SOP No: GM-GO15

SOP Library

SOP NO: GM-GO15 (List of Exhibits/Attachments)

Mission: Technical Support Services

Area: Grains Marketing (GM)
Area: Grains Marketing (GM)

Activity: General Operation (GM-GO)

Title: SOP on the Procurement and Distribution of Fertilizer

Date Approved/Issued: 11/20/2000

Date Effective: 11/20/2000

Digest:

I. TERMS OF REFERENCE

A. Rationale

B. Objective

C. Scope

D. Basis

II. IMPLEMENTING GUIDELINES

A. Procurement

Public Bidding

a) Procurement of fertilizers shall be done through public bidding in NFA Central Office to be conducted by the Central Office Pre qualifications, Bidding, and Awards Committee (PBAC).

b) The bidding shall be open to all fertilizer importers and distributors who are licensed by the Fertilizer and Pesticide Authority (FPA).

c) Bidding procedures shall be governed by Executive Order (EO) 302 dated February 19, 1996 Providing Policies, Guidelines, Rules and Regulations for the Procurement of Goods/Supplies by the National Government.

d) The Bidding Committee shall require the bidders to post cash bonds equivalent to 10% of the total amount of the quoted price.

e) The winning bidder shall be required by the PBAC to submit a Guaranteed Analysis of Nutrients (GAN) of the fertilizer stocks delivered to NFA. The Technology Resource Development Department (TRDD) shall be in charge of testing the stocks to determine if these conform with the qualification standards set by NFA. If the stocks do not conform with qualification standards, TRDD shall recommend rejection of stocks and subsequent suspension of payment.

f) The Office/Department in NFA Central Office designated as the National Coordinating Office for Fertilizer (NCOF) shall determine the volume to be procured which must be disposed/sold within the planting season after the purchase. Likewise, the NCOF shall designate the targeted NFA depots as destination points of the purchased fertilizer. The winning bidder shall be responsible for the delivery of the fertilizer to the depot.

g) The winning bidder must be able to deliver the stocks within fifteen (15) calendar days from receipt of the Certificate of Award.

Storage, Warehouse Documentation,

and Stock Reporting

a) Procured fertilizers shall be stored in a warehouse where there are no grains stocks stored.

b) A Warehouse Supervisor shall be responsible for the safekeeping of fertilizer stocks stored in the warehouse.

c) Upon receipt of fertilizer from the supplier, the Warehouse Supervisor in-charge of the fertilizer shall prepare the Warehouse Stock Receipt (WSR) to document the receipt of the fertilizer. On the other hand, upon issuance of fertilizer and based on the Authority to Issue (AI), the Warehouse Supervisor shall prepare the Warehouse Stock Issue (WSI). Documentation of receipts and issuance of fertilizer shall be on a “bag to bag counting” basis which means there would be no weighing involved.

d) One set of WSRs and WSIs separate from grains stocks shall be used for fertilizer stocks regardless of the type.

e) The Warehouse Supervisor shall prepare a Weekly Stock Report (same format as for grains stocks) for fertilizer stocks and shall attach therein the WSIs and WSRs documenting issues and receipts of fertilizers. Cut-off dates of submission and copy distribution of the warehouse documents and stock reports shall be the same as that of grains stocks.

f) The Operations Section shall liquidate the fertilizer accountability of the Warehouse Supervisor every end of the planting season.

B. Distribution

neral Policies

a) NFA shall distribute fertilizers to qualified Farmers Organizations/Cooperatives (FO/Cs) and individual farmers for their own use only. However, NFA shall also distribute fertilizers to FO/Cs who are ESSS Operators and to LGUs after the requirements of the FO/Cs and individual farmers for their own use have been served. Distribution after serving the priority clients shall be on a “first come first served” basis.

b) Farmers Cooperatives/Organizations and individual farmers who are purchasing fertilizers for their own use shall be given ten (10) working days starting from the announcement by NFA of the fertilizer availability, within which to avail of their privilege to purchase from NFA. After the two week availment period, the sale shall be opened to the other buyers on a “first come, first served” basis.

c) Payment to NFA shall be thru:

c.1 application of the balance of the Cooperative Development Incentive Fee (CDIF) or of the Angat Pinoy Incentive Fee (APIF);

c.2 Cash Payment;

c.3 Payment In Kind (PIK) subject to the approval of the Administrator;

c.4 combination of any two of the three schemes of payment (payment in kind shall be subject to the approval of the Administrator;

c.5 combination of the three schemes (payment in kind shall be subject to the approval of the Administrator).

d) The distribution of the fertilizer shall be thru ex-NFA Warehouse only.

e) The buyers of fertilizers shall be given seven (7) working days after payment within which to withdraw stocks from the NFA warehouse. Stocks paid but not yet withdrawn within seven (7) working days shall be subjected to a storage fee to be determined by the Provincial Office.

f) The Business Development and Promotions Department (BDPD) shall recommend the pricing policy for fertilizer for the Administrator’s approval.

Specific Policies

a) Qualified to Purchase from NFA

a.1 End-User

Farmers Cooperatives/Organizations

Individual farmers

a.2 Intermediaries

FC/FOs who are ERAP Sari-Sari Store (ESSS) Operators

LGUs

Requirements Prior to Actual Purchase of Fertilizer from NFA

b.1 The NFA Provincial Offices shall announce the implementation of the fertilizer distribution program of the NFA and its mechanics in their respective areas by means of a banner, press release, printed forms, and such other means that would convey the start of the implementation of the program.

b.2

To qualify, a farmer organization/cooperative must:

b.2.1 be a holder of a master’s passbook

b.2.2 have submitted the following documents:

b.2.2.1.

Application for Intent to Purchase Fertilizers from NFA (Exhibit 1

);

b.2.2.2.

/Cs’ Board Resolution

signifying intention to avail of the program

and use the balance of CDIF and APIF to purchase fertilizer

The resolution shall also indicate that the organization is authorizing the NFA to deduct from the balance of CDIF/APIF the corresponding amount for payment of the purchased fertilizer. The resolution shall include a list of members who are interested to purchase fertilizer and the corresponding number of hectares each member is cultivating as certified by the Head of the Organization. The Resolution shall also authorize a coordinator to represent the organization in all its transactions with the NFA.

b.2.3 not have been blacklisted by NFA (i.e., it was not found by NFA to be using fertilizer for commercial purposes).

b.3 To qualify, an individual farmer must:

b.3.1 be a holder of farmer’s passbook

b.3.2 have submitted the required

Application for Intent to Purchase Fertilizers from NFA (Exhibit 1

);

b.3.3 not have been blacklisted by NFA (i.e., he or she was not found by NFA to be using fertilizer for commercial purposes).

b.4

FO/Cs interested to put up an ESSS shall put up the required capital

for fertilizer based on their volume requirements and seek FPA license to be able to sell. The Provincial Operations Officer (POO) shall determine their volume requirements and the amount of capital requirement for fertilizer. FO/FCs shall also file the Application for Intent to Purchase Fertilizer. FO/FCs shall also file the

Application for Intent to Purchase Fertilizer from NFA

(Exhibit 1) prior to actual purchase. Likewise, store owners should provide separate storage and selling spaces for fertilizers.

b.5 LGUs shall also file the

Application for Intent to Purchase Fertilizers from NFA (Exhibit 1

)

prior to actual purchase.

c) Allocation

c.1 The volume of fertilizer that a buyer can purchase from the NFA shall be limited to the following:

c.1.1

Individual Farmers

- Individual farmers shall be entitled to a maximum of eight (8) bags per hectare per cropping season.

c.1.2.

FO/Cs

- Farmer Organization/Cooperatives shall be entitled to a maximum of eight (8) bags per hectare per farmer member per cropping season.

c.1.3

FO/Cs as ESSS operators

- NFA shall only distribute fertilizer to FO/Cs who are ESSS operators when it has a surplus supply which shall be determined after all the requirements of the end-users are satisfied, and subject to implementation of the availment period as mentioned in section II.B.1.b of this SOP. The Provincial Operations Officer shall determine the volume to be distributed.

c.1.4 LGUs - Same as (c.1.3) above.

c.1.5 The NFA reserves the right to reduce the volume or deny the request for fertilizers depending on the availability of fertilizer stocks.

Payment

d.1

Application of CDIF/APIF

d.1.1

Farmers Organizations and Cooperatives (FO/Cs) and individual farmers who are purchasing fertilizer for their own use may use their accumulated CDIF and/or APIF held in trust by NFA for payment of fertilizer. However, FO/Cs who are ESSS Operators

could not apply its accumulated CDIF and APIF balance

as payment

d.1.2

Only whole number of bags of fertilizer shall be issued after the CDIF/APIF balances have been converted to the equivalent number of bags of fertilizers. The fraction resulting from the conversion shall either be:

�

rounded off to one whole bag of fertilizer. FO/Cs shall pay in cash the excess not covered by the CDIF and or APIF balance; or

�

dropped and the balance of CDIF and APIF shall be retained with the NFA.

(SEE

Sample for Application of CDIF/APIF

) (ANNEX A

) FOR SAMPLE COMPUTATIONS)

d.2 Cash - All buyers may pay in cash.

d.3

Payment-in-Kind (PIK) -

Implementation of this scheme shall always require the approval of the Administrator.

d.3.1 Whenever this scheme is approved for implementation by the Administrator, individual farmers, FOs/FCs purchasing for their own use, and FO/Cs who are ESSS Operators may pay in kind the fertilizer they purchased from NFA. DMO shall issue the guidelines whenever this scheme is allowed by the Administrator.

d.3.2 Only whole number of bags of fertilizer shall be issued after the money value of the “payment in kind” deliveries has been converted to the equivalent number of bags of fertilizers. The fraction resulting from the conversion shall be rounded off to one (1) whole bag of fertilizer and the FO/FCs or individual farmers shall pay in cash the excess fertilizer issued not covered by the stock deliveries.

d.3.3

NFA shall treat the “payment in kind” deliveries as procurement and the issuance of the corresponding number of bags of fertilizer as PIK for the procured stocks. No Purchase Receipt (PR) is required in this transaction.

(SEE

Sample for PIK of Individual Farmer

(ANNEX B) FOR SAMPLE COMPUTATIONS)

Mode of Distribution

Ex-NFA Warehouse

Fertilizer sold shall be picked up by the buyer at the designated NFA warehouse and the “payment in kind” shall be delivered to the same warehouse.

Procedure - Cash and offsetting of CDIF and APIF Balances

Responsible Employee	PROCEDURE
FOs/FCs and Individual Farmers purchasing for their own use;FO/Cs who are ESSS Operators, LGU	Ÿ Files an *Application for Intent to Purchase Fertilizer* *from NFA* with the Operations Section of the NFA Provincial Office Ÿ For FO/Cs and individual farmers purchasing for their own use, presents the masters’/farmer’s passbook. Ÿ For FO/FCs who are ESSS owners, puts up the required capital for fertilizer based on their volume requirements as determined by Operations Secton.
Operations Section	Ÿ Processes and approves the *Application for Intent to Purchase* *Fertilizer* *from NFA* indicating therein among others the equivalent number of bags that could be purchased from the balance of CDIF and APIF (for FO/FCs); and the balance of APIF for individual farmers; both purchasing for their own use. Ÿ Issues to the applicant his/her copy (copy 5-Applicant ) of the approved *Application for Intent to Purchase Fertilizer from NFA. Ÿ If there is a required cash payment, issues the Authority to Accept Payment* *(AAP) Exhibit (2),* Cashier’s copy and attaches it to the Cashier’s copy of the approved *Application for Intent to Purchase Fertilizer from NFA*. Ÿ If there is no required cash payment, issues the AI.
,FOs/FCs and Individual Farmers purchasing for their own use; FO/FCs who are ESSS Operators; and LGU	Ÿ If there is a required cash payment, proceeds to the cashier, presents the AAP and pays the corresponding amount indicated on it. Ÿ Accepts OR from the Cashier. Ÿ Goes back to the Operations Section and presents the OR for the issuance of AI. Ÿ Upon receipt of the AI, proceeds to the designated warehouse. Surrenders the AI to the Warehouse Supervisor for issuance of the fertilizer. *Procedure - Payment-in-Kind*


RESPONSIBLE EMPLOYEE	PROCEDURE
FOs/FCs and individual Farmers purchasing for their own use and FO/Cs who are ESSS	Ÿ Files an *Application for Intent to Purchase Fertilizer* *from NFA* with the Operations Section of the NFA Provincial Office. Ÿ For FO/Cs and individual farmers purchasing for their own use, presents the masters’/farmer’s passbook. Ÿ For FO/FCs who are ESSS owners, puts up the required capital for fertilizer based on their volume requiremetns as determined by Operations Section.
Operations Section	Ÿ Processes and approves the *Application for Intent to Purchase* *Fertilizer* *from NFA* indicating therein among others the equivalent number of bags of fertilizer that could be purchased from the intended “payment in kind” deliveries of the FOs/Cs or individual farmers purchasing for their use and FO/FCs as ESSS Operators. Ÿ Issues to the applicant Accounting (copy 2), WSII (copy 3), and his/her (copy 5 - Applicant Copy) copies of the approved *Application for Intent to Purchase Fertilizer* *from NFA.* Ÿ If there is a required cash payment, issues the *Authority to Accept Payment* *(AAP)* Cashier’s copy and attaches it to the Cashier’s copy of the approved *Application for Intent to Purchase Fertilizer from NFA*.
FO/FCs, FO/FCs who are ESSS Operators	Ÿ Presents the approved Accounting and WSII copies of the *Application for Intent to Purchase Fertilizer* *from NFA* to the assigned Warehouse Supervisor. Ÿ Delivers the stocks to the Warehouse Supervisor.
WSII	Ÿ Receives the Stocks from the FO/FCs (purchasing for own use or as ESSS Operators) or individual farmer and issues to the latter the SDO copy of the WSR.
FOs/FCs and individual Farmers purchasing for their own use and FOs FO/FCs who are ESSS Operators	Ÿ If there is a cash payment, proceeds to the cashier, presents the AAP with the attached approved Application for Intent to Purchase Fertilizer from NFA and pays the corresponding amount based on the AAP. Ÿ Accepts OR from the Cashier. Ÿ Goes back to the Operations Section and presents the OR for the issuance of AI for fertilizer. In addition, turns over to the Operations Section the SDO copy of the WSR as evidence of the delivery of palay/corn stocks.
Operations Section	Ÿ Prepares the AI for fertilizers based on the SDO copy of the WSR and the Operations copy of the approved *Application for Intent to Purchase Fertilizer from NFA.*
FOs/FCs and individual Farmers purchasing for their own use and FO/FCs who are ESSS Operators	Ÿ Upon receipt of the AI, proceeds to the designated warehouse, turns over the AI to the WSII for the issuance of fertilizer.
WSII	Ÿ Issues the fertilizer. Ÿ Attaches his/her copy and the accounting copies of the *Application for Intent to Purchase fertilizer from NFA* to the WSII and accounting copies of the WSI respectilvely.

Reporting and Monitoring System

The Provincial Offices concerned shall submit a

Weekly Provincial Sales and Inventory Report

(Exhibit 3)

to the Regional Office every Monday following the previous week’s sales. Upon receipt of the provincial reports, the Regional Office shall in turn consolidate these reports and prepare the

Weekly Regional Sales and Inventory Report

(Exhibit 3.a)

to be submitted to the BDPD on the following day.

Accounting Entries

Receipt of Fertilizer from the local supplier (basis - Disbursement Voucher with the attached WSR to be

recorded in the Voucher Register Journal)

DR Inventory Items for Sale - Fertilizer xxx

CR Vouchers Payable xxx

Payment to Supplier (basis - cash/check voucher to be recorded in the Cash and Check Register Journal

)

DR Vouchers Payable xxx

CR Cash in Bank (Current) xxx

Sale of Fertilizer - Cash Payment (basis - OR / Collection and Deposit Module to be recorded in the Journal of Collections and Deposits)

DR Cash Collecting Officer xxx

CR Trading/Production - Sale of Fertilizer xxx

To record cost of sales (basis - WSI to be recorded in the General Journal

)

DR Cost of Sales - Fertilizer xxx

CR Inventory

Items for Sale - Fertilizer xxx

Sale of Fertilizer - Application of CDIF/APIF balances (basis - Application of Intent to Purchase Fertilizer from NFA to be recorded in the General Journal)

DR Trust Liabilities - Miscellaneous

CDIF/APIF

xxx

CR Trading/Production - Sale of Fertilizer xxx

Receipt of cash as payment for the fertilizer not covered by CDIF/APIF balance

(basis - OR/GL- Collection and Deposits Module to be recorded in the Journal of Collections and Deposits)

DR Cash (in excess of the CDIF/APIF bal) xxx

CR Trading/Production - Sale of Fertilizer xxx

To record cost of sales (basis - WSI to be recorded in the General Ledger)

DR Cost of Sales - Fertilizer

xxx

CR Inventory Items for Sale - Fertilizer

xxx

Sale of Fertilizer - Payment-in-Kind

Receipt of palay/corn stocks in exchange for the equivalent number of bags of fertilizer (basis - WSR to be recorded in the General Journal)

DR Inventory Items for Sale - Palay/Corn

( Basic Cost + Drying & Deliv Incentives)xxx

DR Inventory Cost ( CDIF/APIF) xxx

CR Payables - Direct Procurement

( Basic Cost + Drying & Deliv Incentives) xxx

CR Trust Liabilities - CDIF/APIF xxx

To close Inventory Cost to Inventory Account

DR Inventory Items for Sale Palay/Corn xxx

CR Inventory Cost (CDIF/APIF) Palay/Corn xxx

To transfer fund from CPF to GOF (E)

DR Cash Other Banks (Current) GOF (E) xxx

CR Cash Other Banks (Current)CPF xxx

Issuance of fertilizer in exchange for the equivalent number of bags of palay/corn received (basis - WSI/Application for Intent to Purchase fertilizer from NFA to be recorded in the General Journal)

DR Trust Liabilities (CDIF/APIF) xxx

DR Payables - Direct Procurement xxx

CR Trading/Production - Sale of Fertilizer xxx

Receipt of cash as payment for the fertilizer not covered by the delivery of palay or corn stocks (basis - the OR/GL- Collection and Deposits Module to be recorded in the Journal of Collections and Deposits)

DR Cash ( for the excess fertilizer issued against the palay/corn stocks received) xxx

CR Trading/Production - Sale of Fertilizer xxx

To record cost of sales (basis - WSI to be recorded in the General Ledger)

DR Cost of Sales - Fertilizer xxx

CR Inventory Items for Sale - Fertilizer xxx

III. RESPONSIBILITIES

IV. FLOW CHART
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EXHIBITS

Application for Intent to Purchase Fertilizer from NFA

Weekly Provincial Sales and Inventory Report

Weekly Regional Sales and Inventory Report

Sample for Application of CDIF/APIF

Sample for PIK of Individual Farmer

Application for Intent to Purchase Fertilizer from NFA
Weekly Provincial Sales and Inventory Report
Weekly Regional Sales and Inventory Report
Sample for Application of CDIF/APIF
Sample for PIK of Individual Farmer