JENNIFER S.

ANCHETA IV-B
Republic of the Philippines
Congress of the Philippines
Metro Manila

Tenth Congress

Third Regular Session

Begun and held in Metro Manila, on Monday the twenty-eighth day of July,
nineteen hundred and ninety-seven.

[REPUBLIC ACT NO. 8435]

AN ACT PRESCRIBING URGENT RELATED MEASURES TO

MODERNIZE THE AGRICULTURE AND FISHERIES
SECTORS OF THE COUNTRY IN ORDER TO ENHANCE
THEIR PROFITABILITY, AND PREPARE SAID SECTORS
FOR THE CHALLENGES OF GLOBALIZATION THROUGH
AN ADEQUATE, FOCUSED AND RATIONAL DELIVERY
OF NECESSARY SUPPORT SERVICES, APPROPRIATING
FUNDS THEREFOR AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the

Philippines in Congress assembled.

SEC. 1. Short Title

– This Act shall be known as the “Agriculture and Fisheries Modernization Act of
1997.”

SEC. 2. Declaration of Policy.

– The goals of the national economy are a more equitable distribution of opportunities,
income and wealth; a sustained increase in the amount of goods and services produced by the
nation for the benefit of the people; and an expanding productivity as the key to raising the
quality of life for all, especially the underprivileged.

The State shall promote industrialization and full employment based on sound agricultural
development and agrarian reform, through industries that make full and efficient use of human
and natural resources, and which are competitive in both domestic and foreign markets. In
pursuit of these goals, all sectors of the economy and all regions of the country shall be given
optimum opportunity to develop. Private enterprises, including corporations, cooperatives,
and similar collective organizations, shall be encouraged to broaden the base of their
ownership.

Thus, it is hereby declared the policy of the State to enable those who belong to the
agriculture and fisheries sectors to participate and share in the fruits of development and
growth in a manner that utilizes the nation’s resources in the most efficient and sustainable
way possible by establishing a more equitable access to assets, income, basic and support
services and infrastructure.

The State shall promote food security, including sufficiency in our staple food, namely rice
and white corn. The production of rice and white corn shall be optimized to meet our local
consumption and shall be given adequate support by the State.

The State shall adopt the market approach in assisting the agriculture and fisheries sectors
while recognizing the contribution of said sectors to food security, environmental protection,
and balanced urban and rural development, without neglecting the welfare of the consumers,
especially the lower income groups. The State shall promote market-oriented policies in
agricultural production to encourage farmers to shift to more profitable crops.

The State shall empower the agriculture and fisheries sectors to develop and sustain
themselves. Toward this end, the State shall ensure the development of the agriculture and
fisheries sectors in accordance with the following principles:

a) Poverty Alleviation and Social Equity – The State shall ensure that the poorer sectors of
society have equitable access to resources, income opportunities, basic and support services
and infrastructure especially in areas where productivity is low as a means of improving their
quality of life compared with other sectors of society;

b) Food Security – The State shall assure the availability, adequacy, accessibility and
affordability of food supplies to all at all times;

c) Rational Use of Resources – The State shall adopt a rational approach in the allocation of
public investments in agriculture and fisheries in order to assure efficiency and effectiveness
in the use of scarce resources and thus obtain optimal returns on its investments;

d) Global Competitiveness – The State shall enhance the competitiveness of the agriculture
and fisheries sectors in both domestic and foreign markets;

e) Sustainable Development – The State shall promote development that is compatible with
the preservation of the ecosystem in areas where agriculture and fisheries activities are carried
out. The State should exert care and judicious use of the country’s natural resources in order
to attain long-term sustainability.

f) People Empowerment – The State shall promote people empowerment by enabling all
citizens through direct participation or through their duly elected, chosen or designated
representatives the opportunity to participate in policy formulation and decision-making by
establishing the appropriate mechanisms and by giving them access to information; and

g) Protection from Unfair Competition – The State shall protect small farmers and fisherfolk
from unfair competition such as monopolistic and oligopolistic practices by promoting a
policy environment that provides them priority access to credit and strengthened cooperative-
based marketing system.

SEC. 3. Statement of Objectives.

– This Act shall have the following objectives:

a) To modernize the agriculture and fisheries sectors by transforming these sectors from a
resource-based to a technology-based industry;

b) To enhance profits and incomes in the agriculture and fisheries sectors, particularly the
small farmers and fisherfolk, by ensuring equitable access to assets, resources and services,
and promoting higher-value crops, value-added processing, agribusiness activities, and agro-
industrialization;

c) To ensure the accessibility, availability and stable supply of food to all at all times;

d) To encourage horizontal and vertical integration, consolidation and expansion of

agriculture and fisheries activities, groups, functions, and other services through the
organization of cooperatives, farmers’ and fisherfolk’s associations, corporations, nucleus
estates, and consolidated farms and to enable these entities to benefit from economies of scale,
afford them a stronger negotiating position, pursue more focused, efficient and appropriate
research and development efforts and enable them to hire professional managers;

e) To promote people empowerment by strengthening people’s organizations, cooperatives

and NGOs and by establishing and improving mechanisms and processes for their
participation in government decision-making and implementation;

f) To pursue a market-driven approach to enhance the comparative advantage to our

agriculture and fisheries sectors in the world market;

g) To induce the agriculture and fisheries sectors to ascend continuously the value-added
ladder by subjecting their traditional or new products to further processing in order to
minimize the marketing of raw, unfinished or unprocessed products;

h) To adopt policies that will promote industry dispersal and rural industrialization by
providing incentives to local and foreign investors to establish industries that have backward
linkages to the country’s agriculture and fisheries resource base;

i) To provide social and economic adjustment measures that increase productivity and
improve market efficiency while ensuring the protection and preservation of the environment
and equity for small farmers and fisherfolk; and

j) To improve the quality of life of all sectors.

SEC. 4. Definition of Terms.

“Agrarian Reform Community” is a barangay at the minimum or a cluster of contiguous

barangays where there is a critical mass of farmers or farm workers and which features the
main thrust of agrarian development: land tenure improvement and effective delivery of
support services.

“Agricultural Lands” refers to lands devoted to or suitable for the cultivation of the soil,
planting of crops, growing of trees, raising of livestock, poultry, fish or aquaculture
production, including the harvesting of such farm products, and other farm activities and
practices performed in conjunction with such farming operations by persons whether natural
or juridical and not classified by law as mineral land, forest land, residential land, commercial
land, or industrial land.

“Agricultural Land Use Conversion” refers to the process of changing the use of agricultural
land to non-agricultural uses.

“Agricultural Sector” is the sector engaged in the cultivation of the soil, planting of crops,
growing of fruit trees, raising of livestock, poultry, or fish, including the harvesting and
marketing of such farm products, and other farm activities and practices.

“Agricultural Mechanization” is the development, adoption, manufacture and application of

appropriate location-specific, and cost-effective agricultural technology using human, animal,
mechanical, electrical and other non-conventional sources of energy for agricultural
production and post-harvest operations consistent with agronomic conditions and for efficient
and economic farm management.

“Agriculture and Fisheries Modernization” is the process of transforming the agriculture and
fisheries sectors into one that is dynamic, technologically advanced and competitive yet
centered on human development, guided by the sound practices of sustainability and the
principles of social justice.

“Agro-Processing Activities” refers to the processing of raw agricultural and fishery products
into semi-processed or finished products which include materials for the manufacture of food
and/or non-food products, pharmaceuticals and other industrial products.

“Banks”, collectively used, means government banks and private banks, rural banks and
cooperative banks.

“Basic Needs Approach to Development” involves the identification, production and

marketing of wage goods and services for consumption of rural communities.

“Communal Irrigation System (CIS)” is an irrigation system that is managed by a bona fide
Irrigators Association.

“Competitive Advantage” refers to competitive edge in terms of product quality and/or price.
It likewise refers to the ability to produce a product with the greatest relative efficiency in the
use of resources.

“Cooperatives” refers to duly registered associations of persons with a common bond of

interest who have voluntarily joined together to achieve a lawful common social and
economic end, making equitable contributions to the capital required and accepting a fair
share of the risks and benefits of the undertaking in accordance with universally accepted
cooperative principles.

“Department” refers to the Department of Agriculture.

“Economic Scale” refers to the minimum quantity or volume of goods required to be efficient.

“Economies of Scale” refers to the decrease in unit cost as more units are produced due to the
spreading out of fixed costs over a greater number of units produced.

“Empowerment” involves providing authority, responsibility and information to people

directly engaged in agriculture and fishery production, primarily at the level of the farmers,
fisherfolk and those engaged in food and non-food production and processing, in order to give
them wider choices and enable them to take advantage of the benefits of the agriculture and
fishery industries.

“Extension Services” refers to the provision of training, information, and support services by
the government and non-government organizations to the agriculture and fisheries sectors to
improve the technical, business and social capabilities of farmers and fisherfolk.

“Farmer’s and Fisherfolk’s Organizations or Associations” refers to farmers and fisherfolk’s

cooperatives, associations, or corporations duly registered with appropriate government
agencies and which are composed primarily of small agricultural producers, farmers, farm
workers, agrarian reform beneficiaries, fisherfolk who voluntarily join together to form
business enterprises or non-business organizations which they themselves own, control and
patronize.

“Farm-to-Market Roads” refers to roads linking the agriculture and fisheries production sites,
coastal landing points and post-harvest facilities to the market and arterial roads and
highways.

“Fisheries” refers to all systems or networks of interrelated activities which include the
production, growing, harvesting, processing, marketing, developing, conserving, and
managing of all aquatic resources and fisheries areas.

“Fisheries Sector” is the sector engaged in the production, growing, harvesting, processing,
marketing, developing, conserving, and managing of aquatic resources and fisheries areas.

“Fishing” refers to the application of techniques using various gear in catching fish and other
fisheries products.

“Fishing Grounds” refers to areas in any body of water where fish and other aquatic resources
congregate and become target of capture.

“Food Security” refers to the policy objective, plan and strategy of meeting the food
requirements of the present and future generations of Filipinos in substantial quantity,
ensuring the availability and affordability of food to all, either through local production or
importation, or both, based on the country’s existing and potential resource endowment and
related production advantages, and consistent with the overall national development
objectives and policies. However, sufficiency in rice and white corn should be pursued.

“Fresh Agricultural and Fishery Products” refers to agricultural and fisheries products newly
taken or captured directly from its natural state or habitat, or those newly harvested or
gathered from agricultural areas or bodies of water used for aquaculture.

“Global Competitiveness” refers to the ability to compete in terms of price, quality and
volume of agriculture and fishery products relative to those of other countries.

“Gross Value-Added” refers to the total value, excluding the value of non-agricultural or
fishery intermediate inputs, of goods and services contributed by the agricultural and fisheries
sectors.

“Headworks” refers to the composite parts of the irrigation system that divert water from
natural bodies of water such as rivers, streams, and lakes.

“Industrial Dispersal” refers to the encouragement given to manufacturing enterprises to

establish their plants in rural areas. Such firms normally use agricultural raw materials either
in their primary or intermediate state.

“Irrigable Lands” refers to lands which display marked characteristics justifying the operation
of an irrigation system.

“Irrigated Lands” refers to lands serviced by natural irrigation or irrigation facilities. These
include lands where water is not readily available as existing irrigation facilities need
rehabilitation or upgrading or where irrigation water is not available year-round.

“Irrigation System” refers to a system of irrigation facilities covering contiguous areas.

“Irrigators’ Association (IA)” refers to an association of farmers within a contiguous area
served by a National Irrigation System or Communal Irrigation System.

“Land Use” refers to the manner of utilizing the land, including its allocation, development
and management.

“Land Use Plan” refers to a document embodying a set of policies accompanied by maps and
similar illustrations which represent the community-desired pattern of population distribution
and a proposal for the future allocation of land to the various land-using activities, in
accordance with the social and economic objectives of the people. It identifies the location,
character and extent of the area’s land resources to be used for different purposes and includes
the process and the criteria employed in the determination of the land use.

“Land Use Planning” refers to the act of defining the allocation, utilization, development and
management of all lands within a given territory or jurisdiction according to the inherent
qualities of the land itself and supportive of sustainable, economic, demographic, socio-
cultural and environmental objectives as an aid to decision-making and legislation.

“Main Canal” refers to the channel where diverted water from a source flows to the intended
area to be irrigated.

“Market Infrastructure” refers to facilities including, but not limited to market buildings,
slaughterhouses, holding pens, warehouses, market information centers, connecting roads,
transport and communication and cold storage used by the farmers and fisherfolk in marketing
their produce.

“National Information Network (NIN)” refers to an information network which links all
offices and levels of the Department with various research institutions and local end-users,
providing easy access to information and marketing services related to agriculture and
fisheries.

“National Irrigation System (NIS)” refers to a major irrigation system managed by the
National Irrigation Administration.

“Network of Protected Areas for Agricultural and Agro-Industrial Development (NPAAAD)”

refers to agricultural areas identified by the Department through the Bureau of Soils and
Water Management in coordination with the National Mapping and Resource Information
Authority in order to ensure the efficient utilization of land for agriculture and agro-industrial
development and promote sustainable growth. The NPAAAD covers all irrigated areas, all
irrigable lands already covered by irrigation projects with firm funding commitments; all
alluvial plain land highly suitable for agriculture whether irrigated or not; agro-industrial
croplands or lands presently planted to industrial crops that support the viability of existing
agricultural infrastructure and agro-based enterprises, highlands, or areas located at an
elevation of five hundred (500) meters or above and have the potential for growing semi-
temperate and high-value crops; all agricultural lands that are ecologically fragile, the
conversion of which result in serious environmental degradation, and mangrove areas and fish
sanctuaries.

“On-Farm Irrigation Facilities” refers to composite facilities that permit entry of water to
paddy areas and consist of farm ditches and turnouts.

“Primary Processing” refers to the physical alteration of raw agricultural or fishery products
with or without the use of mechanical facilities.

“Post-Harvest Activities” includes, but is not limited to, threshing, drying, milling, grading,
storing, and handling of produce and such other activities as stripping, winnowing, chipping
and washing.

“Post-Harvest Facilities” includes, but is not limited to, threshers, moisture meters, dryers,
weighing scales, milling equipment, fish ports, fish landings, ice plants and cold storage
facilities, processing plants, warehouses, buying stations, market infrastructure and
transportation facilities.

“Premature Conversion of Agricultural Land” refers to the undertaking of any development

activity, the results of which modify or alter the physical characteristics of the agricultural
lands to render them suitable for non-agricultural purposes, without an approved order of
conversion from the DAR.

“Resource Accounting” refers to the process of tracking changes in the environment and
natural resources biophysically and economically in monetary terms.

“Resource-based” refers to the utilization of natural resources.

“Rural Industrialization” refers to the process by which the economy is transformed from one
that is predominantly agricultural to one that is dominantly industrial and service-oriented.
Agriculture provides the impetus and push for industry and services through the market that it
creates, the labor that it absorbs, and the income that it generates which is channeled to
industry and services. As development continues, with agriculture still an important sector,
industry and services begin to generate income and markets and concomitantly increase their
share of total income.

“Strategic Agriculture and Fisheries Development Zones (SAFDZ)” refers to the areas within
the NPAAAD identified for production, agro-processing and marketing activities to help
develop and modernize, with the support of government, the agriculture and fisheries sectors
in an environmentally and socio-culturally sound manner.

“Secondary Canal” refers to the channel connected to the main canal which distributes
irrigation to specific areas.

“Secondary Processing” refers to the physical transformation of semi-processed agricultural

or fishery products.

“Shallow Tube Well (STW)” refers to a tube or shaft vertically set into the ground for the
purpose of bringing ground water to the soil surface from a depth of less than 20 meters by
suction lifting.

“Small Farmers and Fisherfolk” refers to natural persons dependent on small-scale subsistence
farming and fishing activities as their primary source of income.

“Small and Medium Enterprise (SME)” refers to any business activity or enterprise engaged
in industry, agribusiness and/or services, whether single proprietorship, cooperative,
partnership or corporation whose total assets, inclusive of those arising from loans but
exclusive of the land on which the particular business entity’s office, plant and equipment are
situated, must have value falling under the following categories:

Micro : not more than P1,500,000

Small : P1,500,001 to P15,000,000

Medium : P15,000,001 to P60,000,000

The Department, in consultation with the Congressional Oversight Committee on Agricultural

and Fisheries Modernization, may adjust the above values as deemed necessary.

“Socio-Culturally Sound” means the consideration of the social structure of the community
such as leadership pattern, distribution of roles across gender and age groups, the diversity of
religion and other spiritual beliefs, ethnicity and cultural diversity of the population.

“Technology-based” refers to utilization of technology.

“Zoning Ordinance” refers to a local legislation approving the development/land use plan and
providing for the regulations and other conditions on the uses of land including the limitation
on the infrastructure that may be placed within the territorial jurisdiction of a city or
municipality