Rules on agricultural lands issued to boost investment

on . Posted in DAR In The News

businessworldThe government has laid out two omnibus rules intended to fast track the process for transfer of ownership of all types of agricultural lands among qualified agrarian reform beneficiaries (ARBs) as well as boost agricultural venture agreements.

The Department of Agrarian Reform (DAR) has issued Administrative Orders (AO) Nos. 04 and 06, Series of 2016 which respectively provides rules on agribusiness venture agreements (AVAs), and regulates transfer of ownership of agricultural lands. The two AOs take effect, respectively, on June 16 and 17.

“AO No. 04, Series of 2016 provides rules on agribusiness venture agreements (AVAs), while AO No. 06, Series of 2016 regulates transfer of ownership of agricultural lands,” DAR said in a statement.

“Both rules aim to create an environment sustainable for agribusiness in the country by securing tenure rights of agrarian reform beneficiaries (ARBs) and strengthening business relations between [beneficiaries] and investors,” the statement added.

As defined in the statement, AVAs are “contracts entered into by an agrarian reform beneficiary (ARB) or group of ARBs, on the one hand, and an investor, on the other, which involve the possession of the land; management of the operations of the farming of the land; control/distribution of the produce of the land, for a period of more than two cropping seasons; commitment of the owners to produce certain crops, at a determinable quantity, for a period of more than two cropping seasons; and/or such other arrangements similar to these.”

“AO No. 04, Series of 2016 emphasized on the role of the government to provide support services to the farmer-owners to allow them to negotiate with investors, as far as practicable, on an equal footing.”

The statement noted that the order was a result of consultations by both DAR and the United Nations-Food and Agricultural Organization, following “issues surrounding agribusiness venture agreements (AVAs).”

The order aims to make the requirements and process for AVAs simpler, the statement said, adding that “the Presidential Agrarian Reform Council still has the discretion on approving these agreements under the new rules.”

The statement also noted that “Simple transactions of purchase of inputs or sale of crops or products, insofar as these are not linked to any of the abovementioned enumeration, are not considered as AVAs, according to the rules.”

AO No. 06, entitled “Guidelines on Issuance of the DAR Clearance to Authorize the Transfer of Ownership of Agricultural Lands,” assures that “opportunities for red tape in the transfer of ownership of agricultural lands have also been lessened or eliminated altogether,” the statement said.

“The transfer of ownership of agricultural lands, including those not distributed through an agrarian reform program, must be cleared by the DAR before it is registered. The DAR is tasked to verify that the said transfer is not restricted by the Comprehensive Agrarian Reform Law,” the statement quoted DAR Assistant Secretary for Legal Affairs Justin Vincent J. La Chica as saying.

“Except in cases of intestate succession and testate succession of legitimes to compulsory heirs, and the foreclosure of agricultural land by banks, agrarian laws proscribe the transfer of ownership of agricultural lands if it will result [in] the transferee gaining an aggregate agricultural landownership of more than five hectares,” the statement said.

Mr. La Chica was further quoted as saying: “Our interpretation of the law is, except for an Agrarian Reform Cooperative, all types of juridical entities are considered as one person, hence only allowed to own up to five hectares of land. Any attempt to circumvent the five-hectare ceiling rule, such as with the use of fly-by-night juridical entities, will be dealt with to the full extent of the law.”

The order qualifies that ARBs are barred from transferring the awarded land during a holding period of ten 10 years and while the amortization to the government has not yet been fully paid. But this does not apply to transfers by hereditary succession or to the government or another qualified beneficiary during the said period.

“If the restrictions do not apply, the DAR will have to clear the transfer,” the statement quoted Mr. La Chica as saying.

The AOs are posted on DAR’s Web site. -- Janina C. Lim