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Page 1: the most number of findings. The ACPcpbrd.congress.gov.ph/images/PDF Attachments/ABN... · Fisheries Modernization Act (AFMA)–mandated Agro-Industry Modernization Credit and Financing
Page 2: the most number of findings. The ACPcpbrd.congress.gov.ph/images/PDF Attachments/ABN... · Fisheries Modernization Act (AFMA)–mandated Agro-Industry Modernization Credit and Financing

HIGHLIGHTS

New Appropriations. The proposed new appropriations for 2020 for the Department of

Agriculture (DA) excluding its attached corporations amounts to P54.43 billion. By cost

structure, the new DA budget is broken down as follows: (1) General Administration and

Support (GAS )– P 2.27 billion (4.2%), Support to Operations – P 4.64 billion (8.5%), and

Operations – P 47.52 billion (87.3%). The proposed budget is 15.1% higher than the 2019 level

of P47.0 billion. As percentage to the DA’s total obligations, new appropriations from 2016-

2018, accounted for roughly 111.2% of the total. This is mainly due to the significant level of

unused appropriations from 2016-2019.

Expenditure Program. The 2020 expenditure program of the DA includes the new

appropriations of P54.43 billion and automatic appropriations of P2.39 billion. From P49.67

billion in 2019, the expenditure program for the DA is expected to go up to P56.82 billion in

2020 with the increments mostly going to the OSec, notably the P10.0 billion allocation for the

Rice Competitiveness Enhancement Program (RCEF), and for the expenditure programs of

new/transferred agencies, namely: the NFRDI and the FPA. Inclusive of DA Attached

Corporations the 2020 spending level will amount to P71.85 billion.

The spending levels of the DA have fluctuated from P44.76 in 2016 to P48.3 billion the following

year then to P44.4 billion in 2018. The shift to annual cash-based budgeting starting 2019 and the

budgetary adjustments which are still unrecorded for the year does not make it comparable with

previous years. Note that the 2019 and 2020 expenditure levels are still net of any budgetary

adjustments or fund transfers made during budget execution.

Allocation by Major Programs. About 81.2% of the programs, especially the big ticket items,

will be implemented under the OSec in 2020. Three of the largest programs, namely: 1)

Agricultural Mechanization, Equipment Facilities and Infrastructure Program (P13.44 billion);

Locally-funded and Foreign-assisted Program (P13.43 billion); and, Technical and Support

Services Program (10.51 billion), already account for 78.7% of the total program cost. The

Locally-funded and Foreign-assisted Program to be implemented by the OSec will increase by

173.8%, from P4.91 billion in 2019 to P13.43 billion in 2020. This is primarily due to the P10.0

billion allocation for the Rice Competiveness Enhancement Program as mandated by RA 11203

(Rice Liberalization Law). In effect, without the P10.0 billion funding for the Rice

Competitiveness Enhancing Program, operations budget for 2020 would have been lower by

P2.36 billion (P7.64 billion increase in operations budget less P10.0 billion).

By Major Commodity Program, the National Rice Program will continue to have the largest

allocation at P7.0 billion. The 2020 budget level, however, is P455.6 million lower the 2019 level

of P7.45 billion. Note that allocations for the NRP actually constitute more than 50% of the

total agriculture budget as allocations for the NIA, NFA, PhilRice, PCIC and PhilMech are

geared towards the rice commodity.

Evidently, all other commodity programs will have reduced budget in 2020. The National

Livestock Program’s budget will have the biggest reduction of 20.2% in 2020 (P237.5 million).

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This is unfortunate due to the widespread reports of mortality of swine in hog farms in

Rodriguez, Rizal and Bulacan, together with the reported cases of Avian Influenza or bird flu

outbreak in some parts of the country. The government shall not take any chances against

animal diseases that may affect the industry.

Budget Utilization and Unused Appropriations. The Obligation-Appropriations Ratio

(OAR) is a measure of how well agencies utilize their appropriations. The DA has 83.24%

OAR in 2018 (see Table 9). This is a decrease from the 2017 figure of 107.07%. The 2018 ratio

is also lower by almost 11% compared to the average ratio of 94.38% for the period 2014-2017.

Other than 2014 ratio of 80.90%, the 2018 ratio is lower than that of 2015-2017 ratio.

Overall disbursement rate of DA for 2018 was at 73.36%, which is higher by 7.22 percentage

points than the 2017 rate of 66.14%. Among the key agencies of DA, the NMIS registered the

lowest disbursement rate of 61.39% in 2018, when it obligated P612.03 million but was able to

disburse only P375.70 million. Similarly, the BFAR posted a low disbursement rate of 71.59%.

Agencies like ACPC, BFAR and PhilMech posted lower disbursement rate in 2018 than in 2017.

Compliance with Audit Recommendations. One highlight of the COA AAR or

Management Letter1 is the update on the implementation of prior year’s observations and

recommendations. In the 2018 AAR, NMIS have the least audit findings while BFAR have

the most number of findings. The ACPC likewise has the highest “fully implemented” audit

findings while the OSEC has the highest “not implemented” audit findings (Table 14).

Based on the “Executive Summary” of the AAR for the DA during the period 2014 – 2018.

The COA Audit Team rendered either adverse or qualified opinions on the fairness of

presentation of financial statements due to the accounting errors and deficiencies in assets and

liabilities.

COA AUDITOR’S OPINIONS

Particulars 2014 2015 2016 2017 2018

OSEC A A Q Q Q

ACPC Q Q Q Q Q

BFAR Consolidated ML Q Q Q Q

NMIS Q Q Q Q Q

PCAF Q Q Q Q

PhilFIDA ML Q Q Q

CDA Q

FPA Q

FIDA Q

LDC Q

NAFC Q

NFA Q Q A A A

PCA A A A Q Q

NA = Not Available, ML = Management Letter

Auditor’s Opinions are as follows: unqualified (UQ), qualified (Q), adverse (A) and disclaimer of opinion (D)

1 Submitted in lieu of an AAR when an agency fails to submit its financial statements within the required period .

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TABLE OF CONTENTS

Page

I. Mandates and Organizational Outcomes 1

Figure 1 DA Cost Structure and Organizational Outcomes, 2020 4

II. Sources of f\Funds 5

Table 1 Sources of Funds, DA, 2016-2020 6

III. Expenditure Program 7

Table 2 Expenditure Program, DA and its Attached Agencies, 2016-2020 9

Table 2.1 Expenditure Program, DA Attached Corporations, 2016-2020 10

Table 3 Expenditure Program by General Expense Class, 2016-2020 11

Table 4 Unfilled Positions by Agency, 2016-2020 12

Table 5 Regional Distribution of the (Department) Budget, 2017-2020 12

IV. New Appropriations 13

Table 6 New Appropriations by Agency, 2016-2020 13

Table 7 Summary of Programs for 2019-2020 15 Table 7.1 DA’s Priority (Commodity) Programs for 2019-2020 17

Table 8 Operations Budget by Organizational Outcome, Program

and General Expense Class, OSec, 2020 17

Table 8.1 Operations Budget by Organizational Outcome, Program

and General Expense Class, BFAR, 2020 18

V. Performance Review 18

Table 9 Obligation-Appropriations Ratio (%), 2014-2018 18

Table 10 Unused Appropriations, 2014-2018 19

Table 11 Disbursement Rate by Agency, 2017-2018 19

Table 12 Budget Utilization by Major Program, 2018 20

Table 13 Performance Indicators by Organizational Outcome, 2016-2018 21

Table 14 Performance Indicators of Major Programs, 2018-2020

VI. COA Findings and Recommendations 22

Table 15 Status of Implementation of COA Recommendations 22

Table 16 COA Auditor’s Opinions, 2014-2018 27

ANNEXES

Table 1.1 Sources of Funds, OSec, 2016-2020 28

Table 1.2 Sources of Funds, ACPC, 2016-2020 28

Table 1.3 Sources of Funds, BFAR, 2016-2020 29

Table 1.4 Sources of Funds, FPA, 2016-2020 29

Table 1.5 Sources of Funds, NFRDI, 2016-2020 29

Table 1.6 Sources of Funds, NMIS, 2016-2020 30

Table 1.7 Sources of Funds, PCC, 2016-2020 30

Table 1.8 Sources of Funds, PhilMech, 2016-2020 30

Table 1.9 Sources of Funds, PCAF, 2016-2020 31

Table 1.10 Sources of Funds, PhilFIDA, 2016-2020 31

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1

DEPARTMENT OF AGRICULTURE

I. MANDATE AND ORGANIZATIONAL OUTCOMES

1.1 The Department of Agriculture (DA) is a government agency responsible for the promotion of

agricultural development by providing the policy framework, public investments, and support

services needed for domestic and export–oriented business enterprises. In the fulfillment of

this mandate, it shall be the primary concern of the Department to improve farm income and

generate work opportunities for farmers, fishermen, and other rural workers. It shall

encourage people’s participation in agricultural development through sector representation in

agricultural policymaking bodies so that the policies, plans and programs of the Department

are formulated and executed to satisfy their needs.

DA Attached Agencies

1.2 Agricultural Credit Policy Council (ACPC) assists the DA in synchronizing all agriculture &

fisheries credit facilities and program. It oversees the implementation of the Agriculture and

Fisheries Modernization Act (AFMA)–mandated Agro-Industry Modernization Credit and

Financing Program (AMCFP), and manages and facilitates the collection and consolidation of

government-directed credit programs into the AMCFP.

1.3 Bureau of Fisheries and Aquatic Resources (BFAR) is responsible for the development,

improvement, management and conservation of the country’s fishery and aquatic resources.

1.4 Fertilizer and Pesticide Authority (FPA)1 is responsible for assuring adequate supply of

fertilizer and pesticide at reasonable prices; rationalizing the manufacture and marketing of

fertilizer; protecting the public from the risks of the inherent use of pesticides; and educating

the agricultural sector in the use of these inputs.

1.5 National Fisheries Research and Development Institute (NFRDI)2 is responsible for

research of the country’s fisheries and aquatic resources. It generates scientific knowledge and

technologies that will proactively address the needs of the fisheries industry and fisherfolk.

1.6 National Meat Inspection Service (NMIS) promulgates and implements policies,

procedures, rules and regulations governing post-production flow of livestock and meat and

This document was prepared by Prince C. T. Mamhot and Ma. Leni Lebrilla as input to the deliberations of the House Committee on

Appropriations on the FY 2020 proposed National Budget. The report benefitted from the inputs of Dir. Dominador M. Gamboa, and

Exec. Dir. Novel B. Bangsal, and from the overall guidance of Deputy Secretary-General Romulo EM Miral, Jr., PhD. The layout/design of the infographics by Alexiz S. Taaca and Carla P. Soriano is also acknowledged. The views, perspectives, and

interpretations in this ABN do not necessarily reflect the positions of the House of Representatives as an institution or its individual Members. A copy of this publication is available at the CPBRD’s website: cpbrd.congress.gov.ph.

1 Administrative supervision of the FPA was transferred to the Office of the President (OPAFSAM) by virtue of EO No, 165, S.of 2014 but was returned to the DA on September 17, 2018 under EO No. 62, S. of 2018.

2 Assumes the research function of BFAR after the passage of RA 8550 in 1998, as amended by RA 10654 in 2015.

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meat products (both locally-produced and imported) through the various stages of marketing

and proper handling, inspection, processing, storage and preservation of such products.

1.7 Philippine Carabao Center (PCC) is mandated to conserve, propagate, and promote the

carabao as a source of draft animal power, meat, milk, and hide to benefit the rural farmers. It

is responsible for the promotion of profitable and sustainable carabao-based enterprises

designed to improve farmers’ income.

1.8 Philippine Center for Post-harvest Development & Mechanization (PhilMech) is

mandated to generate, extend and commercialize appropriate and problem-oriented agriculture

and fishery postharvest and mechanization technology.

1.9 Philippine Council for Agriculture and Fisheries (PCAF)3 coordinates and monitors

agricultural and fisheries modernization processes, and the development of public-private

partnerships as consultative bodies of the DA.

1.10 Philippine Fiber Industry Development Authority (PHILFIDA)4 promotes the growth

and development of the Philippine Fiber Industry through research and development,

production support, fiber utilization, standards implementation and trade regulation.

DA Attached Corporations

1.11 National Dairy Authority (NDA) ensures the accelerated development of the Philippine

dairy industry through policy direction and program implementation.

1.12 National Food Authority (NFA)5 is mandated to continue to perform the role of ensuring

food security by the maintenance of buffer stock sourced from local farmers as provided for

in RA 11203, the rice liberalization law (Rule 8.1 of the IRR of RA 11203). The agency is

tasked to engage the DSWD and LGUs in distributing the buffer stock during emergency

situations (Rule 8.7 of the IRR of RA 1103).6

3 The PCAF is the consolidation of the Livestock Development Council (LDC) and the National Agriculture and

Fisheries Council (NAFC) by virtue of Department Order No. 6, Series of 2013 and as mandated by Executive

Order No. 366 dated October 04, 2004 (Rationalization Plan of the Executive Branch). 4 The PHILFIDA is the consolidation of the Fiber Industry Development Authority (FIDA) and Cotton

Development Administration (CoDA) by virtue of Department Order No. 2, Series of 2013 and as mandated by

Executive Order No. 366 dated October 04, 2004 (Rationalization Plan of the Executive Branch). 5 The oversight responsibilities over the NFA together with the NIA, PCA and FPA were transferred to the Office of

the President (OP) through the Office of the Presidential Assistant for Food Security and Agricultural

Modernization (OPAFSAM) by virtue of EO No. 165 issued on May 5, 2014. The NFA was later placed under the supervision of the Office of the Cabinet Secretary together with 12 other agencies pursuant to EO No. 01, dated

June 30, 2016. Supervision of the NFA, PCA and FPA was transferred back to the DA on September 17, 2018 pursuant to Section 2 of EO No. 62.

6 The effectivity of the transfer of functions and regulatory powers of the NFA as provided for in Article III of the RA

11203 is specifically enumerated in Rule 3.1 and Rule 3.2 of the IRR.

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1.13 National Tobacco Administration (NTA) is mandated to improve the economic and living

conditions and raise the quality of life of the tobacco farmers including those who depend

upon the industry for their livelihood.

1.14 Philippine Coconut Authority (PCA) is tasked to develop the industry to its full potential in

line with the new vision of a united, globally competitive and efficient coconut industry. It

promotes the rapid integrated development and growth of the coconut and other palm oil

industry in all its aspects and ensure that the coconut farmers become direct participants in,

and beneficiaries of, such development and growth.

1.15 Philippine Crop Insurance Corporation (PCIC) provides insurance protection to

agricultural producers particularly the subsistence farmers from crop losses arising from natural

calamities and pests and diseases, and non-crop agricultural assets losses due to perils that

assets have been insured against.

1.16 Philippine Fisheries Development Authority (PFDA) identifies and determines the sites

for the establishment of fishing port complexes and prepares, adopt sand implements

comprehensive plans for their overall development, including the specifications for

infrastructure facilities, such as piers, wharves, quays, etc. and breakwaters in coordination with

the DPWH, and civil works, such as factory buildings, warehouses, cold storage/ice plants,

other structures related to the fishing industry as may be necessary and useful to conduct of the

business.

1.17 Philippine Rice Research Institute (PhilRice) sustains and further improves the gains

already made in rice production. It is mandated to improve the income and economic

conditions of small rice farmers; to expand employment opportunities in the rural areas and to

promote the general welfare of the people through self-sufficiency in rice production.

1.18 Philippine Sugar Corporation (Philsucor) especially charged and empowered to design and

implement a program for sugar mills, refineries and other sugar facilities. It assists the

sugarcane industry through the formulation and implementation of innovative and diversified

assistance programs to its stakeholders, for the continuing sustainability and enhancement of

sugarcane production, including the production of co-products and by-products of sugarcane.

1.19 Sugar Regulatory Administration (SRA) promotes the growth and development of the

sugarcane industry through greater participation of the private sector and to improve the

working conditions of the laborers.

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FIGURE 1 DA COST STRUCTURE AND ORGANIZATIONAL OUTCOMES, 2020

NEW APPROPRIATIONS (AMOUNTS IN MILLIONS)

Note: The figure appearing after the agency name is the total proposed New Appropriations for the agency, while the sum of allocations to

Organizational Outcomes (OOs) is equal to the agency’s Operations budget.

DA ATTACHED CORPORATION

Sources of basic data: National Expenditure Program 2020 and Department of Agriculture

OSec P 1,240.6 M

ACPC 27.7 M

BFAR 550.7 M

FPA 87.7 M

NFRDI 46.5 M

NMIS 63.1 M

PCC 38.0 M

PhilMech 74.7 M

PCAF 57.7 M

PhilFIDA 86.1 M

General Administration and Support

P 2,272.7 M ( 4.2 %)

OSec P 3,834.0 M

ACPC

BFAR 778.9 M

FPA

NFRDI 7.5 M

NMIS

PCC

PhilMech

PCAF

PhilFIDA

THE DEPARTMENT OF AGRICULTURE (P54,431.7 M)

OSec P 43,681.1 M - Productivity in the agriculture & fisheries sector increased; forward linkage to the industry & services sectors increased; and sector resilience to climate change risks increased ACPC P 2,582.2 M - Access of small farmers & fisherfolk to formal credit under the AMCFP increased BFAR P 5,857.9 M - Productivity in the fisheries sector within ecological limits improved

FPA P 192.2 M - Fertilizer and pesticide products and handlers regulated NFRDI P 286.5 M - Responsive, sustainable and globally competitive fisheries industry through R & D NMIS P 413.4 M - Meat safety and quality ensured; meat industry sector developed PCC P 447.1 M - Carabao-based enterprises enhanced PhilMech P 338.7 M - Increase resource-use efficiency and productivity, reduce losses and add value to the

produce through research, development and extensions PCAF P 234.0 M - Enhanced Agriculture and Fishery Stakeholders Participation in Policy Development PhilFIDA P 398.5 M - Productivity in fiber industry increased

ORGANIZATIONAL OUTCOMES

DA Attached Corporations P 15,026.9 Million

NDA P 266.6 M Growth and competitiveness of the dairy sector enhanced

NFA P 7,000.0 M Food security for rice and corn ensured

NTA P 560.4 M Productivity and income of tobacco farmers increased PCA P 1,123.5 M Growth and competitiveness of the coconut and oil palm industry enhanced

PCIC P 3,500.0 M Financial risk protection for agricultural producers increased PFDA P 1,425.8 M Fish ports and other post-harvest facilities and services enhanced PhilRice P 650.6 M Adoption of high quality seeds of developed/released rice varieties and other tech. increased Philsucor P - M Credit financing assistance to Sugarcane Planters’ Coop./Fed./Asso. of Sugar Mills increased SRA P 500.0 M Growth and competitiveness of the sugar industry sustained

Support to Operations

P 4,637.7M ( 8.5%)

OSec P 38,606.6 M

ACPC 2,554.5 M

BFAR 4,528.4 M

FPA 104.5 M

NFRDI 232.4 M

NMIS 350.3 M

PCC 409.2 M

PhilMech 264.1 M

PCAF 176.2M

PhilFIDA 295.2 M

PhilFIDA M

Operations

P 47,521.3 M (87.3%)

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Cost Structure

1.20 Figure 1 shows the FY 2020 proposed new appropriations for the DA and its attached

agencies, its cost structure and the corresponding allocations for the organizational outcomes

(OO) of the different units/agencies of the department. OOs of the DA’s attached

corporations are likewise presented. Organizational outcomes are short to medium-term

results produced by an agency that contribute to the achievement of its legislated mandate,

achieved through the delivery of programs.

1.21 The proposed new appropriations for the DA (excluding its attached corporations) in 2020

amounts to P54.43 billion. By cost structure, the DA budget is broken down as follows: (1)

General Administration and Support (GAS )– P 2.27 billion (4.2%), Support to Operations –

P4.64 billion (8.5%), and Operations – P 47.52 billion (87.3%).

1.22 The agency/office which gets the largest share of the GAS budget is the Office of the

Secretary (OSec) at P1.24 billion or 54.6% of the total GAS budget. This is followed by

BFAR with P0.55 billion or 24.2%. The top recipients of the Operations budget which will

support the implementation of programs and projects of the Department are the OSec, BFAR

and ACPC with P38.61 billion (81.2%), P4.53 billion (9.5%) and P2.55 billion (5.4%).

II. SOURCES OF FUNDS

2.1 The DA expenditures are funded largely by new appropriations (legislated yearly). Apart from

new annual appropriations, agencies have other sources of funds. These include automatic and

continuing appropriations, and budgetary adjustments. Another source of funds is the

supplemental appropriations in the form of a separate law.

2.2 The proposed FY 2020 new appropriations is presented under a cash-based system. Under

such system, all government programs and projects budgeted for the fiscal year should be

implemented and delivered within the fiscal year. Payments (for goods delivered, services

rendered, inspected, and accepted) can be made up in the three-month Extended Payment

Period of the following year. On the other hand, under the obligation-based budget that is

implemented until 2018, appropriations are considered used once obligated or when contracts

are awarded before the end of the fiscal year. Actual implementation and payments can be

made even after the fiscal year (DBM, 2018).

2.3 Table 1 presents the sources of funds for the DA from 2016 to 2020. The proposed new

appropriations for 2020 of P54.43 billion is 15.1% higher than the 2019 level of P47.0 billion.

As percentage to the DA’s total obligations, new appropriations from 2016-2018, accounted

for roughly 111.2% of the total. This is mainly due to the significant level of unused

appropriations from 2016-2019. Interestingly, unused appropriations in 2019 amounted to

P7.50 billion despite the shift to cash-based budgeting. The share of new appropriations in

2020 is comparatively lower, and this may still be adjusted because the amounts of budgetary

adjustments and unused appropriations are not yet included in the total available

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appropriations. For 2019, continuing appropriations which arises from unreleased

appropriations and unobligated allotments from previous GAA amounted to P7.5 billion

TABLE 1

SOURCES OF FUNDS, 2016-2020

DEPARTMENT OF AGRICULTURE

Sources of basic data: NEP 2018-2020

2.4 In addition to the P54.43 billion proposed new appropriations for 2020, the DA will have

P2.39 billion in automatic appropriations. Automatic appropriations consist of grants

proceeds, retirement and life insurance premiums and other funds in the special account,

which have been authorized by existing legislation and does not require periodic action by

Congress.

2.5 The 2020 automatic appropriations of P2.39 billion of the DA are intended for the Retirement

and Life Insurance Premium or RLIP (P421.3 million), and from the Agricultural

Competitiveness Enhancement Fund or ACEF (P1.8 billion)7 and the Special Account of the

General Fund (163.7 million).

7 Special Provision No. 1 of the 2020 proposed budget of the DA provides that in addition to the amount

appropriated therein, an amount of P1.80 billion sourced from all duties collected from the importation of

agricultural products, except rice, under the minimum access volume mechanism, constituted into the ACEF

2016 2017 2018 2019 2020

Levels (in Million Pesos)

New Appropriations 48,447.5 45,222.4 53,336.3 47,293.2 54,431.7

Supplemental Appropriations - -

Automatic Appropriations 606.6 2,546.7 2,151.8 2,379.0 2,385.1

Continuing Appropriations 6,883.5 6,100.3 7,492.7

Budgetary Adjustments (3,086.8) (946.1) (3,303.0)

Total Available Appropriations 52,850.8 52,923.4 52,185.1 57,164.9 56,816.7

Less: Unused Appropriations (7,700.8) (2,819.5) (7,785.9) (7,492.7)

Total Obligations 42,891.4 44,935.2 44,399.2 49,672.2 56,816.7

Percent Share (%)

New Appropriations 91.7 85.4 102.2 82.7 95.8

Supplemental Appropriations

Automatic Appropriations 1.3 4.8 4.1 4.2 4.2

Continuing Appropriations 13.0 11.5 13.1 -

Budgetary Adjustments (5.8) (1.8) (6.3)

Total Available Appropriations 100.0 100.0 100.0 100.0 100.0

Less: Unused Appropriations (14.6) (5.3) (14.9) (13.1)

Total Obligations/(Expenditure) Program 85.4 94.7 85.1 86.9 100.0

ParticularsCash-BasedObligation-Based

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2.6 Budgetary adjustments of the DA are fund transfers to and from other accounts during budget

execution. From 2016-2018, yearly average of fund transfer to the Department of Public

Works and Highways was at P7.78 billion, mainly for the funding requirement of farm-to

market roads. On the other hand, actual fund transfers from other government offices were

mainly due to Miscellaneous Personnel Benefits Fund (MPBF)8, Pension and Gratuity Fund

(PGF), National Disaster Risk Reduction and Management Fund (NDRRMF) and

Unprogrammed Fund.

III. EXPENDITURE PROGRAM

3.1 Table 2 shows the actual amounts of obligation incurred by the DA and its attached agencies in

2016-2018 as well as the adjusted and proposed amounts for 2019 and 2020, respectively.

Obligations refer to contracts entered into by the agency with suppliers of goods and services.

It likewise includes obligations for payment of salaries, allowances and other compensation of

agency personnel. As stated earlier, cash-based appropriation will be implemented for FY 2020.

3.2 The spending levels of the DA have fluctuated from P44.76 in 2016 to P48.3 billion the

following year then to P44.4 billion in 2018. The shift to annual cash-based budgeting starting

2019 and the budgetary adjustments which are still unrecorded for the year do not make it

comparable with previous years. Note that the 2019 and 2020 expenditure levels are still net of

any budgetary adjustments or fund transfers made during budget execution. From P49.67

billion in 2019, the expenditure program for the DA is expected to go up to P56.82 billion in

2020 with the increments mostly going to the OSec, notably the P10.0 billion allocation for the

Rice Competitiveness Enhancement Program (RCEF), and for the expenditure programs of the

new/transferred agencies, namely: the NFRDI and the FPA.

3.3 Table 2.1 shows the expenditure program for attached corporations under the DA. From 2016

to 2017 (under obligation-based budget), the level of budget support to DA’s attached

corporations has slightly increased from P4.12 billion to P4.9 billion In 2018, however,

budgetary support has gone up to P21.09 billion or 150.7% increase from the previous year.

Much of the increase can be attributed to the transfer of the administrative supervision of the

NFA back to the DA from the OP (Cabinet Secretary)9. Funding subsidy to the NFA in said

pursuant to Section 1 of RA 10848, as amended, shall be used for the increased productivity of farmers and

fisherfolk. 8 MPBF is intended for payment of bonuses, allowances, associated premium, personnel services requirement for

filling of unfilled positions, creation of new positions, and other personnel benefits that arise due to deficiencies in

authorized salaries. 9 Supervision of the NFA together with the PCA and FPA was transferred back to the DA on September 17, 2018

pursuant to Section 2 of EO No. 62.

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year amounted to P12.79 billion. Budgetary support levels for the agency are at P7.01 billion in

2019 and 2020 under the cash-based budgeting system.

3.4 Allocation to the PCIC had likewise increased from P2.5 billion in 2017 to P3.5 billion in 2018.

The level of budgetary support remains at P3.5 billion in 2019 and 2020. Budgetary support is

given to the PCIC for the insurance premium subsidies of agrarian reform beneficiaries (ARBs)

and subsistence farmers/fisherfolk listed under the Registry System for Basic Sectors in

Agriculture (RSBSA)10. However, strengthening the agency by increasing its capitalization is

necessary as climate and disaster-related risks amplify the need to address design and

implementation issues – i. e. expansion of insurance coverage and products through legislation,

institutionalizing index-based insurance and re-insurance programs, and establishment of more

field offices nationwide.

3.5 Budget allocations to the ACPC of P2.55 billion and P2.59 billion in 2019 and 2020,

respectively, were comparatively higher than the 2018 level of P1.13 billion. Consequently, the

agency’s share to the total DA budget increased to 5.1% and 4.6% in 2019 and 2020,

respectively from 2.5% in 2018. The increased allocation will be used to either launch new

credit programs or expand existing ones. Among the new programs are the Production Loan

Easy Access (PLEA) Program which is a loan facility of the Department of Agriculture –

Agricultural Credit Policy Council (DA-ACPC) designed to address the financial needs of

marginal and small farmers and fisherfolk, and the Agriculture and Fisheries Machinery and

Equipment Loaning Program, wherein a group of farmers or fishermen can apply for a loan at

two percent interest, payable in eight years.

3.6 The allocation to the PhiSuCor in 2018 in the amount to P272.8 million also contributed

modestly to the increase of the total budget of the DA attached corporation. PhilSuCor is

tasked to assist the sugarcane industry through the formulation and implementation of

innovative and diversified assistance programs to its stakeholders. Section 11 of RA 10659 or

the Sugarcane Industry Development Act of 2015 has laid down the conditions for the

maximization of the country’s sugarcane resources by mandating the DBM to “include annually,

starting the CY 2016, an initial aggregate amount of P2.0 billion in the President’s program of

expenditures for submission to Congress…”. Note however, that PhilSuCor has no budgetary

allocations for 2019 and 2020.

10 RSBSA is a list of farmers, farm workers and fisherfolks in 75 provinces excluding the National Capital Region (NCR) and

the Autonomous Region in Muslim Mindanao (ARMM) used by the Department of Budget and Management (DBM) to reach target beneficiaries of various agricultural programs of the government.

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TABLE 2

EXPENDITURE PROGRAM BY AGENCY, 2016-2020

DEPARTMENT OF AGRICULTURE AND ITS ATTACHED AGENCIES

(AMOUNTS IN MILLION PESOS)

Sources of basic data: BESF 2018- 2020

3.7 Level of budgetary support for the PCA continues its downward trend. From P1.49 billion in

2018, it decreased to P1.25 billion in 2019 and P1.12 billion in 2020. Financial support both for

the coconut farmers and the coconut industry, however, may be adequately addressed if the

proposed legislative measure setting the management and utilization guideline of the P75.0

billion Coco Levy Fund will be passed by Congress and approved by the President.11 Note that

11 A legislative measure which sets a guideline for the management and utilization of the Coco Levy Fund was passed by

Congress during the 17th Congress but was vetoed by the President purportedly due to lack of vital safeguards, among others.

2016 2017 2018 2019 2020

Nominal Amount

Office of the Secretary 35,828.60 38,448.90 35,181.83 38,921.15 45,871.59

Agricultural Credit Policy Council 696.20 819.00 1,130.50 2,546.77 2,585.81

Bureau of Fisheries and Aquatic Resources 6,796.50 7,299.30 5,882.54 5,879.61 5,982.35

Fertilizer and Pesticide Authority 213.72 200.43

National Fisheries Research and Dev't Institute 289.10

National Meat Inspection Service 401.90 484.70 612.03 497.32 429.94

Philippine Carabao Center 500.10 443.10 506.17 662.14 457.38

Phil. Center for Post-Harvest & Development Mech. 246.50 324.80 351.39 317.38 345.97

Philippine Council for Agriculture and Fisheries - 192.10 196.65 206.97 239.38

Philippine Fiber Industry Development Authority 291.90 408.00 538.05 427.14 414.80

Total Department 44,761.70 48,419.80 44,399.15 49,672.19 56,816.74

Share to Total Department (%)

Office of the Secretary 80.0 79.4 79.2 78.4 80.7

Agricultural Credit Policy Council 1.6 1.7 2.5 5.1 4.6

Bureau of Fisheries and Aquatic Resources 15.2 15.1 13.2 11.8 10.5

Fertilizer and Pesticide Authority 0.4 0.4

National Fisheries Research and Dev't Institute 0.5

National Meat Inspection Service 0.9 1.0 1.4 1.0 0.8

Philippine Carabao Center 1.1 0.9 1.1 1.3 0.8

Phil. Center for Post-Harvest & Development Mech. 0.6 0.7 0.8 0.6 0.6

Philippine Council for Agriculture and Fisheries - 0.4 0.4 0.4 0.4

Philippine Fiber Industry Development Authority 0.7 0.8 1.2 0.9 0.7

Total Department 100.0 100.0 100.0 100.0 100.0

ParticularsObligation-Based Cash-Based

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the Supreme Court has already affirmed with finality the 2004 Sandiganbayan decision which

recognized the government as the owner of the Fund, and is intended for the benefit of all

coconut farmers and for the development of the coconut industry.

3.8 While budgetary support for the majority of attached corporations has generally remained

relatively unchanged, significant rise in the budget support to the PFDA in 2020 is very evident

(from P765.2 million in 2019 to P1.43 billion in 2020 or an increase of 86.3%). The increased

budgetary subsidy could be used for the implementation of fisheries infrastructure development

program especially the construction, rehabilitation and improvement of fish ports.

TABLE 2.1

EXPENDITURE PROGRAM BY AGENCY, 2016-2020

DA ATTACHED CORPORATIONS

(AMOUNTS IN MILLION PESOS)

Sources of basic data: BESF 2018- 2020

3.9 Expenditure by Expense Class. Table 3 presents the DA expenditure program by expense

class for 2016-2020. On average, 10.2% of the total expenditure program goes to Personal

2016 2017 2018 2019 2020

Nominal Amount

National Dairy Authority 190.50 198.90 520.21 271.44 266.59

National Food Authority 5,100.00 12,785.16 7,000.00 7,000.00

National Tobacco Administration 636.60 553.90 345.53 401.37 560.43

Philppine Coconut Authority 1,486.47 1,251.36 1,123.49

Philippine Crop Insurance Corporation 1,600.00 2,500.00 3,500.00 3,500.00 3,500.00

Philippine Fisheries Development Authority 288.60 224.80 397.80 765.19 1,425.77

Philippine Rice Research Institute 518.00 561.00 778.36 771.51 650.64

Philippine Sugar Corporation - - 272.79

Sugar Regulatory Administration 883.90 853.40 1,000.00 500.00 500.00

Quedan and Rural Credit Guarantee Corp. -

Total Department GOCCs 4,117.60 4,892.10 21,086.32 14,460.87 15,026.93

Share to Total Department GOCCs (%)

National Dairy Authority 4.6 4.1 2.5 1.9 1.8

National Food Authority 60.6 48.4 46.6

National Tobacco Administration 15.5 11.3 1.6 2.8 3.7

Philppine Coconut Aiuthority 7.0 8.7 7.5

Philippine Crop Insurance Corporation 38.9 51.1 16.6 24.2 23.3

Philippine Fisheries Development Authority 7.0 4.6 1.9 5.3 9.5

Philippine Rice Research Institute 12.6 11.5 3.7 5.3 4.3

Philippine Sugar Corporation 1.3

Sugar Regulatory Administration 21.5 17.4 4.7 3.5 3.3

Quedan and Rural Credit Guarantee Corp.

Total Department GOCCs 100.0 100.0 100.0 100.0 100.0

Particulars Obligation-Based Cash-Based

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Services (PS) for the payment of salaries and other benefits, 50.77% for Maintenance and Other

Operating Expenses (MOOE), and 39.1% for Capital Outlay (CO).

3.10 For 2020, total expenditure program amounting to P56.82 billion is distributed as follows: PS –

P5.31 billion (9.4%), MOOE –P24.38 billion (42.9%), and CO – P27.13 billion (47.70%). The

said proposed expenditure includes the expenditures programs of the FPA and NFRDI.

3.11 Allocation for PS will be used to defray expenses for salaries, wages, and other compensation of

government employees. MOOE allocation will be used to pay for expenditures to support the

operations of government agencies such as supplies and materials, repairs and maintenance of DA

facilities, transportation and travel, and other necessary operating expenses. CO allocation will be

used for the procurement of goods and services, the benefits of which extend beyond the fiscal

year and which add up to the assets of the government.

TABLE 3

EXPENDITURE PROGRAM BY GENERAL EXPENSE CLASS, 2016-2020

(AMOUNTS IN MILLION PESOS)

Sources of basic data: BESF 2018- 2020

3.12 Unfilled Positions. Staffing Summary of the DBM reports on the number of authorized

permanent plantilla positions and unfilled positions (Table 4). The percentage of unfilled positions

under the Office of the Secretary has relatively increased from 26.9% in 2018 to 28.6% in 2020.

From 2,316 unfilled positions in 2018, this has increased to 2,532 in 2020. Among attached

agencies, BFAR has the highest average rate of unfilled positions at 35.2%. ACPC and PhilMech,

meanwhile, have the least average share of unfilled positions since 2016 at 5.1 % and 6.8%,

respectively.

3.13 Overall, there remains a significant number of unfilled positions, especially in DA and BFAR,

which raises the question whether the said positions are redundant or are still needed by these

agencies. If indeed the positions are no longer needed or redundant, then the resources should

have been allocated to more productive expenditure items or spend on the creation of new

positions which are much more relevant to the agency.

Amount % Amount % Amount % Amount % Amount %

PS 4,335.8 9.7 4,741.8 9.8 5,239.5 11.8 5,256.6 10.6 5,312.8 9.4

MOOE 25,598.9 57.2 26,462.6 54.7 24,556.5 55.3 21,462.3 43.2 24,376.5 42.9

CO 14,826.1 33.1 17,214.2 35.6 14,602.1 32.9 22,951.4 46.2 27,126.1 47.7

Fin Ex 0.9 - 1.1 0.0 1.0 0.0 1.9 0.0 1.4 0.0

Total 44,761.7 100.0 48,419.8 100.0 44,399.2 100.0 49,672.2 100.0 56,816.7 100.0

2019 2020

Obligation-Based2016 2017 2018

Cash-BasedParticulars

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TABLE 4

UNFILLED POSITIONS BY AGENCY, 2016-2020

Source: Staffing Summary 2018-2020

3.14 Regional Distribution. Table 5 shows the regional distribution of the DA budget for 2017-2020.

Note that actual expenditures for 2017 and 2018 are not directly comparable with the 2019 and

2020 levels because aside from the shift to cash-based budgeting, budgetary adjustments or

transfers are reflected only at the end of the fiscal year.

3.15 The bulk of DA budget is allocated to NCR. For 2020, NCR will receive P29.31 billion or 51.6%

of the total budget. Outside of NCR, Region 3 has consistently accounted for significant share of

the department’s budget from 2017-2020 at an average of 7.7%. The CARAGA Region,

meanwhile, has received the least average share with 2.3%. Regional allocation for ARMM was

discontinued in 2018 with the passage of the Bangsamoro Organic Law on July 26, 2018.

TABLE 5

REGIONAL DISTRIBUTION OF THE DA BUDGET, 2017-2020 (AMOUNTS IN MILLION PESOS)

2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

Office of the Secretary 3,123 1,982 2,316 2,532 2,532 33.1 23.0 26.9 28.6 28.6

Agricultural Credit Policy Council 4 7 6 2 2 10.0 16.3 14.0 5.1 5.1

Bureau of Fisheries and Aquatic Resources 918 910 713 687 687 40.3 39.9 32.7 31.5 31.5

Fertilizer and Pesticide Authority 84 36 36 19 19 49.7 21.3 21.3 11.2 11.2

National Fisheries Research and Dev't Institute 45 45 45 45.0 45.0 45.0

National Meat Inspection Service 46 59 56 50 50 12.7 16.3 15.5 13.8 13.8

Philippine Carabao Center 31 22 23 20 20 13.8 10.0 10.4 9.2 9.2

Phil. Center for Post-Harvest & Development Mech 9 7 10 9 9 0.7 0.5 7.6 6.8 6.8

Philippine Council for Agriculture and Fisheries 55 33 32 23 23 41.7 25.0 24.2 17.4 17.4

Philippine Fiber Industry Development Authority 141 114 46 53 53 29.5 23.8 11.2 13.0 13.0

AgencyNumber of Unfilled Positions Share to Authorized Positions (%)

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Source: BESF 2019-2020

IV. NEW APPROPRIATIONS

4.1 The proposed 2020 new appropriations for the DA and its attached agencies will amount to

P54.43 billion (Table 6). Inclusive of automatic appropriations, the DA’s proposed 2020

budget will total P56.82 billion or 14.4% higher than the 2019 level of P49.7 billion. The

department ranks 9th among the departments with the highest levels of allocation (including

SUCs). Inclusive of budgetary support to Government-Owned and Controlled Corporations

(GOCCs), the budget for agriculture will amount to P71.84 billion. Budgetary support to DA-

attached corporations will have a total allocation of P15.03 billion.

TABLE 6

NEW APPROPRIATIONS BY AGENCY, 2016-2020

AmountShare

(%)Amount

Share

(%)Amount

Share

(%)Amount

Share

(%)

Central Office

NCR 17,869.7 36.9 17,361.1 39.1 19,448.6 39.2 29,306.6 51.6

CAR 2,022.8 4.2 1,836.6 4.1 1,711.1 3.4 1,372.4 2.4

Region 1 1,248.5 2.6 2,073.4 4.7 2,298.9 4.6 1,894.0 3.3

Region 2 2,640.0 5.5 3,219.8 7.3 2,340.0 4.7 2,197.3 3.9

Region 3 3,254.7 6.7 3,797.9 8.6 3,869.0 7.8 3,427.2 6.0

Region 4A 1,560.4 3.2 1,292.8 2.9 1,859.9 3.7 2,272.4 4.0

Region 4B 1,666.1 3.4 1,420.8 3.2 1,368.4 2.8 1,697.2 3.0

Region 5 2,289.9 4.7 2,232.4 5.0 2,446.0 4.9 2,297.2 4.0

Region 6 1,998.6 4.1 1,532.9 3.5 2,184.8 4.4 1,830.6 3.2

Region 7 1,727.6 3.6 1,164.9 2.6 1,782.7 3.6 1,735.9 3.1

Region 8 4,224.4 8.7 1,430.2 3.2 1,938.4 3.9 1,528.2 2.7

Region 9 1,424.8 2.9 1,351.8 3.0 1,423.6 2.9 1,479.0 2.6

Region 10 1,869.3 3.9 1,451.2 3.3 1,525.9 3.1 1,518.2 2.7

Region 11 1,504.7 3.1 1,486.7 3.3 2,176.5 4.4 1,290.0 2.3

Region 12 1,929.0 4.0 1,724.2 3.9 2,155.9 4.3 1,729.1 3.0

CARAGA 1,084.9 2.2 1,022.6 2.3 1,142.4 2.3 1,241.5 2.2

ARMM 104.4 0.2

TOTAL DA Budget 48,419.9 100.0 44,399.2 100.0 49,672.2 100.0 56,816.7 100.0

20202018Region

Obligation-Based Cash-Based

2017 2019

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DA AND ITS ATTACHED AGENCIES (AMOUNTS IN MILLION PESOS)

Sources of basic data: GAA 2016- 2019 and NEP 2020

4.2 Exclusive of automatic appropriations, the Office of the Secretary (OSec) will have a budget

amounting to P43.68 billion in 2020, 18.9% higher than the 2019 budget level of P36.7 billion.

It may be noted that the increase in the 2020 budget of the DA is mainly due to the transfer of

administrative supervision of FPA, NFA and PCA from the Office of the Cabinet Secretary

(OP)

o the DA, and to a new budget allocation for NFRDI.

4.3 Among DA’s attached agencies, the ACPC, BFAR, PhilMech and PCAF will have minimal

increases in 2020 compared to the 2019 budget. Conversely, the FPA, NMIS, PCC and

PhilFIDA will receive lower allocations. Budgetary support to GOCCs comes in the form of

Particulars

2016 2017 2018 2019 2020

Nominal Amount

Office of the Secretary 40,326.5 35,759.7 43,919.2 36,730.6 43,681.1

Agricultural Credit Policy Council 43.0 811.2 1,117.6 2,543.2 2,582.2

Bureau of Fisheries and Aquatic Resources 6,702.6 6,989.8 6,092.5 5,758.0 5,857.9

Fertilizer and Pesticide Authority 206.1 192.2

National Fisheries Research & Dev't Institute 286.5

National Meat Inspection Service 267.4 393.2 632.1 480.6 413.4

Philippine Carabao Center 470.7 419.8 489.5 652.0 447.1

Phil. Center for Post-Harvest & Dev't Mech 237.9 308.7 344.0 310.1 338.7

Philippine Council for Agri. and Fisheries 168.1 181.6 179.5 202.2 234.0

Philippine Fiber Industry Dev’t. Authority 231.3 358.5 561.8 410.5 398.5

Total Department 48,447.5 45,222.4 53,336.3 47,293.2 54,431.7

Share to Total Department (%)

Office of the Secretary 83.2 79.1 82.3 77.7 80.2

Agricultural Credit Policy Council 0.1 1.8 2.1 5.4 4.7

Bureau of Fisheries and Aquatic Resources 13.8 15.5 11.4 12.2 10.8

Fertilizer and Pesticide Authority - - - 0.4 0.4

National Fisheries Research & Dev't Institute - - - - 0.5

National Meat Inspection Service 0.6 0.9 1.2 1.0 0.8

Philippine Carabao Center 1.0 0.9 0.9 1.4 0.8

Phil. Center for Post-Harvest & Dev't Mech 0.5 0.7 0.6 0.7 0.6

Philippine Council for Agri. and Fisheries 0.3 0.4 0.3 0.4 0.4

Philippine Fiber Industry Dev’t. Authority 0.5 0.8 1.1 0.9 0.7

Total Department 100.0 100.0 100.0 100.0 100.0

Obligation-Based Cash-Based

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subsidy, equity or net lending. Subsidy for GOCCs can be used to cover operational expenses

that cannot be supported by corporate revenues. It can also be used to cover corporate deficits

and losses. On the other hand, equity is a form of NG investment in the authorized capital

stock of GOCCs (CPBRD, 2014).

4.4 Appropriations by Program. Table 7 presents a summary of programs under the DA for 2019-

2020 and the agencies that will be responsible for their implementation. A total amount of

P47.52 billion has been proposed to support the programs, activities, and projects (PAPs) of the

Department to achieve desired organizational outcomes. This amount corresponds to the

Operations budget of the Department which is P7.64 billion higher compared to the 2019 level

of P39.88 billion or an increase of 19.2%.

4.5 About 81.2% of the programs, especially the big ticket items, will be implemented under the

OSec in 2020. Three of the largest programs, namely: Agricultural Machineries, Equipment

Facilities and Infrastructure Program (P13.44 billion); Locally-funded and Foreign-assisted

Program (P13.43 billion); and Technical and Support Services Program (10.51 billion) already

account for 78.7% of the total program cost. The Locally-funded and Foreign-assisted Program

to be implemented by the OSec will increase by 173.8%, from P4.91 billion in 2019 to P13.43

billion in 2020. This is primarily due to the P10.0 billion allocation for the Rice Competiveness

Enhancement Program as mandated by RA 11203 (Rice Liberalization Law). In effect, without

the P10.0 billion funding for the Rice Competitiveness Enhancing Program, operations budget

for 2020 would have been lower by P2.36 billion (P7.64 billion increase in operations budget less

P10.0 billion).

4.6 RA 11203 provides that any program undertaken in accordance with said law shall only be

deemed complementary and supplementary to and shall not be a replacement of any existing

programs for rice and rice farmers already implemented by the DA and other agencies

concerned. Moreover, Special Provision No. 2 of the proposed DA budget states that P10.0

billion to be constituted into Rice Competiveness Enhancement Fund (RCEF) pursuant to

Section 13 of RA 11203, shall be released directly to the implementing agencies and used for the

attainment of the objectives and plans of the rice industry roadmap, subject to the guidelines

issued thereon. In effect, the different implementing agencies of RCEF especially PhilMech and

PhilRice will have increased budget in 2020 up to the next five years as provided in RA 11203.

TABLE 7

SUMMARY OF PROGRAMS FOR 2019-2020

DEPARTMENT OF AGRICULTURE

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Source: GAA 2019 and NEP 2020

4.7 Note that RA 11204 provides that allocation and disbursement of the RCEF shall be as follows:

50% as grant in kind to eligible farmers association, registered rice cooperatives and LGUs, in

the form of rice farm equipment (ex. tillers, tractors, threshers, seeders, harvesters driers,

irrigation pumps) for the purpose of improving farm mechanization which shall be released

to and implemented by PhilMech;

30% for the development, propagation and promotion of inbred rice seeds to rice farmers

and rice farmer organization, into seed growers association and cooperatives engaged in seed

production and trade which shall be released to and implemented by PhilRice;

10% for the provision of credit to be managed equally by the LBP and the DBP;

10% for the extension of services for teaching skills on rice production, modern rice farming

techniques, seed production, farm mechanization, and knowledge and technology transfer

provided by PhilMech, PhilRice, ATI and TESDA.

2019 2020 2019 2020

Technical and Support Services OSec 10,932.44 10,510.78 (3.9) 27.4 22.1

Agricultural Machinery & Equipment,

Facilities & Infrastructures OSec 14,226.57 13,436.33 (5.6) 35.7 28.3

Agriculture and Fishery Policy OSec 91.34 74.68 (18.2) 0.2 0.2

Agriculture and Fishery Regulatory

SupportOSec 917.13 1,150.93 25.5 2.3 2.4

Locally-Funded and Foreign-Assisted OSec 4,906.58 13,433.86 173.8 12.3 28.3

Agricultural Credit Program ACPC 2,505.18 2,554.52 2.0 6.3 5.4

Fisheries Development BFAR 1,776.47 1,190.09 (33.0) 4.5 2.5

Fisheries Regulatory & Law

Enforcement BFAR 2,170.35 2,745.64 26.5 5.4 5.8

Fisheries Extension BFAR 552.31 560.94 1.6 1.4 1.2

Fisheries Policy BFAR 31.27 31.68 1.3 0.1 0.1

Fertilizer and Pesticide Regulatory FPA 91.10 104.52 14.7 0.2 0.2

Fisheries Research and Development NFRDI 232.44 - 0.5

Meat Regulatory NMIS 304.62 298.10 (2.1) 0.8 0.6

Local Meat Establishment Assistance NMIS 59.15 52.24 (11.7) 0.1 0.1

National Carabao Development PCC 617.69 409.15 (33.8) 1.5 0.9

Agri Mechanization and PH Research,

Development and ExtensionPhilMech 223.36 264.06 18.2 0.6 0.6

Agriculture & Fishery Stakeholders

EngagementPCAF 164.71 176.23 7.0 0.4 0.4

Fiber Development PhilFIDA 255.69 241.91 (5.4) 0.6 0.5

Fiber Industry Regulatory PhilFIDA 55.53 53.256 (4.1) 0.1 0.1

Total Program 39,881.50 47,521.35 19.2 100.0 100.0

Implementing

Agency

% Share to Total

Program

Amount (In Million Pesos)

Cash-Based

Growth

Rates (%)Program

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4.8 Major Priority (Commodity) Programs. Table 7.1 provides a summary of major commodity

programs implemented by the DA. For 2020, the National Rice Program will continue to have

the largest allocation at P7.0 billion. .The 2020 budget level, however, is P455.6 million lower the

2019 level of P7.45 billion. Note that allocations for the NRP actually constitute more than 50%

of the total agriculture budget as allocations for the NIA, NFA, PhilRice, PCIC and PhilMech

are geared towards the rice commodity.

4.9 Evidently, all commodity programs will have reduced budget in 2020. The National Livestock

Program’s budget will have the biggest reduction of 20.2% in 2020 (P237.5 million). This is

unfortunate due to the widespread reports of mortality of swine in hog farms in Rodriguez, Rizal

and Bulacan, together with the reported cases of Avian Influenza or bird flu outbreak in some

parts of the country. The government shall not take any chances against animal diseases that

may affect the industry.

4.10 The National Corn Program’s 2020 budget is also lower by P96.5 million (6.2%) compared to

the 2019 budget. Support for corn farmers especially those planting white corn is very important

as increased corn production may lower the price of corngrits and may eventually temper the

increasing demand for rice.

4.11 Budget for the High Value Crops Development Program (HVCDP) for 2020 will go down by

P111.4 million (7.2%). The 2020 proposed budget is even less than 50% compared to 2017 and

2018 budget levels. HVCDP helps increase income and creates livelihood opportunity among

farmers and farm workers, and contributes to national agricultural development. The decreased

budgetary level will affect the development of country’s high-value crops industry especially the

growth and competitiveness of its “champion” crops for export like mangoes, pineapple and

bananas amid increased competition under an integrated, open ASEAN regional economy.

4.12 Meanwhile, the Promotion and Development of Organic Agriculture Program will just have a

modest budget reduction of P44.3 million (8.1%) in 2020. Nevertheless, adequate funding

support is still vital as the department implements its 2017-2023 National Organic Agriculture

Program Strategic Plan which was crafted as a guide for the implementation of the program to

ensure the competiveness and sustainability of the industry. Similar to the HVCDP, the 2020

budget level is much lower compared to the 2017 and 2018 levels.

4.13 Funding support for the Halal Food Industry Development Program in 2020 at P22.7 million

will be lower by 49.1% compared to the 2019 level of P44.6 million. The proposed budget for

the program may be inadequate to strengthen the Philippine Halal Industry. With globalization

and increasing economic integration, it is essential to ensure the integrity and quality of Halal

products, and make Halal exports more competitive through research and product development,

quality assurance measures, and value-adding mechanisms.

TABLE 7.1

SUMMARY OF MAJOR (PRIORITY) PROGRAMS, 2019-2020

DEPARTMENT OF AGRICULTURE

(IN MILLION PESOS)

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Source: Department of Agriculture

4.14 In terms of percentage, the National Fisheries Program has the least reduction in 2020 at 1.4%.

The P57.0 million decrease in its 2020 budget, however, may be insignificant considering that its

research arm, the NFRDI is allocated with a separate budget of P286.5 million in 2020.

Nevertheless, it may need more funding support to acquire sea assets to curb violation of

fisheries laws especially on illegal fishing.

4.15 Appropriation by Organizational Outcome. The proposed appropriations for programs

under the OSec constitutes 81.2% of the total program appropriations among agencies/offices

under the DA. Table 8 presents the OSec proposed operations budget by organizational

outcome and expense class amounting to P38.61 billion. Note that the OSec has only one

Organizational Outcome (OO). The combined allocation for OSec programs under its OO-

“Productivity in the agricultural sector increased” shows that only 5.0% or P1.92 billion will go

to PS for the payment of salaries, allowances and other benefits. The remaining 39.0% (P15.05

billion) and 56.0% (21.64 billion) will be for MOOE and CO, respectively.

TABLE 8

OPERATIONS BUDGET BY ORGANIZATIONAL OUTCOME,

BY PROGRAM AND GENERAL EXPENSE CLASS, 2020

OFFICE OF THE SECRETARY

Source of basic data: NEP 2020

4.16 The programs of BFAR under its “Productivity in fisheries sector with ecological limits

improved” organizational outcome constitute 9.5% of DA’s total program, the highest among

Amount %

National Rice Program 9,735..8 11,773.2 7,446.1 6,990.5 (455.6) (6.1)

National Livestock Program 1,537.5 1,600.7 1,178.3 940.9 (237.5) (20.2)

National Corn Program 2,826.9 2,986.9 1,560.1 1,463.6 (96.5) (6.2)

National High Value Crops

Development 3,968.2 3,055.1 1,546.0 1,434.6 (111.4) (7.2)

Promotion & Development of

Organic Agriculture 817.9 802.9 545.9 501.6 (44.3) (8.1)

National Fisheries

(Operations Net of Personnel Services)4,078.3 4,021.3 (57.0) (1.4)

Halal Food Industry Development

Program 44.6 44.6 22.7 (21.9) (49.1)

2019 GAA vs. 2020 NEPPrograms 2017 GAA 2018 GAA 2019 GAA 2020 NEP

Variance

PS MOOE CO Total PS MOOE CO Total

OO - Productivity in the Agricultural Sector Increased

Technical and Support Services Program 1,328.6 8,573.3 608.8 10,510.8 3.4 22.2 1.6 27.2

Agri. Machinery & Equipment, Facilities & Infrastructure 14.1 281.2 13,141.1 13,436.3 0.0 0.7 34.0 34.8

Agriculture & Fishery Policy Program 49.1 24.1 1.5 74.7 0.1 0.1 0.0 0.2

Agriculture & Fishery Regulatory Support 511.5 518.4 121.0 1,150.9 1.3 1.3 0.3 3.0

Locally-Funded and Foreign-Assisted Program 16.6 5,654.3 7,763.0 13,433.9 0.0 14.6 20.1 34.8

Total Operations 1,919.9 15,051.2 21,635.4 38,606.6 5.0 39.0 56.0 100.0

Particulars Levels (in Million Pesos) Share to Total Operations (%)

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DA’s attached agencies (excluding OSec). The combined allocation of all its programs shows

that 11.2% or P507.1 million will be for PS, a high 65.5% or P2.97 billion for MOOE and

23.3% or P1.05 billion for CO.

TABLE 8.1

OPERATIONS BUDGET BY ORGANIZATIONAL OUTCOME,

BY PROGRAM AND GENERAL EXPENSE CLASS, 2020

BUREAU OF FISHERIES AND AQUATIC RESOURCES

Source of basic data: NEP 2020

V. PERFORMANCE REVIEW

5.1 The Obligation-Appropriations Ratio (OAR) is a measure of how well agencies utilize their

appropriations. The DA has 83.24% OAR in 2018 (see Table 9). This is a decrease from the

2017 figure of 107.07%. The 2018 ratio is also lower by almost 11% compared to the average

ratio of 94.38% for the period 2014-2017. Other than the 2014 ratio of 80.90%, the 2018 ratio

is lower than that of 2015-2017 ratio.

5.2 PCAF has the highest OAR of109.53% among the agencies of DA in 2018. PCC follows

at 103.47% while the OSEC has the lowest ratio at 80.11%.

TABLE 9

OBLIGATION-APPROPRIATIONS RATIO (%), 2014-2018

Particulars 2014 2015 2016 2017 2018

OSEC 77.80 96.05 88.85 107.52 80.11

ACPC 103.99 68.29 1,617.82 100.96 101,15

BFAR 107.64 107.21 101.40 104.43 96.55

CoDA 146.77

PhilFIDA 86.83 126.22 113.82 95.77

FIDA 130.36

LDC 88.67

NAFC 173.23

NMIS 129.97 175.21 150.29 123.27 96.82

PCC 108.36 107.12 106.25 105.55 103.47

PhilMech 98.87 103.35 103.61 105.25 102.16

PCAF 98.96 103.26 105.77 109.53

Total Department 80.90 96.81 92.75 107.07 83.24

Sources of basic data: NEP 2016- 2020

5.3 Unused Appropriations. Table shows the unused appropriations for 2014-2018.

The unused appropriations are either unreleased appropriation or unobligated

PS MOOE CO Total PS MOOE CO Total

OO - Productivity in Fisheries Sector within ecological

limits improved

Fisheries Development 170.0 935.0 85.1 1,190.1 3.8 20.6 1.9 26.3

Fisheries Regulatory & Law Enforcement 305.5 1,471.4 968.7 2,745.6 6.7 32.5 21.4 60.6

Fisheries Extension 31.5 529.4 560.9 0.7 11.7 12.4

Fisheries Policy 31.7 31.7 0.7 0.7

Total Operations 507.1 2,967.5 1,053.8 4,528.4 11.2 65.5 23.3 100.0

ParticularsLevels (in Million Pesos) Share to Total Operations (%)

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allotment. For 2018, OSec has the biggest unused appropriations of P6.24 billion,

of which P6.21 is unobligated. ACPC has a total unobligated allotment of P1.0

billion. For the same period, total unused appropriations of DA reached a total of

P7.79 billion mostly attributed to unobligated allotment.

TABLE 10

UNUSED APPROPRIATIONS, 2014-2018 (IN MILLION PESOS)

Particulars 2014 2015 2016 2017 2018

OSEC 16,421.39 8,070.06 6,526.25 1,976.13 6,235.11

ACPC 1.40 652.64 6.31 0.68 1,000.36

BFAR 1,567.73 1,065.86 1,088.31 773.10 456.10

CoDA 25.97

PhilFIDA 69.70 29.88 5.80 49.73

FIDA 51.10

LDC 11.45

NAFC 503.28

NMIS 15.49 9.29 13.92 52.79 41.11

PCC 17.13 10.29 2.68 0.36

PhilMech 8.44 10.49 12.15 0.59 3.14

PCAF 64.24 13.72 7.77 0.04

Total Department 18,606.26 9,959.41 7,700.82 2,819.53 7,785.94

Source of basic data: NEP 2016- 2020

5.4 Disbursement Rate by Agency. Table 11 shows the disbursement rates of the DA and

its attached agencies for 2017 and 2018. Overall disbursement rate of DA for 2018 was at

73.36%, which is higher by 7.22 percentage points than the 2017 rate of 66.14%. Among

the key agencies of DA, the NMIS registered the lowest disbursement rate of 61.39% in

2018, when it obligated P612.03 million but was able to disburse only P375.70 million.

Similarly, the BFAR posted a low disbursement rate of 71.59%. Agencies like ACPC,

BFAR and PhilMech posted higher disbursement rate in 2018 than in 2017.

TABLE 11

DISBURSEMENT RATE BY AGENCY, 2017-2018 (AMOUNTS IN MILLION PESOS)

Particulars

2017 2018

Obligations Disbursements Disbursement

Rate (%) Obligations Disbursements

Disbursement Rate (%)

OSEC 38,448.89 24,742.96 64.35 35,181.83 25,486.43 72.44

ACPC 819.00 817.03 99.76 1,130.50 1,129.93 99.95

BFAR 7,299.26 4,943.09 67.72 5,882.54 4,211.04 71.59

PhilFIDA 408.01 347.78 85.24 538.05 401.05 74.54

NMIS 484.71 317.86 65.58 612.03 375.70 61.39

PCC 443.09 402.17 90.76 506.18 445.79 88.07

PhilMech 324.85 280.35 86.30 351.39 330.78 94.13

PCAF 192.08 175.25 91.24 196.65 190.51 96.88

Total 48,419.89 32,026.48 66.14 44,399.15 32,571.22 73.36

a/ Disbursement rate – ratio of disbursements to obligations

Source: 2017-2018 SAAODB, DBM

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5.5 By major program, DA has 95.72% OAR in 2018. Of the selected programs, agriculture and

Fishery Regulatory Support program has the highest OAR of 98.83%. In contrast, Locally-

Funded and Foreign assisted program has the lowest OAR of 85.66%.\\

5.6 Of the P28.09 billion obligated for DA’s major programs, about 71.33% or P20.04 billion was

disbursed. The budget utilization of Locally-Funded and Foreign Assisted Program is notable

because of the 85.66% obligated budget, only 33.51% was disbursed, the lowest of all the DA

Programs. TABLE 12

BUDGET UTILIZATION BY MAJOR PROGRAM, 2018

AMOUNTS IN MILLION PESOS

Program Appropriations Obligations Disbursements Obligation Rate (%) a/

Disbursement Rate (%) b/

Technical and Support Services Program

16,674.02

16,251.96 13,098.94

97.47

80.60

Production Support Services

9,148.12

8,849.86 6,899.45

96.74

77.96

Marketing Development Services

428.79

404.87 326.79

94.42

80.71

Extension Support, Education and Training Services

4,337.57

4,205.20

3,432.22

96.95

81.62

Research and Development 2,829.18 2,792.02 2,458.73 98.69 88.06

Agricultural Machinery, Equipment, Facilities and Infrastructures Program

7,026.88

6,877.64 4,688.30

97.88

68.17

Agricultural Machinery, Equipment and Facilities Support

4,281.30

4,180.03 3,072.11

97.63

73.49

Irrigation Network Services 2,686.06

2,643.59 1,569.11

98.42

59.36

Farm-to-Market Roads 59.52

54.01 47.08

90.74

87.16

Agriculture and Fishery Regulatory Policy Program

122.28

95.32 84.28

77.95

88.42

Agriculture and Fishery Regulatory Support Program

1,019.19

1,007.28 874.88

98.83

86.86

Locally-Funded and Foreign Assisted Program

4,507.66

3,861.19 1,293.74

85.66

33.51

Philippine Rural Development Program

652.67

521.18 269.16

79.85

51.64

Panay Island Upland Sustainable Development Project

9.22

9.06 7.87

98.36

86.85

Scaling-up of the Second Cordillera Highlands Agricultural Resources Management Project (CHARMP2)

97.24

97.23 74.39

99.99

76.50

Integrated Natural Resources and Environmental Management Project (INREMP)

102.35

102.35 2.33

99.99

2.27

Expansion of the Philippine Rural Development Project

2,536.94

2,074.51 248.45

81.77

11.98

Others 1,109.25 -

-

-

TOTAL 29,350.04

28,093.38 20,040.14

95.72

71.33

a/ Obligation rate – ratio of obligations to appropriations b/ Disbursement rate – ratio of disbursements to obligations Source: SAAODB (FAR No. 1 in Transparency Seal)

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5.7 Table 13 presents the performance indicators and the respective targets from 2018 to 2020.

Indicators are arranged in terms of programs and sub-programs instead of MFOs. Majority of

the indicators for 2019 and 2020 targets are the same. Targets in 2020 for “Number of extension

workers trained to support the capacity of LGUs and farmers, fisherfolk, and other beneficiaries

provided with training support services” are lower than the targets for 2019 and 2020.

5.8 Targets for “percentage of beneficiaries rating the provision of agriculture machinery, equipment,

facilities, and installation of small scale irrigation projects to be at least satisfactory” is 85% for

2019 and 2020 which is lower than the actual performance in 2018 (100%).

5.9 Among the sub-programs, target for Locally-Funded and Foreign Assisted Programs particularly

on the “number of agriculture and fishery based enterprises assisted” almost doubled in 2019

compared to the actual performance in 2018.

TABLE 13

PERFORMANCE INDICATORS OF MAJOR PROGRAMS, 2018-2020

Program 2018

2019 Target

2020 Target

Target Actual

Technical and Support Services Program

Outcome Indicators

1. Percentage of beneficiaries rating and technical support services to be at least satisfactory

80% 100% 80% 80%

2. Percentage of deliveries of production support services validated by LGUs to have been delivered at the appropriate time

100% 100% 100% 100%

3. Percentage share of small farmers adopting new technologies to total number of small farmers trained with new technologies increased (to be reported every three (3) years starting 2019)

30%

Output Indicators

1. Number of Provinces and Chartered Cities provided with production support services and support to construct market-related infrastructure

86 6 86 86

2. Number of group beneficiaries provided with market development services 1,695 2,737 1,373 1,383

3. Number of extension workers trained to support the capacity of LGUs and farmers, fisherfolk, and other beneficiaries provided with training support services

a. LGU extension workers trained 18,010 21,108 15,014 14,946

b. Farmers, fisherfolk and other participants 111,968 131,374 145,562 116,889

Agricultural Machinery, Equipment, Facilities and Infrastructures Program

Outcome Indicators

1. Percentage of beneficiaries rating the provision of agricultural machinery, equipment, facilities, and installation of small scale irrigation projects to be at least satisfactory

80%

100% 85% 85%

Output Indicators

1. Number of Provinces and Chartered Cities provided with agricultural machineries, equipment, facilities, and small scale irrigation projects

88 18 85 85

2. Number of hectares of service area generated from the establishment and installation of small scale irrigation projects (SSIPs)

14,682 9, 621 15,580.2 12,028.6

3. Number of kilometers of Farm-to-market Roads (FMRs validated for construction/rehabilitation

600 1,115.25 850.63 829.87

4. Percentage of DPWH-constructed FMRs monitored

100%

90% 100% 100%

Agriculture and Fishery Policy Program

Outcome Indicators

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1. Number of policies issued and disseminated 1 1 1 1

Output Indicator

1. Number of policies supported and endorsed for approval 12 19 20 22

Agriculture and Fishery Regulatory Support Program

Outcome Indicators

1. Number of provinces with control of incidence of major pests and diseases maintained at zero incidence

a. Foot and Mouth Disease 81 81 81 81

b. Avian Influenza 81 81 81 81

Output Indicator

1. Percentage of applications for quarantine and sanitary and phytosanitary (SPS) clearance processed within one (1) year

100% 100% 100% 100%

2. Number of agri-fishery standards developed 43 43 30 24

3. Percentage of new agriculture facilities and products that have been inspected at least once a year

100% 100% 100% 100%

Locally-Funded and Foreign-Assisted Program

Outcome Indicator

1. Number of agriculture and fishery based enterprises assisted 49 27 54

Output Indicator

1. Percentage of amount of approved FMR sub-projects to the total amount of FMR allocation

100% 100% 100% 100%

Source: NEP 2019-2020

VI. COA FINDINGS AND RECOMMENDATIONS

6.1 The Commission on Audit (COA) conducts an annual audit of government agencies and

summarizes its findings in an Annual Audit Report (AAR). The AAR contains observations and

recommendations that deal with the reality and accuracy of financial reports, as well as the

adequacy of the books of accounts.

6.2 One highlight of the COA AAR or Management Letter12 is the update on the implementation of

prior year’s observations and recommendations. In the 2018 AAR, NMIS have the least audit

findings while BFAR has the most number of findings. The ACPC likewise has the highest “fully

implemented” audit findings while the OSEC has the highest “not implemented” audit findings

(Table 14).

TABLE 14

STATUS OF IMPLEMENTATION OF COA RECOMMENDATIONS

(AS OF DECEMBER 2018 )

Particulars Total Fully Implemented

Partially implemented

Not Implemented

Number (%) Number (%) Number (%)

OSEC 30 2 6.67 28 93.33

ACPC 39 19 48.72 10 25.64 10 25.64

BFAR 86 18 20.93 68 79.07

NMIS 16 2 12.50 14 87.50

PCAF 28 7 25.00 19 67.86 2 7.14

PhilFIDA 58 9 15.52 17 29.31 32 55.17

Source: 2018 Annual Audit Reports (Part 3). Available at www.coa.gov.ph.

12 Submitted in lieu of an AAR when an agency fails to submit its financial statements within the required period.

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6.3 Based on the 2018 Annual Audit Report of COA, below are some of the major findings and

recommendations for the department:

OSEC

For CY 2018, the basis for a qualified opinion were accounting errors/omissions and deficiencies

amounting to P23.62 billion which exceeded the materiality level of P1.98 billion. This can be

attributed to:

Six DA offices did not revert to the General Fund the dormant cash, unauthorized accounts and

unnecessary special and trust funds amounting to P116.827 million. It is recommended by COA

and the DA Management agreed to direct the concerned officials of DA-Central Office, ATI, BAI,

BSWM and RFOs IV-A and XI to remit immediately the balance of dormant cash, unauthorized

and unnecessary accounts amounting to P116,827,105.74;

Cash advances for payroll, operating expenses, official local and foreign travels and special

purpose/time-bound undertakings amounting to P95.842 million or 21.79% of the cash advances

granted during the year amounting to P439.842 million were not liquidated. There were still

unliquidated cash advances in prior years amounting to P21.126 million or 21.72% of prior year ’s

balance of P97.429 million. It is recommended to enforce the liquidation of cash advances; ensure

that cash advances are not transferred from one accountable person to another in FAPs and direct

the concerned officials to refrain from granting cash advances unled previous ones have been

liquidated; and

Of the total fund transfers to Implementing Agencies (IAs) and NGOs of P5.715 billion during

the year for the implementation of DA Projects, P831.736 billion or 14.55% were not liquidated.

In addition, there were still unliquidated fund transfers in prior years amounting to P16.569 billion

or 69.68% of prior year’s balance of P23.778 billion, of which P4.407 billion or 20.54 % are aged

10 years or more but not requested or write-off. Recommendation of COA is similar to the

previous case.

ACPC

The ACPC beneficiaries for the Marawi Recovery, Rehabilitation and Reconstruction Program

consisting of 1,402 small farmers and fisherfolk have not received the financial assistance

amounting to P7.01 million as envisioned, due to the complex processing in identifying, validating

of eligible beneficiaries and processing of eMoney card accounts which is reflective of the

program’s slow delivery that impact on the timely attainment of its objective for the immediate

recovery of the affected farmers and fisherfolks. The recommendation is to expedite the releases

of the fund to the identified beneficiaries affected by the Marawi Siege for the beneficiaries to

regain their capacity to earn a living and/or engage in alternative livelihood.

BFAR

Notwithstanding the BFAR’s high rate fund utilization of 92.3% for 2018, two

programs/projects/activities amounting to P326.98 million have zero fund utilizations and were

not implemented in the current year caused by the: 1) ineligibility of the winning bidder for the

implementation of Integrated Marine Environmental Monitoring System (IMEMS) under the

terms of the Financial Protocol of the French Embassy, hence was requested to be locally

funded; and 2) late release of Special Allotment Release Order (SARO) by the Department of

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Budget and Management (DBM) for the livelihood project; while Foreign Assisted Project

(FAP) fund amounting to P56.33 million has lapsed due to non-obligation/utilization.

BFAR has a 99.98% cash utilization rate for 2018, however, deficiencies were noted such as: 1)

transfer of unutilized cash allocations amounting to P76.00 million of BFAR RFOs to BFAR-

CO apparently to avoid lapsing; b) continued issuance of BFAR CO of Notice of Transfer of

Allocation amounting to P185.65 million to its RFOs to fund the Centrally-Managed Items’ and

3) unutilized Notice of Cash Allocation (NCA) of FAP amounting to P15.62 million. It is

recommended to stop inappropriate scheme of transferring unutilized cash allocation to avoid

reversion, instead focus on improvement of planning and budgeting process by strengthening

collaboration among officials concerned in order to come up with feasible estimates/targets for

the year.

Cash advances for official local and foreign travels and special purpose/time-bound

undertakings amounting to P20.08 million or 32% of the cash advances granted during the year

were not liquidated. There were still unliquidated cash advances in prior years amounting to

P23.28 million or 58% of the prior year’s balance of P40.41 million. It is recommended to

strictly enforce liquidation of outstanding cash advances within the prescribed period.

Fund transfers to Implementing Agencies and NGOs for the implementation of agency’s

projects amounting to P536.13 million or 88% of the funds transferred during the year were not

liquidated. In addition, there were still unliquidated fund transfers in prior years amounting to

P1.67 billion or 52% of prior year’s balance of P3.18 billion. The accumulation of the huge

balance of fund transfers may be attributed to the granting of succeeding fund transfers despite

partial/non-liquidation of previous fund transfers. It is recommended that: 1) BFAR should

require accountants to coordinate with the IAs and NGOs/POs concerned to submit

liquidation reports/documents of expended fund transfers and return unutilized balances for

completed projects, if any and send demand letters on a periodic basis and 2) Legal Officers to

resort to other legal means of settlements of accountabilities in case of failure of the IAs and

NGOs/POs to settle fund transfers due for liquidation.

NMIS

Cash advances for operating expenses, foreign travels and special purpose/time-bound

undertakings amounting to P2.84 million or 12.99% of the cash advances granted during the

year amounting to P21.84 million were not liquidated. In addition, there were still unliquidated

cash advances in prior years amounting to P766.98 thousand or 37.89% of prior year’s balance

of P2.05 million. It is agreed by COA and the Management to demand the immediate

settlement of the unliquidated cash advances amounting to P3.62 million and strictly enforce

the period of liquidation as prescribed and require the immediate refund/return of any excess

amount.

Fund transfers to implementing LGUs in current and prior years amounting to P102.93 million,

which includes the fud transfers in connection with the Yolanda Recovery and Rehabilitation

Program amounting to P39.51 million, and to and NGO in prior years amounting to P767.52

thousand or a total amount of P103.70 million remained unliquidated as of year-end.

Furthermore, of the prior years’ balance of P98.20 million, 13% or P12.69 million were dormant

but were not requested for write-off. Accountant is required to exert extra effort for the

immediate and full liquidation of the prior year’s fud transfers by sending demand letters to the

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concerned LGUs, supported with complete documentation and return any

unexpended/unutilized funds.

PCAF

Cash advances for payroll, operating expenses, official local and foreign travels and special

purpose/time-bound undertakings of P2.58 million or 14.55% of the cash advances granted

during the year amounting to P17.74 million and P4.56 million in prior years or 42.37% of

P10.77 million were not liquidated, of which P4.56 million are dormant of ten years and were

not requested for write-off. It is recommended to require all agency officers to settle their cash

advance within prescribed period before granting additional cash advances.

Fund transfers to various IAs and NGOs during the year of projects implementation amounting

to P38.539 million or 85.26% of the funds transferred of P45.20 million as well as the fund

transfers in prior years amounting to P1.47 billion or 87.56% of prior years’ balance of P1.68

billion, of which P593.03 million are dormant for ten years and more but not requested for

write-off. It required of IAs and NGOs to submit liquidation documents of expended funds

transfers and return unutilized balances for completed projects.

PhilFIDA

PhilFIDA reported high utilization of funds of P538.05 million or 91.85% of its budget of

P585.78 million for the implementation of its programs and projects for 2018 which includes

obligations in 2018 amounting to P35.99 million for cash advances on projects to be

implemented beyond the budget year or for future expenses and future contractual

commitments, contrary to National Budget Circular No. 573 which requires that the

appropriations authorized under 2018 are valid for obligation only at the end of the said year. It

is recommended to ensure that the reported/recorded obligations are based on current

contractual agreement within the budget year to reflect the correct utilization rate of Agency

and ensure effective programming of funds.

Trust Receipts and Performance Bonds amounting to P34.86 million were not deposited with

the National Treasury, contrary to the General Provisions of the GAA for 2018. Prior year’s

recommendation was reiterated to remit the balances of the unauthorized bank account with

the National Treasury or to the source agency.

NIA

COA does not express an opinion on the fairness of the presentation of the financial statements of

NIA as of December 2018 and 2017 partly due to:

The net off book adjustments on the Net Assets/Equity (NA/E) in the total negative amount

of P9.35 billion and inactive accounts of 75 completed projects with NA/E positive net amount

of P22.73 billion, equivalent to 3.63% and 8.82%, respectively, of the total NA/E of P257.63

billion as of December 2018 cast doubt on the reliability of the respective balances assets,

liability and equity accounts, which consequently affected the fair presentation of the Financial

Statements. Of the total NA/E adjustments for 75 completed projects of P22.73 billion,

56.16% of P12.76 billion of 39 completed projects were not supported with document.

The prior year errors and other adjustments aggregating P5.29 billion in the Statements of

Changes in NA/E, are not supported with appropriate documents and are not adequately

disclosed and properly presented.

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The carrying amount of the Property, Plant and Equipment (PPE) aggregating P267.70 billion,

as stated in in the Statement of Financial Position (SFP), cannot be relied upon due to adverse

effects of the: a) variances of P66.86 billion between the accounting records and Report on

Physical Account of PPE as well as the Engineering and Operations Division reports; b)

inadequate accounting and property records to substantiate the PPE items costing P62.03

billion; and c) non-reclassification of completed infrastructure projects and non-infrastructure

PPEs amounting to P30.76 billion and P492.08 million, respectively, from Construction in

Progress to the appropriate accounts i.e., asset/expense account.

The net amount of receivables of P33.50 billion in the SFP is overstated due to non-provision

of Allowance for Impairment of P7.28 billion for accounts aged 10 years and above to bring the

balance of the Accounts Receivable-Irrigation Service Fees aggregating to P23.50 billion to its

net realizable value. Also, the Inter-agency Receivables account balance of P14.51 billion is

unreliable due to: a) negative/abnormal balances totaling P14.90 million, b) incomplete

subsidiary records and schedules and unsupported accounts of P7.00 million; and c)

discrepancies of P14.06 billion between books and confirmed balances rendered.

The Inter-agency Payables account balance of P79.92 billion in SFP particularly the Due to

National Government Agencies and Due to Government Owned and Controlled Corporations

accounts could not be ascertained due to: a) unreconciled variance amounting to P11.56 billion

between the records of NIA and confirmed balances of the Sources Agencies (SAs); b)absence

of subsidiary records and supporting documents for accounts totaling P3.32 billion; c) abnormal

balances aggregating P1.15 billion; and d) misclassification of transactions to the account

totaling P7.32 million. Likewise, Financial Liabilities account of P12.37 billion included

outstanding balances of Accounts Payable of P12.32 billion. The Accounts Payable balance is

doubtful because of: a) dormant and long outstanding accounts without supporting claims

aggregating P2.48 billion; b) absence of complete subsidiary records; c) discrepancies of P851.03

million between books and confirmed balances; and d) negative balances aggregating P1.15

billion.

NFA

The rice inventory levels in NFA-National Capital Region and other Provincial Offices in

almost all months of 2018 were way below the required level of buffer stocks of 15 days in each

month and 30 days in July during the year. Hence, NFA was exposed to rice supply shortages

and higher prices of commercial rice in the market, thereby, affecting its ability to achieve its

mandate of providing stable supply and prices at all times and could compromise its capability

to effectively and immediately respond to the rice requirements during calamities. It is

recommended that NFA should strengthen the local procurement level to ensure at all times the

availability of the required buffer stock levels to attain its mandate and to respond to the rice

requirements during calamities.

The inability to undertake the necessary legal actions on shortages of Stock Accountable

Officers (SAO) by NFA Management as required in NFA policies and guidelines resulted in the

accumulation of the stock shortages to P2.93 billion, that includes P0.96 billion pertaining to

shortages of SAOs who were no longer connected with NFA. In addition, there are shortages

amounting to P1.67 billion without computation of final Tolerable Allowance (TOLA) due to

missing/incomplete warehouse/stock reports and the absence of prescribed time frame to

complete stock examination in NFA policy on stock examination of TOLA computation.

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Hence, the final amount of shortages for collection could not be determined, thus, depriving

NFA of the use of uncollected shortages to finance its programs and operations. It requires the

Legal Affairs Department of Central Office to fast track the resolutions of the cases filed

against SAO; enforce collection of their shortages; and for SAO, no longer connected with

NFA, continuously send demand letters to their last known addresses and follow up cases files

at the Ombudsman. Further, instruct the District/Provincial Offices to exert utmost efforts to

enforce/hasten the collection of the final shortages of SAOs still connected with NFA.

NFA constantly increased its approved reference price without consideration of the continuous

decline in the price of rice in the world market. Thus, it had not obtained the most

advantageous price in the purchase of 1.25 million metric tons well-milled long grains white rice

through Government-to-Government and Government-to-Private or Open Tender

procurement schemes. It is recommended that Management cause the submission of the

detailed breakdown of reference price for the procurement of the 750,000 MT through G-to-G

and G-to-P procurement scheme and the copy of bidding documents of the losing bidders.

The grant, utilization, disbursement and recording of fund transfers amounting to P3.65 million

from the NFA Corn Development Fund (CDF) to the Philippine Maize Federation, Inc

(PHILMAIZE) from 2007 to 2018 was not in accordance with COA Circular and NFA SOP,

thus rendering the fund transfers of doubtful regularity due to: a) the non-submission of

eligibility documents and non-liquidation of the previous cash advance; b) the fund transfer

treated as direct expense instead of receivables from the PHILMAIZE; and c) conflict of

interest. Strict compliance with COA provisions on the transfer of funds to NGO/CSO.

PCA

The Biological Assets Account presented in the SFP amounting to P553.94 million as of

December 31, 2018 does not have the complete disclosure on the basis of valuation of the

recognized bearer trees, plants and crops in Davao Research Center and Zamboanga Research

Center, thereby affecting the verifiability of the account. The non-recognition of biological

assets in Albay Research Center of 6,944 coconut palms and its agricultural produce of 28,265

seednuts and seedlings understated the balance of the account by undetermined amount.

Accounting Units are directed to provide complete disclosure on the recorder biological assets

as required.

6.4 Based on the “Executive Summary” of the AAR for the DA during the period 2014 – 2018. The

COA Audit Team rendered either adverse or qualified opinions on the fairness of presentation

of financial statements due to the accounting errors and deficiencies in assets and liabilities.

TABLE 15 COA AUDITOR’S OPINIONS

Particulars 2014 2015 2016 2017 2018

OSEC A A Q Q Q

ACPC Q Q Q Q Q

BFAR Consolidated ML Q Q Q Q

NMIS Q Q Q Q Q

PCAF Q Q Q Q

PhilFIDA M L Q Q Q

CDA Q

FPA Q

FIDA Q

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LDC Q

NAFC Q

NFA Q Q A A A

PCA A A A Q Q

NA = Not Available, ML = Management Letter

Auditor’s Opinions are as follows: unqualified (UQ), qualified (Q), adverse (A) and disclaimer of opinion (D) Source of basic data: COA Annual Audit Reports available at www.coa.gov.ph

ANNEXES

TABLE 1.1

SOURCES OF FUNDS, 2016-2020

OFFICE OF THE SECRETARY

Particulars

Amounts (in Million Pesos)

Obligation-Based Cash-Based

2016 2017 2018 2019 2020

New Appropriations

35,759.7

35,759.7 43,919.2

36,730.6

43,681.1

Automatic Appropriations

361.8

628.5 2,036.7

2,190.6

2,190.5

of which: RLIP *

236.7

248.6 270.6

289.9

289.7

Continuing Appropriations

5,217.0

5,080.8

5,957.7

Budgetary Adjustments

(3,550.4)

(1,043.9) (4,539.0)

Transfers from:

NDRRMC Fund

2,953.5

4,760.2 554.8

International Commitment Fund

Miscellaneous & personnel Benefit Funds

821.0

83.5

179.1

Priority Development Assistance Fund

112.4

Pension and Gratuity Fund

52.2

134.2

Unprogrammed Fund (SIPSP)

4,251.7

Unprogrammed Fund (FAPSF)

299.7

Transfers to:

DPWH

(7,377.2)

(6,000.0) (9,958.5)

Total Available Appropriations

42,354.8

40,425.0 41,416.9

44,878.8

45,871.6

Less: Unused Appropriations

(6,526.2)

(1,976.1) (6,235.1)

(5,957.7)

Total Obligation/Expenditure Program

35,828.6

38,448.9

35,181.8

38,921.2

45,871.6

New Appro- Total Available Appro Ratio (%)

95.2

88.5

106.0

81.8

95.2

Sources of basic data: NEP 2018-2020

TABLE 1.2

SOURCES OF FUNDS, 2016-2020

ACPC

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Sources of basic data: NEP 2018-2020

TABLE 1.3 SOURCES OF FUNDS, 2016-2020

BFAR

Sources of basic data: NEP 2018-2020

TABLE 1.4 SOURCES OF FUNDS, 2016-2020

FPA

2016 2017 2018 2019 2020

New Appropriations 43.0 811.2 1,117.6 2,543.2 2,582.2

Automatic Appropriations 2.5 2.8 3.2 3.5 3.6

of which RLIP* 2.5 2.8 3.2 3.5 3.6

Continuing Appropriations 652.2 4.8 1,000.0

Budgetary Adjustments 4.8 0.8 1,010.0

Transfers from:

Miscellaneous and Personnel Benefit Funds 4.8

NDRRM Fund (Calamity Fund) 10.0

Unprogrammed Fund - 1,000.0

Total Available Appropriations 702.5 819.7 2,130.9 3,546.8 2,585.8

Less: Unused Appropriations (6.3) (0.7) (1,000.4) (1,000.0)

Total Obligation/Expenditure Program 696.2 819.0 1,130.5 2,546.8 2,585.8

New Appro- Total Available Appro Ratio (%) 6.1 99.0 0.5 28.2 99.9

Obligation-Based Cash-Based

Amounts (in Million Pesos)

Particulars

2016 2017 2018 2019 2020

New Appropriations 6,702.6 6,989.8 6,092.5 5,758.0 5,857.9

Automatic Appropriations 59.0 61.4 60.5 121.6 124.4

of which RLIP* 59.0 49.8 56.4 58.6 61.4

Continuing Appropriations 943.2 966.2 442.3

Budgetary Adjustments 180.0 54.9 185.6

Transfers from:

NDRRM Fund (Calamity Fund) 180.0 70.3

Miscellaneous and Personnel Benefit Funds 159.4

Contingency Fund 2.0

Miscellaneous Personnel Benefits Fund 47.3

Pension ans Gratuity Fund 20.6 28.0

Unprogammed Fund (SIPSP) 37.9

Total Available Appropriations 7,884.8 8,072.4 6,338.6 6,321.9 5,982.4

Less: Unused Appropriations (1,088.3) (773.1) (456.1) (442.3)

Total Obligation/Expenditure Program 6,796.5 7,299.3 5,882.5 5,879.6 5,982.4

New Appro-Total Available Appro Ratio (%) 85.0 86.6 96.1 91.1 97.9

Cash-BasedParticulars

Amounts (in Million Pesos)

Obligation-Based

2016 2017 2018 2019 2020

New Appropriations 75.9 108.1 129.2 206.1 192.2

Automatic Appropriations 3.8 5.7 7.3 7.6 8.2

of which RLIP* 3.8 5.7 7.3 7.6 8.2

Continuing Appropriations 6.0 14.4 2.5

Budgetary Adjustments 12.4 20.0 35.9

Total Available Appropriations 98.1 148.2 172.4 216.2 200.4

Less: Unused Appropriations (18.2) (6.7) (5.5) (2.5)

Total Obligation/Expenditure Program 79.9 141.5 166.8 213.7 200.4

New Appro- Total Available Appro Ratio (%) 77.4 72.9 74.9 95.3 95.9

Particulars

Amounts (in Million Pesos)

Obligation-Based Cash-Based

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Sources of basic data: NEP 2018-2020

TABLE 1.5

SOURCES OF FUNDS, 2016-2020 NFRDI

Sources of basic data: NEP 2018-2020

TABLE 1.6 SOURCES OF FUNDS, 2016-2020

NMIS

Sources of basic data: NEP 2018-2020

TABLE 1.7 SOURCES OF FUNDS, 2016-2020

PCC

Sources of basic data: NEP 2018-2020

2016 2017 2018 2019 2020

New Appropriations 286.5

Automatic Appropriations 2.6

of which RLIP* 2.6

Continuing Appropriations

Budgetary Adjustments

Total Available Appropriations 289.1

Less: Unused Appropriations

Total Obligation/Expenditure Program 289.1

New Appro- Total Available Appro Ratio (%) 99.1

Particulars

Amounts (in Million Pesos)

Obligation-Based Cash-Based

2016 2017 2018 2019 2020

New Appropriations 267.4 393.2 632.1 480.6 413.4

Automatic Appropriations 119.5 137.4 15.2 16.7 16.5

of which RLIP* 15.2 16.7 16.5

Continuing Appropriations 4.3 0.7 39.7

Budgetary Adjustments 24.7 6.3 5.8

Transfers from:

Miscellaneous & Personnel Benefit Funds 21.2 4.5 5.8

Pension and Gratuity Fund 3.5 1.8

Total Available Appropriations 415.9 537.5 653.1 537.0 429.9

Less: Unused Appropriations (13.9) (52.8) (41.1) (39.7)

Total Obligation/Expenditure Program 401.9 484.7 612.0 497.3 429.9

New Appro- Total Available Appro Ratio (%) 64.3 73.2 96.8 89.5 96.2

Amounts (in Million Pesos)

Particulars Cash-BasedObligation-Based

Cash-Based

2016 2017 2018 2019 2020

New Appropriations 470.7 419.8 489.5 652.0 447.1

Automatic Appropriations 7.7 8.6 9.5 10.2 10.3

of which RLIP* 7.7 8.6 9.5 10.2 10.3

Continuing Appropriations 12.9 7.1

Budgetary Adjustments 19.1 10.3 7.5

Transfers from:

Miscellaneous & Personnel Benefit Funds 19.1 5.9 3.9

Pension and Gratuity Fund - 4.4 3.6

Total Available Appropriations 510.4 445.8 506.5 662.1 457.4

Less: Unused Appropriations -10.3 -2.7 -0.4

Total Obligation/Expenditure Program 500.1 443.1 506.2 662.1 457.4

New Appro- Total Available Appro Ratio (%) 92.2 94.2 96.6 98.5 97.8

Particulars

Amounts (in Million Pesos)

Obligation-Based

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TABLE 1.8 SOURCES OF FUNDS, 2016-2020

PHILMECH

Sources of basic data: NEP 2018-2020

TABLE 1.9

SOURCES OF FUNDS, 2016-2020

PCAF

Sources of basic data: NEP 2018-2020

TABLE 1.10

SOURCES OF FUNDS, 2016-2020

PHILFIDA

++

2016 2017 2018 2019 2020

New Appropriations 237.9 308.7 344.0 310.1 338.7

Automatic Appropriations 5.8 6.2 6.6 7.3 7.2

of which RLIP* 5.8 6.2 6.6 7.3 7.2

Continuing Appropriations 5.5 8.8 2.7

Budgetary Adjustments 9.5 1.8 3.9

Transfers from:

Miscellaneous & Personnel Benefit Funds 9.5 1.8 2.3

Pension and Gratuity Fund - 1.6

Total Available Appropriations 258.6 325.5 354.5 320.1 346.0

Less: Unused Appropriations (12.1) (0.6) (3.1) (2.7)

Total Obligation/Expenditure Program 246.5 324.9 351.4 317.4 346.0

New Appro- Total Available Appro Ratio (%) 92.0 94.8 97.0 96.9 97.9

Particulars

Amounts (in Million Pesos)

Obligation-Based Cash-Based

2016 2017 2018 2019 2020

New Appropriations 168.1 181.6 179.5 202.2 234.0

Automatic Appropriations 3.4 3.9 4.6 4.8 5.4

of which RLIP* 3.4 3.9 4.6 4.8 5.4

Continuing Appropriations 11.0 7.2 0.0

Budgetary Adjustments 4.9 7.2 12.6

Transfers from:

Miscellaneous & Personnel Benefit Funds 4.4 5.5 11.4

Pension and Gratuity Fund 0.4 1.7 1.2

Total Available Appropriations 187.3 199.9 196.7 207.0 239.4

Less: Unused Appropriations (13.7) (7.8) (0.0) (0.0)

Total Obligation/Expenditure Program 173.5 192.1 196.6 207.0 239.4

Obligation-Based Cash-Based

Amounts (in Million Pesos)

Particulars

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Sources of basic data: NEP 2018-2020

2016 2017 2018 2019 2020

New Appropriations 231.3 358.5 561.8 410.5 398.5

Automatic Appropriations 12.2 13.9 15.4 16.7 16.3

of which RLIP* 12.2 13.9 15.4 16.7 16.3

Continuing Appropriations 37.5 24.8 47.7

Budgetary Adjustments 40.8 16.6 10.5

Transfers from:

Miscellaneous & Personnel Benefit Funds 36.7 11.0 8.1

Pension and Gratuity Fund 4.2 5.6 2.4

Total Available Appropriations 321.8 413.8 587.8 474.8 414.8

Less: Unused Appropriations (29.9) (5.8) (49.7) (47.7)

Total Obligation/Expenditure Program 291.9 408.0 538.1 427.1 414.8

New Appro- Total Available Appro Ratio (%) 71.9 86.6 95.6 86.4 96.1

Particulars

Amounts (in Million Pesos)

Obligation-Based Cash-Based


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