SOP Library
SOP NO:
GM-GO20
(List of Exhibits/Attachments)
Mission
:
Technical Support Services
Area:
Grains Marketing (GM)
Title:
Revised SOP on Sugar Marketing Operations
Date Approved/Issued:
05/03/2004
Date Effective:
05/03/2004
Digest:
I. TERMS OF REFERENCE
A. Rationale
B. Objective
C. Scope
D. Basis
II. IMPLEMENTING GUIDELINES
A.
Procurement
1.
The classification, volume and buying price of sugar to be procured by NFA shall be as authorized by the NFA Council and/or the NFA Administrator.
2.
Procurement of raw sugar Quedans shall only be from the following:
a)
Individual Farmer-Planters
b)
Associations
c)
Corporations/Cooperatives
3.
Quedans to be procured shall only be first endorsee Quedans. All Quedans shall be properly endorsed by the planter/producer or association representative as first endorsee by affixing his/her signature on said document prior to its acceptance.
4.
NFA may also procure Quedans of sugar planters/producers assigned to banks as payment for production loans 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.
4.1
Quedans assigned to banks to be procured by NFA must have the following:
a)
Signature of the owner of the quedan as first endorsee.
b)
Signature of the authorized bank representative as second endorsee
5.
NFA may also procure shares of farm workers (SAKADA) in the sugar production. The Quedans shall be in the name of the Department of Labor and Employment (DOLE) as trustee of the farm workers’ share.
6.
As a matter of policy, NFA shall procure Quedans with free storage period of at least fifteen (15) days. NFA may procure Quedans 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.
7.
The period of reckoning of the date of free storage if there is any shall be the week ending date as reflected in the Quedans .
8.
A Procurement Team composed of a Team Leader, and a support staff if necessary, shall be deployed to designated auction centers to tender bids. In areas with many auction centers, reassignment or detail of NFA personnel from other provinces may be undertaken.
9
The NFA Provincial Office shall get the
specimen signatures of the following signatories to the Quedan:
a)
SRA representative in each mill
b)
Mill Manager/Mill Representative
c)
Association Representative
10. The concerned NFA Provincial Offices shall determine the existing terms, conditions, and services of each sugarmill in their area such as:
Ÿ
name of sugarmill/refinery
Ÿ
location
Ÿ
owner
Ÿ
capacities
Ÿ
planter-miller sharing terms
Ÿ
bagging/rebagging fee
Ÿ
MTS cost/charges
Ÿ
storage fee (free storage period and charges thereafter before milling and refining, tolling fee (refining fee) and guaranteed recovery
Ÿ
handling fee
Ÿ
transport cost
Ÿ
sharing of molasses if any
11. The NFA Provincial Office shall require the sugarmills to submit the series numbers of Quedans submitted for the week ending.
12. Prior to payment and acceptance of Quedans, the following requirements shall be strictly complied with:
12.1 The Quedans shall first be verified and validated with the concerned sugarmill vis-a-vis the series of Quedans issued by them.
12.2. Authenticity of signatures in the Quedans shall be verified from the specimen signatures. NFA shall also validate the signature of the signatories by requiring presentation of valid identification card such as voter’s ID, driver’s license, etc.
12.3 Inspection by the Team Leader/NFA Personnel on the existence of stocks at mill site before the auction.
13. Upon payment of the Quedans, liens and other charges as indicated in the Quedans shall be deducted from the total proceeds of the sale. Likewise, insurance charges by the sugarmill shall also be deducted from the proceeds. All liens deducted shall be clearly itemized in the Purchase Receipt.
14. Upon preparation of the Purchase Receipt (PR), full check payment shall be issued by the NFA Disbursing Officer and the Quedan 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 Quedan.
15. Payment shall be done at the NFA Provincial Office following the usual disbursement voucher (DV) system.
16. Payment shall be through crossed check in the name of the planter/ association. For Quedans assigned to banks, payment shall be in the name of the Bank for the account of the Planter/Producer/Cooperative.
17. As a matter of policy, the Cashier is the accountable officer for Quedans
18. The NFA Provincial Office shall conduct meetings and coordinate with the
Sugar Regulatory Administration (SRA) Extension Services Division in their area to discuss sugar marketing operations.
B.
DISPERSAL AND TOLLING
The NFA Central Office shall approve all requests for sale, withdrawal/transfer of raw sugar, brown sugar and refining and transfer/sale of refined sugar.
1.
Dispersal
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.
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.
2.
Tolling (Refining)
2.1
The concerned NFA Provincial Office shall consider the following in its recommendation, selection and hiring of services of Sugar Refineries in its area or nearest refinery outside its jurisdiction in coordination with the NFA provincial office where the refinery is located:
a)
Dependability and performance standing of refineries.
b)
Refinery production capacity, and if capacity is fully committed or maximized.
c)
Delivery schedule of refined sugar
d)
Terms and conditions governing tolling such as:
Ÿ
tolling charges
Ÿ
guaranteed recovery from raw sugar to refine sugar
Ÿ
empty raw sugar bags
Ÿ
accrual of by products in refining process
Ÿ
insurance charges
Ÿ
packing/container of refined sugar including
charges if there are any
Ÿ
taxes, liens charges if there are any
Ÿ
storage fee for refined sugar (period of free
storage and charges if there are any)
2.2
A refining/tolling supervisor shall be assigned at every sugar refinery for the duration of the Tolling Operations of NFA.
C.
DISTRIBUTION
1.
NFA may sell the procured sugar in the following form (in bulk or in bags of 50kg):
a)
Raw sugar - unrefined crystallized sugar produced by centrifugal machines
b)
Refined sugar - white crystallized sugar processed by the same raw sugar producing machine to remove further some impurities, until sugar becomes light brown in color.
Ÿ
Standard
Ÿ
Premium
2.
NFA may sell sugar in Quedans:
NFA management shall have the option to sell Quedans through bidding or direct sales. Awarded Quedans shall be turned over to the buyer/s at the NFA Provincial Office after full payment.
3. All sales collection shall be deposited in the bank under the Sugar Collection Account and remitted to Central Office.
4.
Pricing Policy
The following policies/guidelines shall be followed in the pricing of both raw and refined sugar:
4.1
Raw Sugar
4.1.1
Compare the offered price to the canvassed prevailing market price in the area.
4.1.2
Compute for the NFA break-even selling price which will include the following cost component.
a)
QUEDAN
Procurement Cost
Plus: Interest (__% per month__month/s)
Insurance (in ___ month/s)
Incidentals (Storage fee, etc.)
(A fraction of a month is considered one month)
b)
Physical Raw Sugar in BAG/Bulk
Ÿ
IN BAG:
Procurement Cost
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)
Ÿ
IN BULK:
Procurement Cost
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)
4.2
Refined Sugar
4.2.1
Compare the offered price to the canvassed prevailing market price in the area.
4.2.2 Compute for the NFA break-even selling price which will include among others the following cost component
Procurement Cost
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
SRA Monitoring Fee
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.
D.
DOCUMENTATION PROCEDURES
1.
Procurement
1.1
The Team Leader shall receive the Quedans
(Annex A)
to be procured from the planters association/individual planters and verifies individual Quedans as to number of Lkg (bags of 50kg) and ownership based on the listings of Quedans submitted by the sugarmills.
1.2
An Abstract of Quedan Purchases shall be prepared and shall include the Name of Planters, Quedan Numbers, Quantity in Lkg, Production Week Ended, Gross Amount, Total Liens, and other Charges
(Annex B).
It shall be signed by the Encoder, certified correct by the Team Leader, verified by the Sr. Accounting Specialist and approved by the Provincial Manager.
1.3
The Team Leader shall prepare the disbursement voucher (DV) based on the Abstract of Quedan Purchases (maximum of 25 Quedans only) and attaches the following documents for processing of check:
Ÿ
copy of the Abstract of Quedan Purchases
Ÿ
original Quedans verified by the Team Leader
Ÿ
photocopy of Quedans certified by the Team Leader
1.4
After processing of check for payment the Cashier shall prepare the Purchase Receipt (PR) to document Quedan purchases indicating “sugar procurement” as its nature of transaction.
1.5
For monitoring and control purposes, the control number of the Quedans shall always be written/indicated on the PR. Likewise, the Team Leader shall double check the control/series number of Quedans with the Abstract of Quedan Purchases. The Face of the Quedans shall be stamped with “NFA PROCURED” to avoid repeated use of the document.
1.6
The Cashier shall acknowledge the receipt of the original Quedans for safekeeping. Likewise he/she shall maintain a copy of the Abstract of Quedan Purchases in his/her file.
1.7
Only the certified photocopy of the Quedans shall be attached to the copy of DV for accounting purposes.
2.
Withdrawal of Raw Sugar (from sugarmill )
2.1
The Provincial Manager shall issue an Authority to Issue (AI) based on the Abstract of Quedan Purchases authorizing the Cashier to issue the Quedan/s to the procurement Team Leader.
2.2
The Team Leader shall acknowledge receipt of Quedan/s from the Cashier.
2.3
The Team Leader shall facilitate processing of check payment for liens and other fees to the sugarmill.
2.4
The team leader shall present to the sugarmill the Quedans and the Official Receipts (OR) as proof of payment of all liens.
2.5
Upon presentation of the Quedans and the OR, the sugarmill shall issue a Delivery Order (D.O.) to NFA based on the Quedans.
2.6. Upon receipt of the D.O., the team leader shall issue a Warehouse Stock Receipt based on the D.O. with :”receipt from sugarmill” as nature of transaction.
2.7. Raw sugar withdrawn from the sugarmill may be:
a)
transferred to the NFA warehouse for storage
b)
Issued to the refinery for tolling
2.8.
Transfer of raw sugar to NFA warehouse
2.8.1
The PM shall issue an AI to the Team Leader authorizing him to transfer raw sugar from sugarmill to NFA warehouse.
2.8.2
The Team Leader shall issue a Warehouse Stock Issue (WSI) to the receiving Warehouse Supervisor with “transfer to NFA warehouse” as the nature of transaction. (TITO with WSR prepared under 2.6 above)
2.8.3
The Warehouse Supervisor (WS II), upon receipt of raw/refined sugar in the warehouse, shall issue WSR to document receipt of raw sugar from the Team Leader
2.9 Transfer of raw sugar (from Sugarmill to refinery/tolling)
2.9.1
The Provincial Manager shall issue an Authority to Issue (AI) addressed to the Team Leader authorizing him/her to withdraw raw sugar from mill and issue it to refinery/ tolling.
2.9.2
Based on the D.O., the Team Leader withdraws raw sugar from the sugarmill, simultaneously issues a WSR with “ receipt of raw sugar from sugarmill” as nature of transaction, and a WSI (TITO) to the assigned NFA tolling supervisor in the refinery with “transfer to refinery” as nature of transaction
2.9.3
The assigned NFA tolling supervisor shall issue a WSR with “receipt of raw sugar for tolling” as nature of transaction
2.9.4
The assigned NFA tolling supervisor shall issue another WSI for the issuance of raw sugar for tolling .
2.9.5
Recoveries (refined sugar) from tolling shall be documented with a WSR
3.
Withdrawal of Sugar Recovery
(Refined)
Refined sugar may be withdrawn in quedan or in physical form.
3.1
In Quedans
The team leader shall receive the Quedans from the refinery and turnover the same to the Cashier who will acknowledge the receipt of the Quedans for safekeeping.
3.2
Physical Withdrawal
3.2.1
Based on the AI issued by the NFA PM, the NFA Tolling Supervisor shall prepare a WSI addressed to the receiving Warehouse Supervisor with “transfer of refined sugar from refinery to NFA warehouse” as nature of transaction.
3.2.2
The receiving NFA Warehouse shall issue a WSR with “transfer of refined sugar from refinery” as nature of transaction.
4.
Distribution
4.1
All issues of Quedan /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).
4.2
An Official Receipt indicating the Quedan Numbers/Quantity of sugar purchased shall be issued to the buyer by the NFA Cashier.
4.3
Upon payment and presentation of O.R., the Provincial Manager shall issue an authority to issue (AI) addressed either to:
4.1.1
The Cashier authorizing him/her to issue Quedan to buyer. (if Quedans were sold through bidding) The Quedan numbers shall be indicated on the AI. Receipt of Quedans by buyer shall be acknowledged properly in the AI.
4.1.2
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).
4.1.3
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.
5.
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.
Process Flow Chart A. Procurement B. Dispersal/Transfer
C. Distribution
E.
FUNDING
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 fund availability as approved by the DBTFM. 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.
F.
ACCOUNTING TREATMENT
1.
Procuremen
t
a)
To record Quedan purchases based on the PRs and Abstract of Quedan Purchases thru Voucher System
DR: 8-72-360-15 Invty. Items for Sale-Raw Sugar
w/ sugarmills
1
/ xxx
CR: 8-84-900.14L Trust Liabilities-Liens xxx
1
/
CR: 8-84-900.
14I
Trust Liabilities-Insurance xxx
1
/
CR: 8-84-900.14S Liabilities-Storage xxx
1/
DR/CR: 8-81-400.04 Voucher Payable xxx xxx
1/
CR: 8-70-350 Cash-OBC-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.
2.
Tolling/Processing
2.1
Within the Province
a)
Withdrawal of Raw Sugar from the sugar mill and issuance to the Refinery.
WSR
- Memo Entry - Previously recorded in the Voucher Register Journal
WSI
DR: 8-72-200.03 Invty - Work in Process -
Sugar with Refinery xxx
CR: 8-72-360.15 Invty - Items for Sale - Raw Sugar xxx
Note: For recording in the General Journal thru the preparation of journal voucher
For Control purposes, the accounting copy of Abstract of Purchase shall be tick marked.
b)
Receipt of Refined Sugar from the Refinery
DR: 8-72-360.16 Invty. Items for Sale-Refined Sugar xxx
CR: 8-72-200.03 Invty. Work in Process-Sugar w/ Refinery xxx
c)
Payment of Liens and other Charges
DR: 105-C-900.16 Invty. Cost - Tolling - Tolling Fee xxx
CR: 8-81-900.01 Accrued Expenses xxx
#
DR/CR: 8-81-400.04 Voucher Payable xxx xxx
DR: 8-81-900.01 Accrued Expenses xxx
CR: 8-70-350 Cash in Bank xxx
#
DR: 8-72-360.16 Invty. Items for Sale- Refined Sugar xxx
CR: 105C-900.16 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.
d)
Payment/Set-Up of Operating Expenses
DR: 170-BGG Activity Code -Appropriate
Object of Expense xxx
CR: 8-81-400.04/ Vouchers Payable/
8-81-900.01 /Accrued Expenses xxx
#
DR/CR: 8-81-400.04/ Vouchers Payable/
8-81-900.01 /Accrued Expenses xxx xxx
CR: 8-70-350 Cash in Bank -OBC xxx
e)
Payment/Remittance of Liens to PNB, BIR, Sugar Mill, etc.
DR: 8-84-900.14L Trust Liabilities-Liens xxx
CR: 8-81-400.04 Vouchers Payable xxx
#
DR: 8-81-400.04 Vouchers Payable xxx
CR: 8-70-350 Cash in Bank- OBC xxx
f)
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)
Issuance of Refined Sugar to Other Provinces. Same Procedure as in Grains transactions.
3.
Distribution
3.1
Direct Selling of Quedans/Sale of Raw Sugar (Ex-Mill)
Based on the Official Receipt (O.R.)
DR: 8-70-400 Cash C.O. xxx
DR: 8-84-900.14 Trust Liabilities xxx
CR: 1-57-715 Sale of Raw Sugar (at selling price) xxx
#
3.2
List of Released Quedan Receipt duly acknowledged by Buyers/or copy of AI duly acknowledged by the Buyer.
DR: 3-22-715 Cost of Sales - xxx
CR: 8-72-360.15 Invty Items for Sale-Raw Sugar xxx
G.
MONITORING AND REPORTING SYSTEM
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.
Ÿ
Daily Sugar Procurement Report Daily
Ÿ
Weekly Sugar Stock Movement Report Weekly (Indicating also
the cumulative total)
Ÿ
Prevailing Prices of Refined Weekly (cut-off
Brown Sugar every Monday)
Ÿ
Sales/Distribution Report Weekly (every Monday)
Ÿ
Separate SRDF and SOI for Sugar Same cut-off for
regular reports
2.
The Regional Office shall submit to CO-DTBFM the following reports:
Ÿ
SRDF - Monthly Statement of Receipts and Disposition of Funds
each account, SPF and SOE
Ÿ
SOI - Quarterly Statement of Obligation incurred for each account,
SPF and SOE.
All rulings and/or issuance inconsistent herewith are hereby superseded.
This SOP shall take effect immediately upon approval.
III. RESPONSIBILITIES
IV. FLOW CHART
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