Magna Carta of Small Farmers Act

Policy, purpose, and intent

Section 2 declares State policy to give the highest priority to agricultural development to realize equitable distribution of benefits and opportunities through the empowerment of small farmers.
The State provides the necessary support mechanism to enable small farmers to pursue socioeconomic endeavors (Section 2).
The State ensures rural development based on growth and equity fully integrates women and youth by providing ample opportunity to develop skills, acquire productive employment, and contribute to communities (Section 2).
The State maintains ecological balance and environmental protection to sustain rural development goals (Section 2).
The Act recognizes the right of small farmers and farmworkers, as well as cooperatives and independent farmers’ organizations, to participate in planning, organization, management, and implementation of agricultural programs and projects, especially through bayanihan (Section 2).
The Act directs the State to support agriculture through appropriate policies, research, technology and training, and adequate financial, production, marketing and other support services to enhance productivity (Section 2).
The Act provides incentives and reward systems to accelerate productivity and promote self-sufficiency and full development of agricultural potentials (Section 2).

Coverage and key definitions

The Act covers all small farmers and, to the extent provided, the departments, offices, agencies, subdivisions, or instrumentalities of the National Government (Section 3).
A “Small farmer” is a natural person dependent on small-scale subsistence farming as primary income whose sale, barter, or exchange of agricultural products does not exceed One hundred eighty thousand pesos (P180,000) per annum based on 1992 constant prizes (Section 4).
An inter-agency committee headed by the Department of Agriculture may conduct periodic review and adjustments of the income level to account for inflation, devaluation, and consumer price index (Section 4).
A “Farmers’ organization” refers to farmers’ cooperatives, associations, or corporations duly registered with appropriate government agencies, composed primarily of small agricultural producers, farmers, farmworkers, and other agrarian reform beneficiaries, which voluntarily form business enterprises they own, control, and patronize (Section 4).
A “Small agricultural producer” is a self-employed individual providing the primary labor requirement personally (or with family) or earning at least fifty percent (50%) of gross income from the labor provided (Section 4).
Definitions also include (among others): farmworker, production infrastructure, pre-harvest activities, postharvest activities, extension services, transportation infrastructure, preharvest facilities, postharvest facilities, market infrastructure, input subsidy, agrarian reform credit, price subsidy, upland farming, rural bank, cooperative bank, private development bank, certified seed, good seed, cooperative, Integrated Pest Management (IPM), and locally available materials (Section 4).

Farmers’ organization and representation

The State recognizes the right of farmers to organize to promote welfare and advance or safeguard interests, and the Government assists small farmers in establishing self-help organizations such as farmers’ cooperatives and associations (Section 5).
The Government encourages formation of marketing cooperatives to enable members to purchase inputs at lower cost and obtain fair prices (Section 5).
After farmers voluntarily organize at the barangay, municipal, provincial, and regional levels, elected farmers elect national officials who, notwithstanding existing laws to the contrary, occupy a seat in boards of concerned government agencies (including but not limited to Philippine Coconut Authority, National Food Authority, Philippine Crop Insurance Corporation, National Irrigation Administration, and others) (Section 6).
At other levels, farmer representatives serve as members of planning and implementing units of local governments and act as official representatives for coordination with government (Section 6).
Farmer representatives must be members of primary farmers’ organizations preferably cooperatives and must have been elected in all preceding levels (Section 6).

Empowerment: rights and obligations

“Empowerment of small farmers” means providing opportunities for farmers to access ownership or management of production resources (Section 7).
Small farmers’ rights and obligations promoting empowerment are given legislative force, and farmers’ rights to participate in charting political, economic, and social development are made inviolable (Section 7).
Small farmers must fulfill corresponding obligations to initiate or undertake patriotic and nationalistic endeavors (Section 7).

Farmers’ rights

Small farmers have the right to conduct activities under an atmosphere guaranteed by a support price program for certain commodities such as rice and corn (Section 8).
Small farmers have the right to participate in a market free from monopoly, cartel, or any other situation suppressing prices to their disadvantage (Section 8).
Small farmers are entitled to social security protection against calamities, death, sickness, and disability (Section 8).
Small farmers may avail of credit at minimal interest rates with minimum collateral requirements for farm and basic household needs (Section 8).
Small farmers may avail of and distribute farm inputs and services (Section 8).
Small farmers have the right to be heard and represented in government (Section 8).
Small farmers have the right to be regularly informed of vital information such as market prices, government agricultural policies, market demands, and farming practices (Section 8).
Small farmers have the right to benefit from the country’s natural resources under existing laws (Section 8).
Small farmers may pursue education and skills development for improved quality of life (Section 8).
Small farmers may eventually assume certain processing and marketing functions of government agencies (Section 8).
Small farmers have the right to technical assistance for preparing project feasibility studies for loans and other government economic assistance (Section 8).

Farmers’ obligations

Small farmers must use their farmers’ organizations, preferably cooperatives, to enhance capabilities in production, processing, marketing, and financing toward self-reliance (Section 9).
Small farmers must aim for increased productivity through recommended farm practices and quality inputs (Section 9).
Small farmers must comply with terms and conditions in availing government, financial institution, and NGO assistance (Section 9).
Small farmers must adopt production and marketing strategies for economies of scale, soil and climatic adaptation, idle labor use, and innovative technology through crop zonification, diversification, home and backyard industries, farming systems, and similar activities (Section 9).
Through cooperatives, small farmers must share benefits with consumers by applying economies of scale, integration of processing and marketing, and better technology for reasonable prices and superior quality (Section 9).
Small farmers must help deliver public services by contributing labor and materials to irrigation canal maintenance, small water impounding projects, buying stations and public markets, and plant nurseries and seedbanks (Section 9).
Small farmers must exert efforts to meet local demand requirements to avert shortages that may necessitate importation (Section 9).
Small farmers must participate in conservation, protection, and development of the national patrimony (Section 9).
Small farmers must promptly pay applicable fees and license fees, and comply with taxes to appropriate government agencies (Section 9).
Small farmers must participate in and contribute to government insurance and social security programs (Section 9).
Small farmers must undertake self-help community development projects such as cottage industries and backyard farming (Section 9).

Infrastructure, inputs, and services

The Government must provide infrastructure support, access to farm inputs and services to agriculture—particularly small farmers—based on their absorptive capacity (Section 10).
Infrastructure projects must be constructed and maintained with farmers’ organizations to use locally available manpower and materials (Section 10).
Every farmer must be assisted to gain access to, obtain, own, or operate facilities for pre- and postharvest activities, support services, and procurement and distribution of inputs through farmers’ organizations (Section 10).
Each city or municipality predominantly agriculture-based must establish linkages with component barangays, NGOs, and concerned government agencies to make assistance available to local farmers (Section 10).

Transportation infrastructure

The Government must provide farm-to-market roads, feeder roads, and bridges linking farms to markets, prioritizing areas predominantly populated by small farmers and with relatively low productivity (Section 11).
The Government must construct additional piers or wharves and airports and improve existing facilities, especially in surplus production areas and strategic areas, and devise schemes allowing farmers to operate and eventually obtain their own transport equipment (Section 11).
The Department of Public Works and Highways, in coordination with other agencies or national subdivisions, implements the section, while farmers’ organizations participate in site identification, preparation, actual execution, and maintenance (Section 11).

Communications infrastructure

The Government must make available at least one (1) communication facility in each municipality for farmers’ access to vital information, operated by the Department of Agriculture or a designated farmers’ organization (Section 12).

Postharvest storage and multipurpose spaces

Every barangay predominantly agriculture-based is entitled to at least one (1) storage facility and a multipurpose pavement/plaza usable for various purposes including drying produce (Section 13).
Locations are chosen by the barangay site or by approval of the sangguniang barangay in consultation with small farmers and farmers’ organizations, with farmers’ organizations providing labor and locally available materials (Section 13).
Priority goes to areas lacking facilities and predominantly populated by small farmers, and selected sites must be accessible by transportation and communication facilities and near the barangay center as far as practicable (Section 13).
Farmers’ organizations may collect reasonable fees for services, and collections must be used only for maintenance, improvement, and expansion of the facilities (Section 13).
Rental fees for land, where applicable, must be remitted to the barangay (Section 13).

Postharvest facilities and leasing

The National Food Authority (NFA) must establish necessary postharvest facilities (rice mills, dryers, threshers, warehouses, cold storage, and other facilities) needed in the area (Section 14).
NFA facilities must be leased to farmers’ organizations (Section 14).
Viable cooperatives have the option to buy facilities from the NFA (Section 14).
Underutilized or non-operational Government postharvest facilities must be made available through lease or sale to farmers’ organizations (Section 14).

Market infrastructure

The Government must assist farmers’ organizations in establishing and operating market infrastructure, facilities, and equipment to assure markets for produce (Section 15).

Good seeds and planting materials

The State must ensure every farmer has equal opportunity to avail of, produce, and market good seeds and planting materials recommended by the Department of Agriculture capable of producing high-yielding, pest-and-disease resistant, widely-adapted crops for irrigated, rainfed, and upland areas (Section 16).
Farmers’ organizations must coordinate with Department of Agriculture field offices and other concerned agencies to ensure seeds and means needed to produce and market seeds suited to local conditions are available to small farmers (Section 16).
The Department of Agriculture, through the Bureau of Plant Industry, and in cooperation with private seed producers’ associations, farmers’ organizations, the Institute of Plant Breeding of the University of the Philippines at Los BaAos, and other state universities, colleges, and institutions, must provide support enabling seed production and distribution services (Section 16).
The Department of Agriculture must conduct information campaigns and accelerate dissemination of technology on use, production, and storage of quality seeds, and provide seed quality control services to discourage inferior seeds and other varieties (Section 16).

Fertilizers and pesticides

The Government together with small farmers must encourage fertilizers and pesticides with an acceptable level of deleterious effects on health and the environment, promote organic fertilizer and Integrated Pest Management (IPM), and promote efficient proper usage to reduce losses from wasteful and improper application (Section 17).
The Government must support farmers’ organizations in trading fertilizers and pesticides (Section 17).
The Department of Agriculture must formulate policies and implement programs regulating fertilizer and pesticide use, conduct information campaigns on highly toxic pesticides and their consequences, and monitor and regulate pesticide sale to prevent banned pesticides from being sold (Section 17).
The Department of Agriculture must evaluate data submitted by pesticide companies (Section 17).
The Department of Agriculture must ensure adequate fertilizer supply at reasonable prices (Section 17).
Farmers’ organizations must be encouraged to undertake fertilizer distribution to their members to eliminate added cost passed by traders (Section 17).

Farm machinery and irrigation systems

Farm machinery and equipment

The Department of Agriculture, through barangay or municipal governments and farmers’ organizations, must support activities to ensure availability of farm machinery and equipment for small farmers in pre- and postharvest operations (Section 18).
All farm machinery and equipment must be registered with the municipal government for monitoring purposes (Section 18).
The Department of Agriculture must devise a program to increase draft animals in the area (Section 18).
Local agricultural officers, coordinating with farmers’ organizations, must devise schemes for sharing, pooling, leasing, or acquiring draft animals, equipment, or machinery (Section 18).
The Government must support farmers acquiring inventories of farm equipment, including through grants-in-aid and other domestic and foreign funds, acquiring and distributing farm equipment and machinery to farmers’ organizations to increase productive capabilities, with funding included in the annual budget of the Department of Agriculture (Section 18).

Water management and small irrigation

The Government must provide adequate support services for development, management, and conservation of water resources (Section 19).
The Department of Public Works and Highways through the National Irrigation Administration and the Department of Agriculture, with participation of farmers’ organizations, must implement small water impounding projects for supplemental irrigation and additional income from fish and duck raising while minimizing soil erosion, siltation, and flooding (Section 19).
Training programs for small farmers on these subjects must be provided (Section 19).
The Government must focus on small irrigation systems that are more efficient, cost-effective, and cheaper to establish, using designs based on economic rate of return and sustainable use, and must rehabilitate, improve, and maintain inefficient and underutilized irrigation systems (Section 19).
The Department of Environment and Natural Resources must adopt measures promoting conservation practices such as reforestation, watershed management, antipollution programs, and similar measures, and the Department of Agriculture must implement measures ensuring farming practices are not detrimental to the environment (Section 19).
The DENR must collaborate with local government units to strictly enforce conservation measures, restore protective forest cover, and stabilize critical watersheds (Section 19).
Farmer-beneficiaries must be organized into irrigators’ associations tapped by DENR for community-based reforestation projects, particularly watershed development and management of irrigation projects (Section 19).
The National Irrigation Administration, Department of Agriculture, and DENR must coordinate through local development councils to integrate irrigation delivery with other agriculture support services (Section 19).
The Bureau of Soils and Water Management must prepare parcellary maps for each barangay, municipality, or city predominantly agriculture-based identifying agricultural lands reachable by irrigation systems (Section 19).
The Government must implement irrigation pump distribution programs in areas predominantly populated by small farmers (Section 19).

Access to irrigation services

While the Government provides irrigation services through NIA and other concerned offices, farmers’ organizations are encouraged to spearhead construction of irrigation systems (Section 20).
The Government must encourage small farmers to join or form irrigators’ associations and promote farmers’ participation to build capability for operation and maintenance and for fee collection and remittance to NIA (Section 20).
NIA must develop and institutionalize second-crop irrigation facilities supporting multi-crop farming (Section 20).
NIA must devise schemes for small farmers to avail of electric pumps or diesel-powered deep well irrigation systems in water-scarce barangays or communities (Section 20).

Agricultural credit, incentives, and pricing

Rural credit delivery

An efficient rural credit delivery system guided by a sound rural credit policy must be established to meet small farmers’ needs (Section 21).
The credit system must include a maximum rate of interest not to exceed seventy-five percent (75%) of commercial rate per annum, inclusive of all service, penalty, and other charges (Section 21).
The credit system must include minimum collateral requirements, accessibility, reasonable repayment terms, expeditious loan documentation and processing procedures (Section 21).
Services must include loans for procurement of production inputs and other needs such as education and health needs (Section 21).
The Department of Agriculture through the Agricultural Credit Policy Council (ACPC) and other agencies must provide subsidies for education and training of small farmers on credit awareness, loan acquisition, and repayment, and must run an information drive promoting viable farmers’ organizations (including cooperatives, credit unions, rotating savings, and credit associations) and NGOs that increase access to credit (Section 21).
The Government must set up a system providing information on the credit worthiness of potential borrowers (Section 21).
To reduce risks and administrative costs, the Government must expand loan guarantee coverage under the Comprehensive Agricultural Loan Fund administered by ACPC and expand crop insurance programs to cover not only rice and corn but other crops, livestock, poultry, fishery, and agro-forestry (Section 21).
Insurance payments must be prompt; any delay without just cause entitles beneficiaries to a reasonable interest rate on the amount due (Section 21).
ACPC must conduct special projects to promote innovative financing schemes (Section 21).
The Government must subsidize costs of information dissemination, monitoring, training, and registration to promote development of farmers’ organizations (Section 21).
Farmers’ organizations may serve as conduits of rural banks, private development banks, and other banks for agricultural credit delivery (Section 21).
An amount must be earmarked for lending exclusively to farmers’ cooperatives at subsidized interest rates (Section 21).
All agricultural lending programs of the Government are consolidated and placed under administration of the Land Bank of the Philippines, with funds augmented by annual budgetary allocations managed as a self-sustaining fund base coordinated with ACPC (Section 21).
A portion of all loanable agricultural funds must be used for direct lending to small farmers for production, processing, postharvest, and marketing requirements (Section 21).
Government agencies involved in small-farmer development may deposit their funds with the Land Bank of the Philippines to cover administrative costs of the agricultural funds it handles (Section 21).

Cooperative banks

The Government must promote establishment of cooperative banks and promote growth of networks of cooperative banks to provide small farmers access to reasonable credit/loan packages (Section 22).

Incentives

Small farmers—including agricultural share tenants and lessees, regular and seasonal farmworkers, and beneficiaries under the Comprehensive Agrarian Reform Law (CARL)—are entitled to incentives privileging livelihood projects and technology adoption (Section 23).
Financial and technical assistance must be awarded to deserving farmers’ organizations implementing livelihood projects, and concerned national offices or agencies must assist in locating markets and providing other support services (Section 23).
Barangay, municipal, or provincial officials must assist communities in making representations to seek assistance for agro-based projects and must support site-specific agro-based projects operated business-like (Section 23).
The Department of Agriculture and concerned agencies must promote investment and financing programs to channel resources to livelihood projects in the countryside (Section 23).
Preferential tariff terms must be extended on farm inputs and spare parts, and on farm machinery and equipment imported by farmers’ organizations, provided these are used specifically for their projects (Section 23).
The Government must give incentives and recognition to farmers and farmers’ organizations adopting more efficient farm technologies or equipment resulting in increased productivity and income (Section 23).
The Government must widen existing crop and livestock insurance programs through an insurance scheme accommodating major crops, livestock, and other produce of small farmers (Section 23).
Short-duration study tours, local or overseas, must be provided to deserving small farmers to improve technological competence and knowledge (Section 23).
A system of certification of farm skills must be instituted by the Department of Agriculture through duly authorized institutions to upgrade skills of farmers and farmworkers (Section 23).
Farmers’ insurance coverage by the Social Security System must be extended to small farmers and farmworkers (Section 23).
Importations of agricultural products must not be allowed when produced locally in sufficient quantity, and importation policies must protect new and developing crops such as soybean, ramie, sorghum and wheat, with periodic review in consultation with farmers’ organizations (Section 23).

Income-generating activities

Small farmers must be encouraged to engage in other income-generating activities to supplement farm income (Section 24).
National agencies, in collaboration with local government units, must provide technical and skills training assistance through farmers’ organizations and must provide marketing assistance (Section 24).
Farmers’ organizations must be the main conduits for funding livelihood projects, including identification of specific markets and facilitating access to market facilities, and must receive other support services necessary for success, with priority given to demand-pulled production activities (Section 24).

Price support system

The Department of Agriculture through appropriate agencies must establish a price support system for certain agricultural products, especially rice and corn, taking into account the need to increase real income of small farmers (Section 25).
The price support system must not increase retail prices beyond the paying capacity of the average consumer (Section 25).
The Government must endeavor to set farmgate prices that respond to changing economic conditions (Section 25).
The Government must minimize importation of farm inputs developed locally, such as fertilizers and seeds, except during times of calamities or emergencies (Section 25).

Minimum wage

Rural workers including regular farmworkers are entitled to wage levels prescribed by the Regional Tripartite Wages and Productivity Board pursuant to Republic Act No. 6727 (Section 26).
Contract workers or seasonal farmworkers must also be entitled to minimum wages unless they receive higher wages under their contract (Section 26).

Procurement, penalties, and sanctions

Exclusive procurement from small farmers

The National Food Authority or any appropriate agency of the Department of Agriculture implementing government price support for agricultural produce, especially rice and corn, must procure and purchase palay, corn, or other agricultural produce directly from small farmers or farmers’ organizations (Section 27).
Such agencies must devise an effective procurement scheme so small farmers can avail of the benefit (Section 27).

Criminal penalties and disqualification

Any official or employee of the implementing agency who allows, consorts, or connives with any trader or nonfarmer in the purchase of rice, corn, or other agricultural produce or inputs subject to price support or other government subsidy intended exclusively to benefit small farmers is punished by a fine of not less than PHP 10,000 or imprisonment for not less than two (2) years but not more than four (4) years, or both, at the discretion of the court (Section 27).
Administrative sanctions include perpetual disqualification to hold public office (Section 27).
The Probation Law does not apply to penalties imposed under this Act (Section 27).
Penalties apply also to officials or employees who consort or connive with any trader or nonfarmer in the sale of rice, corn, or other agricultural produce sold under any government program (Section 27).

Tax compliance filing deadline

Authentic copies of evidence of procurement or purchase of palay, corn, and other agricultural produce enjoying price support must be furnished to the Bureau of Internal Revenue within thirty (30) days from issuance by the NFA or implementing agency (Section 27).
Violations of the furnishing requirement are subject to the penalties provided in the preceding paragraph (Section 27).

Research, extension, and agro-industry linkages

The R and D System must conduct mission-oriented or strategic research and adaptation trials, verify results under actual farm conditions, and complement national research centers by contributing studies or actual data (Section 28).
The R and D System must concentrate on local-level problems and must tap farmers’ knowledge and synthesize it with existing data through proper assessment and development (Section 28).
The Philippine Council for Agriculture and Resources Research and Development serves as the lead agency to strengthen the existing R and D System in coordination with the Bureau of Agricultural Research, Philippine Rice Research Institute, other government research institutions, state research institutions, private research institutions, state colleges and universities, and farmers’ organizations in the area (Section 28).

Demonstration farms

Technology verification and piloting must be conducted by farmers’ organizations on farmers’ fields under supervision of R and D personnel (Section 29).
Demonstration farms must showcase technologies that have passed regional adaptability tests (Section 29).
Emphasis must include ease of application, use of indigenous technology and materials, resource conservation, increased productivity and income, and similar considerations (Section 29).

Research, training, extension focus

Research, training, and extension must focus on adaptive technologies addressing problems in production, postharvest and processing, marketing, entrepreneurship and management, and community organizing and institutional development (Section 30).

Soil and climatic studies

The Bureau of Soils and Water Management (BSWM) and other concerned agencies must conduct studies in municipalities and provinces to determine best land use, most profitable cropping mix, and fertilizers needed, and to determine soil management practices for sustainability (Section 31).

Extension services

Department of Agriculture extension workers must serve as linkages between small farmers and farmers’ organizations by identifying on-farm problems for referral to research and development institutions and disseminating tested location-specific technologies (Section 32).
Farmers’ organizations must complement the Department of Agriculture’s extension program for effective technology transfer and information dissemination (Section 32).

Agro-industrial linkages

The Department of Trade and Industry and the Department of Agriculture must jointly devise a program to increase linkages between agriculture and industries—especially those in industrial estates—through promotion of processing industries for rural agri-based industrial development (Section 33).

Implementation, repeals, and effectivity

Within sixty (60) days from effectivity, the Department of Agriculture must issue necessary rules and regulations to implement the Act (Section 35).
Inconsistent laws, decrees, executive orders, administrative orders