QuestionsQuestions (DAR ADMINISTRATIVE ORDER NO. 03, S. 2010)
It is issued pursuant to Republic Act (R.A.) No. 9700, particularly to implement the mandate under Section 14 of R.A. 9700 on agricultural support and liberalization of access to credit by agrarian reform beneficiaries (ARBs).
It applies to the delivery of support services to ARBs under Section 14 of R.A. 9700, specifically (1) agricultural support as initial capitalization for new ARBs and (2) socialized credit for existing ARBs.
New ARBs are men and women farmer-beneficiaries awarded with EP/CLOA from July 1, 2009 onwards under R.A. 9700.
Forty percent (40%) is allocated for support services; of this, thirty percent (30%) is set aside for agricultural credit facilities, while the remaining 70% is for extension and other support services.
One-third (1/3) of the funds for agricultural credit facilities is allotted for subsidies to support initial capitalization of new ARBs; the remaining two-thirds (2/3) is for socialized credit to existing ARBs (including leaseholders).
The two programs are (1) Agricultural Production Support Program (APSP) for one-time subsidy to new ARBs upon awarding of EP/CLOA, and (2) Socialized Credit and Microfinance Program (SCMFP) to provide socialized credit to existing ARBs and leaseholders.
Key principles include a multi-pronged approach (credit + capacity-building + enterprise development + sustainable agriculture + market linkages), emphasis on long-term viability (finite credit funds), schemes to address ARB cash-flow vulnerability, support for close credit supervision, promotion of savings/capital build-up, documentation of best practices for sustainability, and multi-stakeholder partnership for long-term credit access.
Accreditation means the formal recognition by DAR of the PO after proper verification and validation of required documents.
The AO requires an Agricultural Productivity Information Sheet (Form 2A) signed by the New ARB and an Application (Form 3) signed by the Organization, plus: certificate of membership; certificate of attendance/participation in orientations/trainings; authenticated photo copy of CLOA/EP (or PARO certification); photocopy of DAR ARB ID card (when available); and Letter of Intent (Form 1A) from the organization willing to manage subsidy assistance funds.
(1) MARO reviews and endorses list of ARBs/organizations with accreditation documents; (2) DARPO-BDCD evaluates viability and verifies inclusion in masterlist, then PARO issues Certificate of Accreditation; (3) PARO endorses recommended list to DARRO for approval and fund releases; (4) DARRO-RPMU deliberates and prioritizes approvals; (5) DARPO issues notarized MOA; (6) DARPO cashier releases funding checks to the partner organization, which distributes to individual ARB recipients; (7) ARBs execute deed of undertaking for exclusive use of funds.
The subsidy must be used for intended agricultural production purposes. If pooled for implements/equipment, a rental fee is charged to maintain/upgrade/replace equipment. If used individually, the ARB must pay back the corresponding amount to the organization/cooperative; the repayment becomes part of an indivisible equity/revolving capital to sustain funding support. For existing organizations, repaid subsidy becomes capital share of concerned ARBs.
The ARB may qualify for socialized credit upon showing proof that the subsidy was used judiciously for its intended purpose.
SCMFP caters to existing ARBs and leaseholders needing agricultural credit, including rural women/spouses of ARBs.
The AO lists possible securities such as purchase orders, marketing agreements, expected harvests, and other types of soft collateral like promissory notes and treasury bonds.
Partner-GFIs shall charge a maximum of 2% per annum to institutional borrowers/conduits to cover disbursement and collection costs; crop insurance is optional for borrowers. End-borrower rates must be significantly lower than market rate, considering accessibility/availability/affordability.
The NCMU and partner-GFIs shall package short-term (one-year) loans for new partner-credit conduits, and subsequent financing should gradually scale up to medium-term loans after successful repayment cycles, subject to lending policy.
A National Credit Program Steering Committee (NCPSC) chaired by the DAR Secretary oversees policy review/approval and development of credit windows, and oversight of implementation. A National Credit Management Unit (NCMU) is lodged in DAR/BARBD to develop, facilitate, oversee, monitor, and evaluate the programs, and to provide technical/secretariat support to the NCPSC. Regional/provincial counterparts also exist.
It takes effect on June 24, 2010. It includes a separability clause (invalid parts do not affect the rest), a repealing clause (inconsistent orders/circulars/rules are amended/modified/repealed), and an effectivity statement.