SOP Library
SOP NO:
GM-GO11
(List of Exhibits/Attachments)
Mission
:
Technical Support Services
Area:
Grains Marketing (GM)
Area:
Grains Marketing (GM)
Activity:
General Operation (GM-GO)
Title:
SOP on Sugar Marketing Operations
Date Approved/Issued:
10/20/1997
Date Effective:
10/20/1997
Digest:
I. TERMS OF REFERENCE
A. Rationale
B. Objective
C. Scope
D. Basis
II. IMPLEMENTING GUIDELINES
1. Identification of qualified Farmer-Planters/Farmer Producer/Association
1.1 Procurement of raw sugar shall only be from the following:
1.1.1 Individual Association
1.1.2 Quedans
1.1.3 Corporations/Cooperatives
1.1.4 Quedans of Family Corporations/Corporations/Federations of
Associations as sugar planters/producers assigned to banks as
payment for production loans.
1.1.5 Quedans Corporations/Cooperatives owned by planters/farmers/
producers assigned to banks under its crop loan.
1.1.6 Shares of farm workers (SAKADA) in the mill district
1.2 Procurement of raw sugar shall also be allowed from Family Corporation/Corporations which have been put-up primarily by planters to cultivate/plant sugar cane.
1.3 Procurement of raw sugar shall also be allowed from federations of associations who represent legitimate planters associations to facilitate marketing as their previous arrangement.
1.4 The NFA Provincial Office shall conduct meetings and coordinate with the Sugar Regulatory Administration (SRA) Extension Services Division in their area and secure the following required data:
1.4.1 Certified list of planters directory and crop estimate for crop year 1996-1997 on a per district/sector basis classified as to areas planted. Planters directory shall contain among others the following data:
farm number
name of planter
location of farm
area in hectares
Plant care per cropping
Ratoon cane per cropping
Crop Estimate
in tons
in Lkg (50 kilos)
name of Hacienda
The planters directory shall be verified correct by SRA.
1.4.2 The specimen signatures of authorized signatories of planters representative (farmers association), signatories of Quedan Receipts or Official Sugar Warehouse Receipts (QSWR) such as from SRA and from sugar millers involved.
2. Procurement Operations
2.1 Procurement of raw sugar from planters/associations shall be based on the list appearing in the Planters Directory provided and certified by the SRA Extension Services Division.
As a matter of policy, no procurement shall be undertaken from individual planters unless verification has been done i.e. ownership of land is established that seller/holder of Quedan Receipt is the owner of the land or is a planter/lessor. Documents such as TCT or Tax Declaration or Lease Contract etc. shall be presented and verified genuine and correct by concerned issuing offices like BIR, Bureau of Land, etc.
2.2 For Planters Associations, procurement shall be based on the Masterlist provided by the association as certified by S.R.A. Extension Services Division. Initially however, and pending submission of the complete Masterlist, the association must submit a Certification on a per transaction basis the list of bonafide members interested to participate indicating the area, production and quantity to be sold in Lkg. Signatory to the Certification shall be the representative so authorized by the Planters Association thru a Board Resolution.
2.3 NFA shall likewise procure the farm workers' (SAKADA) share of the sugar production in the mill District they belong.
For this specific procurement, the quedans shall be in the name of the Department of Labor and Employment (DOLE) as trustee of the farm workers' share.
2.4 The quality of raw sugar to be procured are those raw sugar classified as "B" which is for domestic consumption and produced in crop year 1996-1997 only. Molasses recovery is not included in this Special Sugar Procurement Program.
2.5 All concerned NFA Provincial Offices shall determine the existing terms, conditions, and services of each sugarmill in their area such as:
name of sugarmill/refinery
location
owner
capacities
planter-miller sharing terms
bagging/rebagging fee
MTS cost/charges
storage fee (fee storage duration and charges thereafter before milling and refining)
tolling fee (refining fee) and guaranteed recovery
handling fee
transport cost
sharing of molasses if any
2.6 Procurement shall only be at the sugarmills, designated auction centers, NFA Warehouses or Provincial Offices where a Team Leader and SDOs shall be assigned as Procurement Team.
2.7 Quedan receipt QSWR to be procured shall only be first endorse Quedan. However, Sugar Quedan Receipt assigned to banks may be procured provided it is supported by a certification from the Bank that subject quedans are under its crop loan program; that these quedans are assigned to the Bank and covered by a Deed of Assignment by the owner of the Quedan and that same is free from liens and encumbrances.
2.8 Quedan receipt assigned to banks to be procured by NFA must have the following:
2.8.1 Signature of the owner of the quedan as first endorsee.
2.8.2 Signature of the authorized bank representative as second endorsee
2.9 Prior to payment and acceptance of Quedan Receipts/QSWR, the following requirements shall be strictly complied with:
2.9.1 Countercheck the name of the Seller-Planter/Planter Association from the certified list of Planters Directory furnished by local SRA Extension Services Division.
2.9.2 The QSWR shall first be verified and validated with the concerned sugarmill viz-a-viz the series of QSWR issued by them.
2.9.3 Verify authenticity of signatories to the Quedan Receipts/QSWR with both the SRA and authorized Planters Association representatives, if any.
2.9.4 Inspection of inventory by the Team Leader/NFA Personnel (existence of stocks at millsite) before the auction.
2.9.5 Likewise, all Quedan Receipts/QSWR shall be property endorsed by the planter/producer or association representative as first endorsee by affixing his/her signature on said document prior to its acceptance.
2.9.6 As a matter of policy, NFA shall procure Quedan Receipts with free storage period of at least fifteen (15) days. NFA may procure Quedan Receipts whose free storage period have expired provided the farmers/planters are willing to pay the insurance and storage fee incurred regardless of the period plus 15 days additional storage fee. These fees shall be immediately deducted from the proceeds of the sale.
The period of reckoning of the date of free storage if there is any shall be the week ending date as reflected in the Quedan Receipt/QSWR.
3. Buying Price and Payment
3.1 NFA buying price for raw sugar “B” shall be P610.00 per Lkg. (50 kilos). Liens and other charges as indicated in the quedan receipts/QSWR shall be deducted from the total purchase price. Likewise, insurance charges by the sugarmill shall also be deducted from the proceeds.
3.2 All liens deducted shall be clearly itemized in the Purchase Receipt.
3.3 NFA shall validate the signature of planter/association representative by requiring presentation of valid identification card such as votes ID, drivers license, etc.
3.4 Upon preparation of the Purchase Receipt (PR), full check payment shall be issued by the NFA Disbursing Officer and the Quedan Receipt (QSWR) shall be stamped “NFA Procured”. The PR shall bear the same signature of the planter/owner or association/cooperatives' authorized representative as appearing in the QSWR/Quedan Receipts. Payment can also be done at the NFA Provincial Office following the usual voucher system.
3.5 Payment shall be thru crossed check in t he name of the planter/association. For Quedan Receipt assigned to banks, payment shall be in the name of the Bank for the account of the Planter/Producer/Cooperative.
4. SUGAR PROCUREMENT TEAM
The sugar procurement team shall be composed of a team leader preferably a warehouse supervisor and a umber of SDOs per millsite/bidding site. In areas where there are many sugar centrals/sugarmill, travel, re-assignment or detail of NFA personnel from other provinces may be undertaken. Hiring of additional personnel can also be resorted to, to complement existing personnel, subject to the approval of NFA Central Office.
As a matter of policy, the Cashier is the accountable officer for Quedan Receipts procured under this Program. The purchased/QSWR/quedan receipt shall be turned over by the SDO to the Cashier leaving a xerox copy of the pre-numbered memo and Quedan Receipt/QSWRs for his/her file. Immediate liquidation of SDO at the end of every procurement day shall be required.
5.
DISPERSAL AND TOLLING
The NFA Central Office shall approve all request for sale, withdrawal/transfer of raw sugar, brown sugar and refining and transfer/sale of refined sugar.
5.1 DISPERSAL/TRANSFER
5.1.1 The NFA Regional/Provincial Office shall undertake withdrawal of raw sugar either for transfer/sale or refining within or outside the province, only upon receipt of instruction from C.O.-D.M.O.
5.1.2 Transfer of sugar may either be in bags or bulk, through sea or land transfer whichever is the most efficient, available and as practiced in the area.
5.2 Tolling (Refining)
The concerned NFA Provincial Office shall consider the following in their recommendation, selection and hiring of services of Sugar Refineries in their area or nearest outside their jurisdiction in coordination with concerned provincial office where the refinery is located:
5.2.1 Evaluation of dependability and performance standing of refineries.
5.2.2 Refinery production capacity, and if capacity is fully committed or maximized.
5.2.3 Delivery schedule of refined sugar
5.2.4 Terms and conditions governing tolling such as:
tolling charges
guaranteed recovery from raw sugar to refine sugar
empty raw sugar bags
accrual of by products in refining process
insurance charges
packing/container of refined sugar including
charges if there are any
taxes, liens charges if there are any
storage fee for refined sugar (period of free
storage and charges if there are any)
A refining/tolling supervisor shall be assigned at every sugar refinery for the duration of the Tolling Operations of NFA.
6. DISTRIBUTION
6.1 NFA may sell the procured sugar in the following form:
6.1.1 Raw sugar, dark brown, unrefined crystallized sugar produced by centrifugal machines
Quedan Receipt
Bag/Bulk (physical)
6.1.2 Refined sugar - white crystallized sugar processed by the same raw sugar producing machine to remove further some impurities, sugar becomes light brown in color.
Standard
Premium
NFA may sell raw sugar by selling the Quedan receipts or in physical form - in bulk or in bags of 50 kg
6.2 All sales collection shall be deposited in the bank under the Sugar Collection Account and remitted to Central Office.
7. PRICING POLICY
The following policies/guidelines shall be followed in the pricing of both raw and refined sugar:
7.1 Raw Sugar
7.1.1 Compare the offered price to the canvassed prevailing market price in the area.
7.1.2 Compute for the NFA break-even selling price which will include the following cost component. (See
Sample Computation for NFA Break-Even Selling Price for Raw Sugar
))
7.1.2.1 QUEDAN
Procurement Cost at P610/Lkg
Plus: Interest (__% per month__month/s)
Insurance (in ___ month/s)
Incidentals (Storage fee, etc.)
(A fraction of a month is considered one month)
7.1.2.2 PHYSICAL RAW SUGAR IN BAG/BULK
IN BAG:
Procurement Cost at P610/Lkg
Plus: Interest (__% per month__month/s)
Insurance (in ___ month/s)
Incidentals (Storage fee, etc.)
Bagging/Handling
Free on Truck (FOT)
(A fraction of a month is considered one month)
IN BULK:
Procurement Cost at P610/Lkg
Plus: Interest (__% per month__month/s)
Insurance (in ___ month/s)
Incidentals (Storage fee, etc.)
Handling in bulk
Free on Truck (FOT)
(A fraction of a month is considered one month)
7.2 Refined Sugar
7.2.1 Compare the offered price to the canvassed prevailing market price in the area.
7.2.2 Compute for the NFA break-even selling price which will include among others the following cost component (see
Sample Computation for NFA Break-Even Selling Price for Refined Sugar
).
Procurement Cost at P610/Lkg
Plus: Interest (__% per month x no. of months)
Insurance (in ___ month/s)
Refining Cost (Tolling Fee) plus 10% VAT
Incidentals (Trucking, Handling,Taxes,etc)
Packaging Cost
Advance VAT of P46.00/bag
SRA Monitoring Fee of P1.20/bag
Dispersal Expenses (freight, trucking,
arrastre/stevedoring, marine insurance,etc.)
In the event that the prevailing market prices falls below the NFA computed break-even cost, the NFA Administrator shall approve the corresponding selling price Bulletin.
8.
DOCUMENTATION PROCEDURES
8.1 Procurement
8.1.1 An index card per individual farmer/producer or association shall be maintained to monitor procurement of Quedan Receipts.
8.1.2 The documents to be used for this procurement operation is the NFA Purchase Receipt (PR) which shall be stamped with “for sugar procurement only”. A separate pad of accountable forms shall be used for this purpose and shall be the accountability of the SDO.
8.1.3 For monitoring and control purposes, the control number of the QSWR shall always be written/indicated on the PR. Likewise, the QSWR upon payment shall be stamped with “NFA PROCURED” to avoid repeated use of the document.
8.1.4 All quedan receipts procured for the day shall be surrendered/turned over by the SDO to the NFA cashier. The SDO shall prepare an abstract of purchased Quedan where the cashier will acknowledge the Quedans turned over to him/her by the SDO. The Abstract of Purchase together with the P.R. shall serve/support the replenishment/liquidation voucher of the SDO.
8.2 Dispersal/Transfer (from Mill to NFA Warehouses)
8.2.1 The SGOO (POO) shall prepare an Authority to Issue (AI) addressed to the cashier authorizing him/her to issue the Quedan Receipts to the Warehouse Supervisor.
8.2.2 The Warehouse Supervisor shall acknowledge receipt of Quedan Receipt from Cashier.
8.2.3 Likewise an Authority to Issue (AI) addressed to the Warehouse Supervisor shall be prepared authorizing him/her to withdraw raw/refined sugar from mill.
8.2.4 Receipt of raw sugar from mill by the WS II shall be documented through the WSR.
If raw sugar is to be issued for tolling or to other warehouse/WS II, documentation through technical transactions shall be undertaken using the WSR.
8.3 Distribution
8.3.1 All issues of Quedan Receipt/raw sugar and refined sugar to buyers shall be covered by an authority to accept payment to be prepared by the SGOO (POO) and addressed to the cashier (See
Authority to Accept Payment (AAP)
.
8.3.2 An Official Receipt indicating the Quedan Receipt Nos./Quantity of sugar purchased shall be issued to the buyer by the NFA Cashier.
8.3.3 Upon payment and presentation of O.R., the SGOO (POO) shall prepare an authority to issue (AI) addressed either to:
8.3.3.1 The Cashier authorizing him/her to issue Quedan to buyer. The Quedan Receipt nos. shall be indicated on the AI. (For direct selling of Quedans). Receipt of Quedans by buyer shall be acknowledged properly in the AI.
The Cashier shall prepare a report summarizing daily issuances of quedans and submit same to accounting unit as basis for recording entries in the journal voucher.
8.3.3.2 The warehouse supervisor authorizing him/her to issue sugar to buyer. This shall be documented using the WSI. (For selling of sugar in physical form).
8.4 Payment of liens to PNB, BIR, SRA and Sugar Mill shall be the responsibility of the operations unit. For this purpose, a voucher shall be prepared which shall be supported by xerox copies of the Quedan Receipts and a summary of liens due them.
See Process Flow Charts:
Process Flow Chart
A. Procurement & B. Dispersal/Transfer
C. Distribution
9.
FUNDING
1. A Sugar Procurement Fund (SPF) and a Sugar Operating Expense (SOE) Fund Account shall be opened and used as disbursement account for the procurement and operating expense of sugar respectively. Fund requirement shall be remitted to the field offices based on the recommendation of DMO and DAS. Likewise, a Sugar Collection Account (SCA) shall be opened where collection from the sale of sugar shall be deposited. This shall be remitted to Central Office following the usual standard procedure.
2. The ceiling of the SDO shall be increased to P5M for this purpose.
10. ACOUNTING TREATMENT
10.1 Procurement
10.1.1 Drawing of Cash Advances by the SDO
DR: Cash with SDO xxx
CR: Cash in Bank-SPF xxx
#
Note: Memo entry - Voucher Register Journal
Recording - Cash/Check/Register Journal
10.1.2 Replenishment/Liquidation of SDO
DR: Invty. Items for Sale-Raw Sugar xxx
CR: Trust Liabilities-Liens xxx
CR: Trust Liabilities-Insurance xxx
CR: Trust Liabilities-Storage xxx
DR/CR: Voucher Payable xxx xxx
CR: Cash-SDO-SPF xxx
Note: Recording Voucher Register Journal
DR: Cash with SDO xxx
CR: Cash in Bank - SPF xxx
#
Note: Memo entry Voucher Register Journal
Recording - Cash/Check Register Journal
The replenishment/liquidation voucher shall be supported by PRS and Abstract of Purchases.
10.1.3 Payment thru Voucher System
DR: Invty. Items for Sale-Raw Sugar
1
/ xxx
CR: Trust Liabilities-Liens xxx
1
/
CR: Trust Liabilities-Insurance xxx
1
/
CR: Trust Liabilities-Storage xxx
1/
DR/CR: Voucher Payable xxx xxx
1/
CR: Cash-SDO-SPF
2
/ xxx
2
/
#
Note:
1/
For recording Voucher Register Journal
2
/ For recording Check Register Journal
All expenses incurred identifiable to Sugar
Operations shall be charged to Activity Code
170 captioned as Sugar Operation (Operating
Expenses) e.g. TEV, OT, gas, oil, expired
insurance, storage fees, etc.
10.2 Tolling/Processing
10.2.1 Within the Province
Withdrawal of Raw Sugar from the sugar mill and
issuance to the Refinery.
10.2.1.1 WSR - Memo Entry - Previously recorded in
the Voucher Register Journal (Replenish-
ment/Liquidation by the SDO or payment
thru Voucher System).
10.2.1.2 WSI - DR: Invty - work in Process -
Sugar with Refinery
CR: Invty - Items for Sale - Raw
Sugar
#
Note: For recording in the General Journal thru
the preparation of journal voucher
For Control purposes, the accounting copy of Abstract
of Purchase shall tickmarked.
10.2.2 Receipt of Refined Sugar from the Refinery
DR: Invty. Items for Sale-Refined Sugar xxx
CR: Invty. work in Process-
Sugar with Refinery xxx
10.2.3 Receipt of Refined Sugar from the Refinery
DR: Invty. Cost - Tolling - Tolling Fee xxx
CR: Voucher Payable/Accrued
Expenses xxx
DR: Voucher Payable/Accrued
Expenses xxx
CR: Cash in Bank xxx
#
DR: Invty. Items for Sale-Refined Sugar xxx
CR: Invty. Cost-Tolling-Tolling Fee xxx
Note: Direct expenses re-transfer of Raw Sugar from Sugar Mill to Refinery shall be charged/capitalized to raw Sugar Inventory, Spillages, if any, shall be absorbed by the Cost, Material Losses shall be investigated.
10.2.4 Payment/Set-Up of Operating Expenses
DR: Approp.Activity Code xxx
CR: Vouchers Payable/Accrued Expenses xxx
#
DR: Vouchers Payable/Accrued Expenses xxx
CR: Cash in Bank xxx
#
10.2.5 Payment/Remittance of Liens to PNB, BIR, Sugar Mill, etc.
DR: Trust Liabilities-Liens xxx
CR: Vouchers Payable xxx
#
DR: Vouchers Payable xxx
CR: Cash in Bank xxx
#
10.2.6 Transfer of Refined Sugar from the Refinery to NFA Warehouse
Note: Accounting treatment entries shall follow the same
procedures as in Grains transactions re-transfer
within the province. (Warehousing Activity)
10.2.7 Issuance of Refined Sugar to Other Provinces. Same Procedure
as in Grains transactions.
10.3 Distribution
10.3.1 Direct Selling of Quedan Receipts/Sale of Raw Sugar (Ex-Mill)
#
10.3.1.1 OR = DR: Cash C.O. xxx
DR: Trust Liabilities xxx
CR: Sale of Raw Sugar xxx
(at selling price)
#
10.3.1.2 List of Released Quedan Receipt duly acknowledged by Buyers/or
copy of AI duly acknowledged by the Buyer.
DR: Cost of Sales - xxx
CR: Invty Items for Sale-
Raw Sugar xxx
#
10.3.2 Sale of Raw/Refined Sugar at NFA Warehouse
10.3.2.1 Transfer of Raw Sugar from Sugar Mill to NFA Warehouse
Imaginary Whse: WSR (memo entry-Previously recorded)
NFA Terminal Whse: WSR/WSI
DR: Invty IFS - RS (Receiving Whse.) xxx
actual quantity received
CR: Invty IFS - RS (Issuing Whse) xxx
Note: Material losses - spillages should be investigated
OR = DR: Cash with collecting officer xxx
CR: Sale of Raw/Refined Sugar xxx
WSI = Prepare Journal Voucher
DR: Cost of Sales xxx
CR: Invty IFS-Raw/Refined Sugar xxx
11. MONITORING AND REPORTING SYSTEM
11.1 The Provincial Office shall submit to C.O.-DMO/RO the following reports on
sugar operations. This shall be prepared by the operations unit and noted
by the Provincial Manager.
11.1.1
Daily Sugar Procurement Report
Daily
11.1.2
Weekly Sugar Stock Movement Report
Weekly (Indicating also
the cumulative total)
11.1.3 Prevailing Prices of Refined Weekly (cut-off
Brown Sugar (Exhibit 4) every Monday)
11.1.4
Sales/Distribution Report
Weekly (every Monday)
11.1.5 Separate SRDF and SOI for Sugar Same cut-off for
regular reports
11.2 The Regional Office shall submit to CO-DTBFM the following reports:
11.2.1 SRDF - Monthly Statement of Receipts and Disposition of Funds
each account, SPF and SOE
11.2.2 SOI - Quarterly Statement of Obligation incurred for each account,
SPF and SOE.
11.3 An
Abstract of Sugar Quedan Receipt Purchases
shall be submitted
weekly to the Philippine National Bank (PNB) copy furnished accounting unit,
operations unit and DMO Central Office. This shall be prepared by the Disbursing
Officer ad approved by the Provincial Manager.
All issuances inconsistent with the provisions of this SOP are hereby superseded.
This SOP shall take efffect this 20th day of October 1997.
III. RESPONSIBILITIES
IV. FLOW CHART
Top Page
EXHIBITS
Sample Computation for NFA Break-Even Sellling
Price for Raw Sugar
Sample Computation for NFA Break-Even
Selling Price for Refined Sugar
Authority to Accept Payment (AAP)
Daily Sugar Procurement Report
Weekly Sugar Stock Movement Report
Sales/Distribution Report
Abstract of Sugar Purchases
Process Flow Chart - A. Procurement &
B. Dispersal/Transfer (From mill to NFA warehouse/refinery)
Process Flow Chart - C. Distribution