Creation of National Dairy Authority for dairy Dev

Policy and declared objectives

The State shall strive for national self-sufficiency in milk and dairy products as a vital feature of achieving a self-reliant and independent Philippine economy, ensuring proper nutrition and more employment opportunities. (Section 2)
The State shall recognize the primary role of the private sector in research, training, production, processing, and marketing, and shall provide incentives to those undertaking these activities, while the government limits itself to policy-making, facilitation, and regulation. (Section 2)
The State shall create an agency tasked to help the private sector accelerate the development and growth of the Philippine dairy industry under the spirit of cooperativism at all stages of dairy production, processing, distribution, marketing, and other dairy-related activities, while ensuring market viability of livestock and dairy products and focusing on breeds adapted to Philippine conditions. (Section 2)
The State shall help establish marketing networks and outlets, especially among and between processors and end-users, including integration of local milk production with existing industrial milk plants sufficient to meet local milk needs. (Section 2)
The Act’s objectives include accelerated development of the Philippine dairy industry; support and assistance to dairy producers (particularly rural-based small dairy farmers); encouragement of participation by farm families, rural cooperatives, and the private sector; ensuring adequate supply at affordable prices; improving livelihood and income through dairying; improving nutrition of children and pregnant and nursing mothers through locally produced milk; developing and disseminating appropriate smallholder-based dairy technology; improving milk production and building up productive milking herd; and conserving foreign exchange by supporting local milk production. (Section 3)

National Dairy Authority (NDA) created

A National Dairy Authority (NDA) is created as an agency attached to the Department of Agriculture for policy and program coordination. (Section 4)
The Authority is the central policy determining and directing body tasked to ensure the accelerated development of the Philippine dairy industry, consistent with the Act’s policies and objectives. (Section 4)
The Authority is governed by a Dairy Industry Board. (Section 5)

Dairy Industry Board composition and meetings

The Dairy Industry Board consists of:
- The Secretary of Agriculture as chairperson;
- The NDA Administrator as an ex officio member;
- The Secretary of Trade and Industry;
- The Secretary of Health;
- The Secretary of Education, Culture and Sports;
- The Secretary of Science and Technology;
- The Secretary of Agrarian Reform;
- The Director of the Dairy Training and Research Institute; and
- Four (4) other members appointed by the President upon the chairperson’s recommendation. (Section 5)
Of the four (4) appointed members: one (1) must come from the commercial milk processors’ group, and three (3) must come from dairy cooperatives and/or national dairy federation, with one representative each from Luzon, Visayas, and Mindanao. (Section 5)
Board appointed members hold office for three (3) years from appointment without reappointment. (Section 5)
Any member appointed to a vacancy serves only for the unexpired term of the member he succeeds. (Section 5)
The Board must convene in a regular monthly meeting and must hold special meetings when necessary. (Section 7)
A quorum exists with the presence of at least seven (7) Board members. (Section 7)
The vote of a majority of those present is sufficient to transact business in any meeting. (Section 7)
Department secretaries may be represented permanently by their undersecretaries or assistant secretaries with full voting power, and such representatives count toward quorum determination. (Section 7)
The chairperson shall not vote except in case of a tie. (Section 7)
The Administrator, coordinated with the Board Secretary, may submit matters by memorandum for resolution when the Board cannot be convened, and concurrence of a majority of Board members and/or alternates constituting a quorum is sufficient for approval. (Section 8)

Authority functions and Board allowances

The Authority must formulate and execute dairy programs generating national impact on rural and urban nutrition levels and incomes. (Section 6)
The Authority must assist in the purchase, importation, propagation, storage, distribution, and sale of dairy animals, semen, forage seeds, fertilizers, veterinary supplies, dairy equipment and engineering supplies, and other needed inputs for the dairy industry. (Section 6)
The Authority must encourage integration of dairy production and local milk into rural livelihood and nutrition programs and must help distribute dairy products into such programs. (Section 6)
The Authority must assume control and supervision over all dairy-related government agency personnel and programs, including specified units and entities:
- the Bureau of Animal Industry’s Dairy Division;
- the Livestock Development Council’s Dairy Division;
- the Philippine Dairy Corporation;
- the Livelihood Corporation’s Laguna Processing Center; and
- other dairy-related government agencies/divisions/councils,
  subject to Civil Service Commission guidelines. (Section 6)
The Authority may borrow, raise, or obtain funds; issue bonds and other instruments of indebtedness; or enter into financial/credit arrangements to support or carry out objectives, subject to laws governing public debts and expenditures. (Section 6)
The Authority may receive grants, subsidies, donations, or contributions from domestic or foreign corporations, thrusts, foundations, associations, and other sources from any private or government office, agency, or corporation in the Philippines or abroad. (Section 6)
The Authority must establish, maintain, or operate field units or offices nationwide to utilize the Act’s objectives. (Section 6)
The Authority must help design and implement a credit system to finance dairy farmers and dairy cooperatives or associations. (Section 6)
The Authority may charge reasonable fees for services rendered to attain the Act’s objectives. (Section 6)
The Authority must promulgate rules and regulations to carry out the Act’s provisions and policy objectives. (Section 6)
The Authority may adopt, alter, and use a corporate seal; sue and be sued; and perform acts necessary or incidental to carry out its objectives and powers. (Section 6)
The chairperson and Board members are entitled to per diems and other allowable emoluments fixed by the Board for every meeting actually attended, subject to existing laws, rules, and regulations, but in no case may such exceed Four thousand pesos (P4,000.00) per month. (Section 8)
Transportation expenses for representatives from far places must be reimbursed. (Section 8)
The Administrator, as an ex officio member of the Board, must receive only the remuneration and allowances provided by the Board for that position. (Section 8)

NDA management: Administrator appointment and duties

The Authority has a full-time Administrator to manage operations, assisted by a Deputy Administrator. (Section 9)
The Administrator and Deputy Administrator are appointed by the President of the Philippines. (Section 9)
The Administrator must be a citizen of the Philippines, at least thirty-five (35) years of age on appointment date, of good moral character, with recognized executive ability and competence, and preferably well-versed in aspects of the dairy industry. (Section 9)
The salary and allowances of the Administrator and Deputy Administrator must follow R.A. 6758 (Salary Standardization Act of 1989). (Section 9)
Subject to the Board’s control and supervision, the Administrator must:
- submit policy recommendations and proposed measures for Board consideration; (Section 10)
- recommend to the Board for approval an organizational structure and Plantilla in line with existing laws, rules, and regulations; (Section 10)
- execute, administer, and implement Board-approved policies and measures; (Section 10)
- submit to the Board, aligned with the national budget cycle, an annual budget and supplemental budgets for approval; (Section 10)
- represent the Authority in dealings with persons/entities/agencies/institutions, public or private, domestic or foreign, subject to limitations and conditions in the Act; (Section 10)
- appoint (subject to Board confirmation), discipline, or remove for cause officers and personnel in line with civil service law, rules, and regulations; and (Section 10)
- perform other duties assigned by the Board or the Secretary of the Department of Agriculture. (Section 10)

Dairy development through cooperatives, campaign, and priorities

The Authority must help organize small producers and processors of milk into cooperatives or other forms of organizations. (Section 11)
The Authority must facilitate collective arrangements enabling cooperatives to acquire dairy animals, feeds, veterinary and other supplies, materials, equipment, services of all kinds, and other dairy inputs under favorable terms. (Section 11)
The Authority must provide a forum for cooperative members to discuss common problems affecting production, marketing, and cooperative relationships with the Authority. (Section 11)
The Authority must help design credit systems providing loans, grants, and required services to dairy cooperatives and duly accredited people’s organizations. (Section 11)
The Authority must assist cooperatives in developing market channels and negotiating bulk outlets for milk output. (Section 11)
The Authority must support formation of a Dairy Cooperatives Federation among dairy cooperatives as a channel for its coordinative function. (Section 11)
The Authority must promote a nationwide campaign to boost support for the Act’s objectives and must encourage women’s groups’ participation in dairy and dairy-related projects, including dairy animal health care, village nutrition schemes, community-based processing, and marketing of milk and dairy products. (Section 12)
Immediately after the Act’s approval, the Authority—coordinating with other related agencies—must undertake vigorously priority projects comprising:
- educational programs for dairy farmers and dairy cooperatives (including seminars, workshops, assemblies, and others); (Section 13)
- training programs (including animal husbandry, feed technology, dairy cooperatives management, and other related aspects of dairying); (Section 13)
- dairy research and development (including breeds and breeding, herd improvement, indigenous and agri-waste feed sourcing, product development, herbal veterinary drugs and biologics, dairy facilities fabrication, and others); (Section 13)
- establishment of support services for farmers and cooperatives to acquire basic supplies and inputs for animal health and nutrition; and (Section 13)
- boosting the number and quality of local animal stocks through applied technology. (Section 13)

Dairy Development Fund and nutrition sourcing

The Authority must implement Section 13 through a Dairy Development Fund used exclusively for the Act’s priority programs. (Section 14)
The Fund begins with Two hundred million pesos (P200,000,000) from National Treasury funds not otherwise appropriated. (Section 14)
Every year thereafter, the General Appropriations Act must provide an amount of not less than One hundred forty million pesos (P140,000,000) to augment the Fund. (Section 14)
Government nutrition programs requiring milk and dairy products must be sourced from small farmers and dairy cooperatives, in coordination with the Authority. (Section 16)

Supply, importation guidelines, and pricing rules

The Authority must monitor:
- importation, manufacture, supply, and distribution of dairy products and raw materials for processing of milk and dairy products; and
- importation and exportation of dairy animals,
  and must set guidelines for importation, exportation, and pricing of dairy animals, raw materials, and other products necessary for manufacture/processing when industry needs require such guidelines. (Section 17)
The Authority must set such guidelines only after public hearing and after consultations with:
- the National Economic and Development Authority;
- the Department of Trade and Industry;
- the Department of Finance; and
- representatives of dairy cooperatives and the commercial sector. (Section 17)
Within three (3) years from the Act’s effectivity, dairy cooperatives and the commercial sector must mutually agree, subject to quality and price considerations, on a volume of local milk production to be absorbed by the commercial sector. (Section 17)
If, at the end of the three-year period, the parties do not mutually agree, the commercial sector must absorb a fixed portion of local milk supply to be determined by the Authority. (Section 17)
Processors that purchase locally produced milk from dairy cooperatives in excess of the volume prescribed by the Authority must be accorded tax credits equivalent to ten (10%) percent of the value of the excess volume purchased. (Section 17)

Taxes, duties, exemptions, and credits

The Authority must be exempt from payment of customs duties and taxes on importation of dairy animals, veterinary and other supplies, other farm inputs, dairy equipment and machineries, including spare parts, for distribution to dairy cooperatives, subject to conditions. (Section 18)
Conditions for the customs duties and tax exemption include that:
- the equipment/machineries (including spare parts) are not manufactured domestically in sufficient quantity, of comparable quality, and at reasonable prices; (Section 18)
- the articles are actually, directly, and exclusively used by dairy cooperatives in manufacture of their products; (Section 18)
- the articles are not disposed within three (3) years from acquisition without prior approval of the Authority; and (Section 18)
- if later sold, transferred, or exchanged in the Philippines to non-exempt persons/entities, the purchasers/recipients are treated as the importers and are liable for customs duties and internal revenue taxes due on such importations. (Section 18)
If later sold/transferred/exchanged to non-exempt persons/entities, the customs duties and internal revenue taxes due are a lien on the articles itself, superior to all other charges or liens, irrespective of possessors. (Section 18)
Donations, contributions, bequests, subsidies, or financial aid made to the Authority constitute allowable deduction from the donor’s income for income tax purposes and are exempt from donor’s tax, subject to conditions under the National Internal Revenue Code, as amended. (Section 18)
Small farmers and small farmers’ dairy cooperatives are exempt from all taxes on proceeds from sale of raw milk and milk products. (Section 18)
Milk processors are entitled to a presumptive input tax credit of four percent (4%) of the value of gross purchases from small farmers and small farmers’ dairy cooperatives. (Section 18)

Credit facilities, auditor oversight, and support agencies

The Bangko Sentral ng Pilipinas must adopt monetary and re-discounting policies designed to encourage rural banks, savings and loan associations, commercial banks, and other credit institutions to meet financing and credit needs essential to achieve the Act’s objectives. (Section 19)
The Philippine National Bank, Land Bank of the Philippines, and Development Bank of the Philippines must design and establish special lending programs at affordable terms for small dairy farmers and dairy cooperatives. (Section 19)
The Authority must have an auditor and complementary personnel appointed by the Commission on Audit in accordance with civil service law, rules, and regulations. (Section 20)
Salaries of the auditor and audit staff must be determined and paid by the Commission on Audit. (Section 20)
The Authority must coordinate closely with other government agencies in establishing support services for the dairy industry, including needed infrastructure and setting tariff rates to countervail subsidized imports. (Section 15)
The Authority must coordinate closely with government nutrition requirements so that milk and dairy products are sourced from small farmers and dairy cooperatives. (Section 16)

Transitory provisions, penalties, and implementation

The Philippine Dairy Corporation is abolished. (Section 21)
Dairy functions of the Livestock Development Council’s Dairy Division, the Bureau of Animal Industry’s Dairy Division, and the Livelihood Corporation’s Laguna Processing Center are transferred to the Authority. (Section 21)
Personnel, assets, funds held, grants, subsidies, and records of the abolished agencies, as well as those of the specified transferred offices, are transferred to the Authority. (Section 21)
The Secretary of Agriculture must designate an officer-in-charge pending appointment of the Administrator by the President. (Section 21)
Incumbent officials and employees of affected offices continue to exercise functions, duties, and responsibilities with corresponding benefits and privileges unless and until otherwise ordered by the Board. (Section 21)
The Board must approve and prescribe the Authority’s new position structure and staffing pattern within ninety (90) days from effectivity, within guidelines under existing civil service and other laws, rules, and regulations.
Those separated from service must receive retirement benefits under existing laws, rules, and regulations.
Otherwise, separated personnel must be paid the equivalent of one (1) month’s salary for every year of service or a fraction thereof, computed on the basis of the highest salary received, with a cap of twelve (12) months’ salary equivalent. (Section 21)
Any person or entity violating any provision of the Act must be sentenced to imprisonment of not more than six (6) months or a fine of not more than Twenty thousand pesos (P20,000.00) or both, at the discretion of the Court. (Section 22)
The Department of Agriculture, coordinated with the member agencies and private sector representatives of the Dairy Industry Board, must prepare and issue implementing rules and regulations within six (6) months from the Act’s effectivity. (Section 23)
The Secretary of the Department of Agriculture must report to both Houses of Congress on the status of promulgation of the implementing rules and regulations within ninety (90) days from the Act’s effectivity. (Section 23)

Appropriations, repeals, separability

Appropriations of agencies, divisions, councils, and corporations merged, abolished, or transferred pursuant to the Act must be turned over to the Authority, and sums necessary for continued operation and maintenance must be included in the annual General Appropriations Act thereafter. (Section 24)
All laws, decrees, executive orders, rules and regulations, or parts thereof inconsistent with the Act are repealed or modified accordingly. (Section 25)
If any provision is declared unconstitutional or invalid, remaining provisions not affected continue in full force and effect. (Section 26)