Question & AnswerQ&A (EXECUTIVE ORDER NO. 151)
The main purpose of Executive Order No. 151 is to establish the Farmers Trust Development Program, which promotes and supports the voluntary consolidation of small agricultural landholdings into medium and large scale farm enterprises through a usufruct trust arrangement, facilitating access to long-term private sector capital for rural development.
A Farmers Trust is an arrangement where individual agricultural landholdings convey usufructuary rights to a Farmers Trust Enterprise, retaining ownership but sharing in the income from the enterprise under an equitable agreement. Farmers may work in the enterprise with employment priority, often represented by authorized cooperatives or associations.
The Service Consortium is chosen by the farmers or land rights holders. Its roles include organizing and developing the Trust Enterprise, securing capital through project securitization, providing production inputs and services, unified management, and ensuring assured markets for the enterprise.
The trust agreement includes the conveyance of usufructuary rights, the service package, project inputs from the Consortium, terms including duration and exit options, equitable profit sharing, and the responsibilities of the Trustee Bank overseeing the trust assets and enforcing the agreement.
They are primarily funded through project securitization, which involves structuring investments and financial instruments to conform to the assets and business objectives of the enterprise, providing adequate security and incentives for investors.
The Trustee Bank holds the usufruct rights and other assets of the Farmers Trust Enterprise in trust, enforces the terms of the trust agreement, manages cash flows, and protects the rights of investors and creditors.
The Department of Agrarian Reform (DAR) or the Department of Environment and Natural Resources (DENR) approve the conveyance of usufruct rights depending on land jurisdiction.
Quedancor provides guarnaty coverage for Project Participation Certificates issued by the Farmers Trust, supporting the funding of DAR-sponsored Farm Development Trust Enterprises as mandated by its charter and the Agriculture and Fisheries Modernization Act.
The Farmers Trust Development Fund is established by the DAR, in coordination with the DOF, as a Special Purpose Vehicle to finance Farmers Trust Enterprises through the issuance of Farm Development Trust Certificates.
The program requires insurance protection in case of force majeure or mismanagement, mandates consultation on important decisions, and provides exit options for farmers and other participants in the trust arrangement.
Purchasing Farmers Trust Certificates qualifies as compliance with the Agri-Agra law under an alternative compliance mechanism, recognizing the loans extended to Farmers Trust Enterprises as eligible for the banking sector's mandated agricultural credit.
The Program Committee is chaired by the Secretary of Agrarian Reform with members from Agriculture, Finance, Environment and Natural Resources departments, and Quedancor. It coordinates program implementation, formulates guidelines, and ensures protection and risk management for participating farmers.
Yes, with appropriate modifications, the trust mechanism can apply to fisheries, pasture lands, forest lands, and other productive enterprises, subject to approval by the DAR, DENR, or DA depending on land jurisdiction.
It repeals or modifies all prior inconsistent executive orders, administrative orders, rules, and regulations to ensure conformity with the provisions of the Farmers Trust Development Program.