MOA by and between DA and LBP

PROPONENTS

Upon endorsement of DA RFU releases In tranches per Loan

Agreement

Updates on the Utilization of the

Agricultural Competitiveness Enhancement Fund (ACEF)

As of June 2010

Part III

Source of Funds AMOUNT (PESOS)MAV In-Quota Tariffs (RA 8178, 1996)/ (1999 to 2007 collections) The BTr has not yet reported the duties on MAV

utilization for 2008, 2009, 2010

9,441,114,688.80

Sugar Conversion Fees -- (EO 87, 1999)

1,141,345,966.40

Total Payment Collection (2002 -1st qtr 2010) – P206,719,560.65

• Collection from 2002 to 1st qtr of 2008 (Reverted to Treasury per RA 8178 of 1996) -- P102,819,977.81

• Added to the ACEF (Special Fund) per RA 9496 of 2008 (collection from 2nd qtr of 2008 to 1st qtr of 2010) -- P103,899,582.84

103,899,582.84

TOTAL ACEF10,686,360,238.0

0

Source of Funds

Fund UtilizationACEF-(EXECOM) Approved Projects/ActivitiesAVAILMENTS/DISBURSEMENTS• Grant (DA AO 23,s 2007 & DA AO 14, s 2009)

• Loans• Unreleased Loans• Scholarship (P372,788,527.92 -- allocation per

IRR)

• Admin Fund (2003)• FS Fund (Reverted/2003)

2,576,020,918.005,887,558,883.00

79,968,663.00120,397,356.44

5,033,400.0010,000,000.00

TOTAL AMOUNT OF ACEF-EXECOM APPROVED ACTIVITIES/PROJECTS

8,678,979,220.44

Funds Available/Balance

FUNDS AVAILABLE /ACEF BALANCE =

2,007,381,017.60

Total Amount Available in Fund 183

P2,007,381,017.60

Cold Chain Program* 1,500,000,000.00 Scholarship (balance of

the scholarship allocation per June 2009 available fund)

252,391,171.55

FUNDS ALLOCATION

* approved by the ACEF EXECOM but no SARO has been issued and can be referred back to ACEF Execom to align with the priority program of the Department of Agriculture/DA Secretary

Summary of Activities Funded by ACEFActivities Amount

(Pesos)%

Machineries and Equipment

3,891,079,501.00

44.80

Infrastructures & Buildings

2,473,583,419.00

28.50

Research and Development Activities

129,318,772.00 1.50

Sugar-ACEF 599,543,000.00 6.90

Scholarship 120,397,356.44 1.40

Farm Inputs and Other activities

1,465,023,773.00

17.00

TOTAL8,678,979,220.

44100

Project Distribution by Category(Loans and Grant)

CATEGORY

NO. OF

PROJ.%

ACEF ASSISTANCE (PESOS)

%

Loan 307 96.24 5,908,514,252.00 69.64

Grant 12 3.76 2,576,020,918.00 30.36

TOTAL 319 100.0

08,484,535,170.0

0 100.0

0

Regional Distribution of Projects (loans and grant)

REGIONNO. OF

PROJ.% ACEF ASSISTANCE (PESOS) %

Nationwide7

(grant -4) 2.19%

2,553,181,210.00(1,525,219,856.00)

30.09%

Sugar ACEF 1

(grant) 0.31% 599,543,000.00 7.07%

CAR 5 1.57% 99,161,110.00 1.17%I 20 6.27% 383,789,646.00 4.52%II 13 4.08% 162,780,139.00 1.92%

III 68

(grant-2) 21.32%

1,480,462,982.00(155,888,477.00)

17.45%

IV-A 51 15.99% 789,864,795.00 9.31%

IV-B7

(grant -2) 2.19%

151,596,142.00(110,255,662)

1.79%

V 14 4.39% 155,992,014.00 1.84%

VI 34

(grant -2) 10.66%

551,803,620.00(46,487,600)

6.50%

VII 11 3.45% 145,453,196.00 1.71%VIII 7 2.19% 100,292,103.00 1.18% IX 13 4.08% 293,535,116.00 3.46%X 8 2.51% 135,043,736.00 1.59%XI 25 7.84% 320,843,479.00 3.78%XII 23 7.21% 400,800,219.00 4.72%XIII 2 0.63% 20,899,772.00 0.25%

ARMM 10 3.13% 139,492,891.00 1.64%

TOTAL 319 100.00% 8,484,535,170.00 100.00%

Distribution of Projects by Sector/Commodity SECTOR / COMMODITY

NO. OF PROJ.

%ACEF ASSISTANCE

(PESOS)%

FISHERIES & AQUACULTURE 49 15.36% 950,905,073.00 11.21%GRAINS 28 8.78% 943,552,875.00 11.12%

CORN 8 2.51% 133,755,960.00 1.58%RICE 20

(Grant – 1)6.27%

809,796,915.00(500,000,000.00)

9.54%

HVCC 58 18.18% 1,001,653,267.00 11.81%FRUITS, VEGETABLES, FOODS

(AND RELATED PRODUCTS)40

(Grant – 1)12.54%

657,361,595.00(100,000,000.00)

8.02%

INDUSTRIAL 18(Grant – 1)

5.64%320,794,772.00(10,255,662.00)

3.78%

Sugar ACEF Grant - 1 0.31% 599,543,000.00 7.07%LIVESTOCK & POULTRY 136 42.63% 2,221,049,783.00 25.93%

ABATTOIR5

(Grant – 2)1.57%

79,370,000.00(26,000,000.00)

0.94%

DAIRY 4 1.25% 33,586,267.00 0.40%FEEDMILL 13 4.08% 207,137,144.00 2.44%GOAT 3 0.94% 30,449,054.00 0.36%MEAT PROCESSING 4 1.25% 88,000,853.00 1.04%POULTRY 64 20.06% 1,096,090,687.00 12.92%SWINE/HOGS 45 13.48% 686,415,778.00 7.84%

MULTI - SECTOR 47 14.73% 2,826,844,467.00 32.87%FERTILIZERS 7 1.88% 107,410,543.00 1.03%ACTIVITY/TRAINING CENTERS 3 0.94% 46,031,335.00 0.54%TRACTOR / FARM MECH. 12 3.76% 74,951,045.00 0.88%

MULTI-SECTOR / COMMODITY (LIVESTOCK, FISHERY, HVCC, etc.)

28(Grant – 6)

8.15%4,098,451,544.00

(1,340,222,256.00)30.42%

TOTAL 319 100.00% 8,484,535,170.00 100.00%

Project Distribution by Type of Proponent

TYPE OF PROPONENT

NO. OF PROJ.

%ACEF ASSISTANCE

(PESOS)%

AGRI CORP 94 29.47% 1,736,151,100.0020.46

%COOP 46 14.42% 530,727,878.00 6.26%

LGU 12

Grant - 3

3.76% 320,933,920.00

(226,000,000.00) 3.78%

NGA / GOV’T CORP

8Grant -

5 2.51%

2,653,181,210.00(1,625,219,856.00

)

31.27%

SRA / Sugar ACEF)

Grant 1 0.31% 599,543,000.00 7.07%

SINGLE PROP 151 47.34% 2,456,301,432.0028.95

%

SUC 7

Grant - 3

2.19% 187,696,631.00

(125,258,062.00) 2.21%

TOTAL 319100.00

%8,484,535,170.0

0 100.0

0

LOAN STATUS# Of

Projects

Amount (Pesos)

%

Not Due for Payment

2265,143,865,518.0

088

Fully paid with partial

payment (69 projects)

343,208,000.00

163,511,460.004

Arrears/Undergoing Restructuring

78 557,929,272.00 8

TOTAL 3075,908,514,251.0

0100

Loan Status

YEARACTUAL REPAYMENT

COLLECTION

EXPECTED COLLECTION

PER MOA SCHEDULE

YEARLY RE-

PAYMENT RATE

2002 320,100.00 620,100.00 52%2003 10,948,440.00 16,697,202.00 66%

2004 11,936,391.70 30,321,391.70 39%2005 11,667,365.50 49,296,676.17 39%2006 22,911,278.67 94,612,463.25 24%

2007 31,565,129.74130,709,173.1

0 24%

2008 (1st qtr) 13,471,272.20 158,996,147.90

22%2008 (2nd qtr - 4th qtr)

21,185,200.19

2009 58,098,629.20236,774,061.6

125%

20101 24,615,753.45 69,221,255.96 36%

TOTAL 206,719,561.00764,648,732.

651. 2010 Collection (as of 31 March 2010 only)

Repayment & Collection Status

ACEF Scholarship Program

Total Number of Scholars

1,498

Total Number of SUCs/Institutions

36

TOTAL ALLOCATION (Duration of the Program, P)

120,397,356.00

1. Insurance coverage to ensure recovery after natural calamities;

2.Further strengthen the capability of the DA RFUs in evaluating projects for funding under ACEF;

3. Further intensify monitoring of on-going projects by the ACEF NTS and DA RFUs; and

4. Strengthen the feedback mechanism/reporting of project status between the DA RFUs and the ACEF NTC/NTS

Actions Taken/Plan of Action by the ACEF NTC

Thank You