Cagayan Valley

Regional Dairy
Industry Plan
2006-2015

September 2006

CHAPTER I
INTRODUCTION

I. BACKGROUND
Over the years, the Philippines has always been a net milk importer. Based on the data
generated from the Bureau of Agricultural Statistics in 2004, the country had a total livestock
production of 8,956,633 composed of 3,115,087 heads of carabao representing 35 percent;
2,547,819 heads of cattle representing 28 percent; and 3,293,727 goats representing 37 percent.
Out of the total number of livestock production, there are only 7,173 dairy animals, or 0.08%. Of
this number, 3,857 or 54% are carabaos, 3,115 or 43% are cattle and 201 or 3% are goats.
Given the very low number of dairy animals, the national dairy industry was able to produce a
total of 11,607,000 liters of liquid milk in year 2004. Thus, our country imported a total of
2,110,000 metric tons valued at about 491.77 million US dollars to meet its dairy requirements.
Based on these figures, local milk production represents only a measly 1 percent of the national
liquid milk requirements.
However, considering the high volume of milk importation, ironically, the Philippines, in 2004 was
able to export a total of 258,690,000 kgs. of milk in various forms to other countries, especially
Asian countries such as Indonesia, Malaysia and Vietnam. The total value of products exported
is about P4,208,990,000.00 or $75,040,000.00.
The government strives for national self-sufficiency in milk and dairy products as a vital feature in
the attainment of a self-reliant and independent economy in the provision of proper nutrition and
generation of more employment opportunities for the Filipino people thus, Republic Act No. 7884
was enacted into law. Towards this end, Section 3-b of the Act states the objective To give
support and assistance in the production, processing and marketing activities of all those
engaged in the business of producing milk and other dairy products particularly rural based small
dairy farmers through the provision necessary support systems.
Consistent with the thrusts and priorities to promote investments in agri-business and strengthen
entrepreneurship of small and medium enterprises as enunciated in the Cagayan Valley Regional
Development Plan (CVRDP) for 2004-2010, the Regional Dairy Industry Development Plan
covering the period 2006-2015 provides the framework and direction for accelerating the
development of the dairy industry in the region.
The potential for the development of a dairy industry in the region is recognized given its land
resource which is conducive for livestock production. Based on the inventory of Land Use, the
region has a total of 573,066 hectares of grassland and brushland. Of this total, about 117,342

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hectares representing 20.48 percent is still underutilized. The promotion of dairy animal
production will help address the milk requirement gap for local consumption and the needed fresh
milk as raw material for dairy processing. Likewise, the development of the dairy industry in the
region will contribute to the creation of additional employment and additional income of the people
in the countryside.
The Regional Dairy Industry Development Plan, serves as a framework and guide for all dairy
industry stakeholders in the implementation of programs and projects that will accelerate the
development of the dairy industry in the region. Specifically, the plan aims to set the direction for
the development of the industry along its pillars in production; processing; marketing; and
organization and management. Recommended policies and strategies are outlined for possible
adoption by the dairy producers and stakeholders based on local conditions, resources and
capabilities.
II. BRIEF PROFILE OF REGION 02
Physical Characteristics
Cagayan Valley lies within the northeastern tip of the Philippines. It is bounded on three sides
by big mountain ranges: Cordillera to the west, Caraballo to the south, and Sierra Madre to the
east. To the north lies the Babuyan channel beyond which is the North China Sea.
Tuguegarao City, the regional capital, is about 485 kilometers from Manila via the Maharlika
Highway.
The region is composed of five (5) provinces, namely the island group of Batanes, the valley
provinces of Cagayan and Isabela, and the generally mountainous provinces of Nueva
Vizcaya and Quirino. The region is composed of 90 municipalities, 2 component cities and 1
independent component city. The region registered a total of 2,311 barangays.
Cagayan Valley is the fourth largest region in the country with a total land area of 2,683,758
hectares. The provinces of Cagayan and Isabela occupy about three-fourths of the regions
area having 900,267 has. and 1,066,456 has., respectively. The remaining area is shared by
the provinces of Nueva Vizcaya (390,387 has.), Quirino (305,720 has.), and the island group
of Batanes (20,928 has.).
Topography is generally sloping. About 40 percent of the land is mountainous or with slopes
greater than 30 degrees. This is followed by undulating to hilly terrain (8 to 30 degrees slope)
and lowlands (below 8 degrees slope) at 31 and 29 percent of total area respectively. Lands
with elevation from 0 to 500 meters above sea level (ASL) represent about 92 percent of the
total area while only 8 percent have an elevation between 500 to 1000 meters above sea level.
Climate
The region falls under Type III climate pattern which have a very pronounced dry season from
November to April and wet during the rest of the year in the regions western flank or valley
areas. Rainfall ranges from 1,600 mm. in the lowlands and 4,400 mm. in the mountainous
areas. Temperature ranges from as low as 17degrees centigrade to as high as 35 degrees
centigrade. May is the warmest month and January is the coldest month. Relative humidity
ranges from 70% to 90%. Tropical storms are common between May and November,
averaging about twelve per year. However, its climate is conducive to livestock production.
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Population
3.1. Population Level
As of Censal Year 2000, total regional population was estimated at 2,813,159 persons.
Despite having the fourth largest land area, the regions total population count is 6th lowest
among all regions of the country. During the same year, total regional population accounted for
about 3.68 percent of the national total. For the past 20 years, the regional percentage share
to the national total population has been decreasing from 4.22 percent in 1980 to 3.68 percent
in censal year 2000.
3.2. Inter-Censal Population Growth Rates
Population growth has been steadily decreasing from 1975 to 1990. In 1995, however,
the regions population growth rate started an upward trend, reaching a 2.25 percent Annual
Average Growth Rate (AAGR) in Year 2000. Except during the period 1975 to 1980, the
regions population growth rate has always been lower compared to that of the national
average.
Labor and Employment
The number of people entering the labor force declined by 6.69% or from 1,509,000 in 2004 to
1,408,000 in year 2005. Correspondingly, number of employed persons totaling 1,429,000 in
2004 decreased by 136,000 in 2005, the employment rate was recorded at 92.65 percent. This
is 1.07 percentage points lower than the previous years employment rate.
4.1

Employment by Sector

Total employment in the agriculture sector grew by 15.61 percent and created 116,000 new
jobs, bringing the total employment to 859,000 or 60% of total employment.
The Industry sector remained the least employer, because it was able to absorb only 93,000
workers mainly due to the decline in trading activities.
The Services sector however, helped offset the decline in the number of workers in the
Industry sector by absorbing additional 23,000 jobs in 2004. This is largely due to the
increasing activities in the in the Construction, transportation and communication sub-sectors.
Economy
5.1. Gross Regional Domestic Product (GRDP)
The regions economy ballooned to a 10.7 percent growth in 2004 from 1.2 percent in 2003.
The GRDP adjusted for inflation reached P24.15 Billion in 2004 from P21.81 Billion in 2003.
The upsurge was powered by the substantial increase in Agriculture, Fishery and Forestry
activities from a virtual standstill of 0.2 percent growth in 2003 to a substantial 16.4 percent
increase in 2004. This sector contributed 50 percent of the total GRDP and registered the
fastest growth among regions in the country.
The Industry Sector contributed 15 percent of total GRDP and recovered from its slump of 6.2
percent in 2003 and slightly grew by 6.5 in 2004.

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The Services Sector which accounted for 35 percent of the regional economy declined from
6.2 percent in 2003 to 4.8 percent in 2004 because the sectors on Transportation;
Communication and Storage; Trade; Finance; Ownership of Dwellings and real Estate; and
Government Services posted growths lower than the previous year.

III. DAIRY INDUSTRY SITUATION IN REGION 02

A. Development Potentials and Opportunities
1. The presence of Dairy Zones
At present, there are four (4) existing Dairy Industry Zones in the region. These Dairy
Zones were identified based on the following criteria:
a. It is composed of contiguous municipalities with dairy animal population of not
less than 300 heads;
b. There are existing dairy cooperatives or livestock associations that are engaged
in milk production, collection and processing;
c. There are government agencies providing technical assistance in the
development of the Dairy Development Program of the dairy cooperatives or
livestock associations; and
d. The LGUs of the identified municipalities have integrated Dairy Enterprise
Development in their respective Comprehensive Local Development Plan.
On the basis of the above stated criteria, the Dairy Industry Zones with the component
municipalities are as follows:Within the dairy zones are Dairy Cooperatives that are being
assisted by the Department of Agriculture through the Philippine Carabao Center. The Cagayan
Dairy Zone has the most number of Dairy Cooperatives with 5, Batanes and Isabela North have
one each while Isabela South has two dairy cooperatives.
There is also an existing dairy cooperative called Sta Cruz MPC at Pamplona, Cagayan which is
located outside of the identified dairy zone in Cagayan.
2. Presence of Government Dairy Institutional Farms
There are five government institutional dairy farms (Figure 1) which are established in the
State Colleges and Universities operating in the region namely: Cagayan State University at
Piat, Cagayan campus; Cagayan Valley Agriculture and Natural Resources Research and
Development (CVARRD) based at Isabela State University at Echague, Isabela campus;
Quirino State College (QSC) at Diffun; Maddela Institute of Technology (MIT) in Maddela,
Quirino; Nueva Vizcaya State University (NVSU) in Bayombong, Nueva Vizcaya.
These institutions serve as dairy incubators and provide extension services to improve the
skills, technologies as well as management capabilities of dairy cooperatives and
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entrepreneurs in dairy production, processing and marketing. Table 1 presents the different
institutions and the corresponding production and support services they provide. The
Philippine Carabao Center based at the Cagayan State University-Piat Campus and the
Cagayan Valley Agriculture and Resources Research and Development based at the Isabela
State University have a more comprehensive package of services extended as compared to
the other institutions whose services are still limited to improvement of technology for dairy
stock production.
Table 1. Production and Dairy Support Services
In Government Dairy Farms

3. Availability of Technologies for Dairy Animal Production

The Unified Artificial Insemination Program was implemented to consolidate the output for
both carabao and cattle through a professionalized delivery of services by trained Artificial
Insemination (A.I.) technicians for crossbred animals within the period of 20 years. Under
this program, murrah buffalo crossbreeding program in Region 02 is an organized effort to
increase the genetic potential of native carabao not only for milk production but for meat
production as well. From the reports of the Philippine Carabao Center as shown in Table 4, a
total of 448 animals were subjected to artificial insemination from 1986 to 1990 and
increased by an average of 20% from 1991to 1995. With the intensified program the number
peaked to 12,702 growing by an average of 60%, but declined by 11% from 2001-2005. For
20 years, a total of 21,987 animals were covered by artificial insemination covering 13.8% of
the total female buffalo population in the region.
From an initial of number of 69 animals crossbred in 1986, its number grew by an average of
47.5% from 1991 to 1995 but declined from 1996-2000 accounting for only 11.5%. From
2001-2005, a total of 835 animals were covered by A.I. bringing a total of 2,314 or 47.5%
from 1991 to 1995 but slowed down from 1996-2000 by 11.5%. From 2001-2005, a total of
835 animals were covered bringing a total of 2,314 also for improved meat production.
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The Carabao Upgrading Program was started in 1986 by strengthening the Philippine Carabao
Research and Development Center (PCRDC) in partnership with the Department of
Agriculture and the Provincial Veterinary Offices and selected municipalities with funding
assistance from the United Nations Food and Agriculture Organization (FAO) and the United
Nations Development Program (UNDP). It should be noted however, that its low performance
is still low due to the reduction in national subsidy for the program for which the Local
Government Units are supposed to absorb the funding requirements as a result of the
devolution. Moreover, the program is not yet fully accepted by the farmers as they still prefer
the natural breeding technology.
4. Availability of Government Support Programs
4.1 Loan Assistance Program
The DA-PCC extends assistance programs to dairy producers through the Bull Loan Program
using the 25 Dairy Buffalo Module Scheme and the PAIWI Loan Scheme.
Through the 25 Dairy Buffalo Module Program the buffalos are extended directly to
NGOs/cooperatives, and government dairy farms, or indirectly to NGOs through Local
Government Units (LGUs). For an NGO to qualify, it must be duly registered with appropriate
government agency, which registers organizations or associations for purposes of giving legal
personality. The NGO should meet the requirements such as a) well-defined organizational
structure; b) with at least a 500 square meters animal shade; c) able to pay the P10,000.00
guarantee fund; and d) attendance to all trainings, seminars, and meetings called for related
to the program. So far, the PCC has extended the program to 8 dairy cooperatives and
associations with a total of 234 dairy buffalos. Average repayment is recorded at 62%.
This type of loan being extended by the PCC is almost similar with its Dairy Buffalo Module
Scheme. They differ somehow in the repayment scheme where the recipients are going to
pay the PCC one female calf (18 months old) out of three consecutive calving. On the
succeeding calving, the 50-50 sharing scheme is observed. When the breeding capability of
the animal is diminished, the recipient shall return the animal to the PCC.
Under the PAIWI Loan Scheme is also the bull loan scheme. This scheme has the same
client eligibility requirements as the Dairy Buffalo Module Scheme, plus the insurance of the
bull. The ownership of the bull under this scheme is only transferred to the client once it has
sired 50 calves within a certain period of time. The sired calves and their offspring must be
properly evaluated and passed the PCC standards. For clients of yearling bulls, at least 25
offspring must be properly evaluated by the PCC before ownership is transferred.
4.2 Support Facilities
For 2006, the national government provided region 02 a Mobile Liquid Nitrogen Tank worth
P5M. which is intended for the preservation of semen, vaccine and blood samples. National
funds were also allotted for massive training of village based Artificial Insemination
Technicians.

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5. Willingness of Local Government Units to Partner with DA-PCC for the Dairy Program
At present, a total of 142 bulls are distributed in several municipalities namely:
a) Isabela, 58 heads were distributed in Naguilian-32; Ilagan-11; San Mateo 10 & Sta Maria
5.
b) Cagayan Province, 42 heads distributed in Tuguegarao-12; Aparri-2; Solana-5;
Penablanca-5; Amulung-8; Rizal-5; and Pamplona 5.
c) Quirino Province, 21 bulls were distributed in Cabarroguis.
d) Nueva Viscaya Province, there are 25 bulls distributed, 20 of which are in Bagabag while 5
bulls were given to Aritao.
These animals are used as breeding bulls to serve the hundreds of native carabaos in the
villages for the crossbreeding technology. The resulting progenies which have 50% blood line
of the native and imported buffaloes are ideal animals for milk production. To date, close to
2,000 crossbred buffaloes are scattered throughout Region 02 and these are concentrated in
San Agustin; Isabela with 600 crossbreds; Solana, Cagayan with 200 crossbreds; Piat,
Cagayan with 100; Amulung with 200; and Penablanca with 50.
6. Corn Industry as a Forward Linkage to Dairy Industry
As of 2004, a total of 316,411 hectares is planted with corn with a total production of about
1,198,349 metric tons in the region. If a portion of this area will be used for corn forage/silage
production, it can provide better nutrients for dairy animals. Corn forage is high in digestible
nutrients compared to other grasses. Although it has a very low dry matter content which is
only 30%, it blends very well with legumes and concentrates to improve the dry matter
content of the ration.
Based on DA-RFU2 comparative cost and return analysis for corn production, it shows that if
a hectare of land is utilized for the production of corn silage, it can yield an average annual
income of P73,260.00. In contrast, the average annual income derived from corn grain
production is estimated at P44,010.00, or a difference of P29,250.00 as shown in the table
below.
Table 3. Comparative Cost and Return Analysis for Corn Production
in a Hectare of Land

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7. Available Pasture Leases

In the identified dairy zones a total of 12,033 hectares could be tapped as forage production
areas for the 1,957 heads of potential dairy animals. A total of 30 pasture lessees were
identified in the Cagayan Dairy Zone covering 7,153 hectares with a total of 1,630 dairy
animals which are potential for crossbreed production. For Southern Isabela Dairy Zone,
there are 7 pasture lease holders that manage 940 hectares of grassland with 327 dairy
animals. In North Isabela Dairy Zone, there are 13 pasture lessees that manage 3,940
hectares.
8. High Demand for Milk and Milk Products
Considering the present and projected population of Region 02, and the supply of milk from
pure and crossbred buffalos, the sufficiency level accounts for only .04%. However, with the
expected development of the dairy industry in the region, the sufficiency level is expected to
increase to .27% by 2015, as shown in Table 4.
Pasteurized milk is the easiest to prepare and the most in demand among the by-products of
milk. It was estimated that of the 16 kilogram annual per capita consumption, about 20.8
liters are in the form of pasteurized milk
The three institutional dairy farms located in Cagayan, Isabela, and Quirino and the
Integrated Farmers Cooperative in Cagayan are producing reconstituted pasteurized milk.
About 125,500 packs of reconstituted pasteurized milk at 200 ml /pack was produced in 2005
At present, commercial ready to drink (RTD) milk is sold at P14.00 per 200 ml pack while the
locally produced reconstituted pasteurized milk is sold at P9.00 per 200 ml.. If promotion and
advocacy on the consumption of locally produced pasteurized milk is intensified, it will be a
boost to the dairy processors in the region.
Although there are no available records on the volume of the regions milk candy and other
milk products sold, these are readily bought by local and foreign tourists for pasalubong.
9.

Presence of Some Successful Dairy Farmers in the Dairy Zone

As published by Dr. Sosimo Ma. Pablico in his book Changing Lives (2006), a compilation
of success stories, four dairy farmers from the Dairy Multi-Purpose Cooperative in Cagayan
were included. These successful farmers are headed by their manager Ricardo Pamittan.
The cooperative was organized and registered in 1994 and in 1998, the 25-Dairy Murrah
Buffalo Module was extended by the Philippine Carabao Center. A year after the assistance,
a couple recipients who are both graduates of Bachelor of Science in Education, opted to
raise carabao rather than practicing their profession. They started earning an income of
P9,090 in 1999 and in 2004, they already earned P104,000-P108,000 from this livelihood
activity. There are also other successful dairy producers from the different cooperatives
included in the said book whose success stories can be disseminated to serve as models for

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other dairy farmers.

10. Presence of Dairy Processors in the Dairy Zones
Of the four existing Dairy Zones in the region, the Cagayan Dairy Zone has two Dairy
Processing Centers. The Integrated Farmers Cooperative operates a Level 1 or kitchen type
processing. A private entrepreneur in Alcala Cagayan operates a Level 2 processing center
and is the major producer of milk candies. . These are engaged in the processing of milk
candies and pastilles.
There are also entrepreneurs in this zone engaged in the
manufacture of ice cream but they utilize skimmed milk as one of their raw materials.
On the other hand, the Isabela North Dairy Zone has one existing Level 1 dairy processing.
The products processed are pastilles and pasteurized milk.
Two milk processing centers are established in Isabela, one in San Pablo and another in san
Agustin. These projects are being funded by DOLE, Provincial Government of Isabela, the
Congressman in the identified districts and the Philippine Carabao center.
B. PROBLEMS and CHALLENGES
As revealed in the situational analysis, the core problem of the dairy industry is the low
income of dairy producers in the region due to the following reasons:
1. Low Dairy Production and Productivity
1.1 Limited supply of quality breeder stock
As of 2005, a total of 6,102 dairy animals were recorded in the identified Dairy Zones. With this
total, 5,816 heads representing 95.31% are produced in the municipalities within the dairy
zones while the remaining 4.69% are produced in the dairy cooperatives.
With the 286 dairy animals produced in the dairy cooperatives which are all purebred murrah
buffalos, the Cagayan Dairy Zone registered the biggest share at 74.12% , Isabela Southeast
Dairy Zone follows with 11.9%, while Batanes Dairy Zone and Isabela North Dairy Zone
contributed only 7.69% and 6.29%, respectively.
With the 5,816 dairy animals produced in the municipalities within the dairy zones, a total of
4,157 is shared by the Cagayan Dairy Zone at 71.5%. The Isabela Southeast Dairy Zone
contributes 1,264 heads or 21.73 percent while the North Isabela and the Batanes Dairy
Zones share only 11.88 percent and 7.69 percent respectively.

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Number of Dairy Animals

Names of Dairy
Cooperative

In the Dairy
Cooperatives

TOTAL

% Distribution

In the Municipalities within

the dairy zones

Pure-bred
Buffalos

Native
Buffalos

Crossbred
Buffalos

ARB-Basco Dairy Coop

22

68

10

100

1.64

Cagayan Dairy ZOne

212

3,656

501

4,369

71.30

277

40

335

5.49

1,198

66

1,298

21.27

5,199

617

6,102

100.00

a. Integrated Farmers
Coop

104

b. Dairy Multi-purpose
Coop

74

c. General Balao Multi

Purpose Coop

23

d. NORFARCO

11

3. Isabela North dairy

Zone
a. San Pablo
Livestock & dairy
Development
Association
4. Isabela Southeast Dairy
Zone

18

18

34

a. ICRAMCO

17

b. San Jose Dairy

Coop

17

TOTAL

286

Of the 5,816 dairy animals, 89.4% are native buffalos while the remaining 10.6% are Murrah
crossbreds.
The total number of dairy animals in the Dairy Zones is still insufficient to warrant a large
scale dairy processing industry. The low production is attributed to the limited supply of
quality breeder stock due to inappropriate breeding practices, and slow adoption of genetic
technologies among dairy producers. Table 5 presents the dairy animal production in the
dairy cooperatives and in the municipalities within the dairy zones.
At present, Region 02 does not have entrepreneurs engaged in the business of intensive
genetic selection and breeding under the intensive system of management and infrastructure

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needed to produce superior breeding stock. The sources of breeder stock are either coming
from ANSA Farms of Batangas or imported from other countries like Australia, USA.
Government agencies like the Department of Agriculture Region 02 and the Philippine
Carabao Center have the technology for producing good quality breeder stock of cattle, goat,
sheep and dairy buffaloes. They extend technical assistance and promote the scientific ways
of breeding, selection, feeding, health care and have

appropriate infrastructure for this purpose. Unfortunately they have limited supply of
commercial type of livestock breeders needed to produce germplasm for dairy breeding
1.2 Raw milk production and productivity is low
Table 6, shows the list of dairy cooperatives and associations in the region, and the
corresponding volume of milk produced in 2004 and 2005 from purebred murrah buffalo. The
total milk production recorded at 44,772 liters in 2004 increased to 51,494 liters in 2005
reflecting an increase of 15.01%.
The Integrated Farmers Cooperative and the Dairy Multi-Purpose Coop. showed increasing
trends in milk production at 54% and 4% respectively. However, on the average, total milk
production is 2.97 liters/head/ per day. This productivity is much lower when compared with
the productivity in other parts of the country recorded at 6.5 or more liters/head/day. The low
productivity is attributed to the poor health and nutrition of dairy animals
because of the low adoption of mature technologies, lack of quality feeds, poor feeding
practices, limited utilization of awarded pasture lease areas and limited year-round supply of
quality forage for feeds.
1.3 Poor health and nutrition of dairy animals
Some of the dairy animals suffer from poor health and malnutrition due to the low adoption of
mature technologies, lack of quality feeds, poor feeding practices, limited utilization of
awarded pasture lease areas and limited year-round supply of quality forage for feeds.
Result of the survey conducted among dairy producers in the dairy zones revealed that only
few farmers subject their dairy animals for vaccination and deworming. Majority of farmers
just allow their dairy animals to drink water in the river or creeks. In terms of the
environmental condition of dairy production areas, most farmers just leave the animal wastes
in the field.
1.4 Poor quality of raw milk
Dairy producers are still using the traditional method like manual milking. Milk is highly
perishable, hence the quality of raw milk cannot be assured for human consumption
especially due to inadequacy of storage facilities. Only few milk producers use aluminum or
glass containers. Raw milk products are not subjected to milk tests and analyses.

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1.5 Inadequate skills for milk processing

Of the 12 dairy entrepreneur-respondents surveyed within the dairy zones, survey results
showed that only 7% are skilled worker while 47% are semi-skilled. Most of the workers work
on a part time basis. Milk testing and analysis is still inadequate. Moreover, adoption of Good
Manufacturing Practices (GMP), Quality Control Points (QCP) and Hazard Analysis Critical
Control Points (HACCP) is still low. Of the 12 processors, only 3 have sanitary permits while
only 2 were able to secure BFAD-license to operate
2. Marketing and Distribution Systems are Weak
Only the Integrated Farmers Cooperative and the Dairy Multipurpose Cooperative have a
more systematic marketing system. They have a collection center, designated collector and
motorized vehicle for collection. The other dairy cooperatives have no established collection
system.
In terms of marketing system for processed milk, only the Integrated Farmers Cooperative
has established a marketing linkage with groceries. Some processed milk are sold through
order basis or in display centers.
3. Low Capital Investments for Dairy Industries
Investment in the dairy industry is still low. Investors both from within and outside the region
are still limited. Moreover the banking institutions in Region 02 have not yet included the dairy
industry as a one of their financing portfolios.
4. Weak Organization and Management Systems of Dairy Cooperatives
Generally, management of all the respondent-enterprises is not yet well established. While
the 2 cooperatives and the lone association has its respective organizational and functional
structures. These however, are not properly followed for reasons that there are no staffs
working on a full-time basis.

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CHAPTER 2

THE REGIONAL DAIRY INDUSTRY DEVELOPMENT FRAMEWORK

This chapter presents the framework and direction for the development of the Dairy Industry in
the region within the plan period 2006-2015.
I. GOAL
Within the plan period, the region shall pursue the goal of accelerating the growth and
development of the dairy industry in order to increase income and alleviate poverty in the
countryside.
OBJECTIVES
In order to achieve the goal, the following are the objectives:
To increase production and improve productivity;
2. To improve marketing systems;
3. To increase capital investments; and
4. To strengthen organization and management systems.
III. STRATEGIC FRAMEWORK
1. Development of the Dairy Zones
The development of the existing dairy zones namely: Cagayan Dairy Zone; Isabela North
Dairy Zone; Southern Isabela Dairy Zone and the Batanes Dairy Zone shall be vigorously
pursued in order to stimulate dairy animal production, milk production, milk collection, dairy
processing and marketing. Batanes Dairy Zone shall be considered as an independent
Provincial Dairy Zone. Dairy buffalo production shall be accelerated through genetic
improvement and hybridization and improved animal health and nutrition program.
From 2009-2011 and 2002-2015 the existing dairy zones in Batanes, Cagayan and Isabela
shall be expanded to cover 3 to 4 nearby municipalities.

The establishment of dairy zones in Nueva Vizcaya and Quirino will commence only in 2009
and will extend to 2011 since these provinces are still starting to introduce the production of
dairy animals. The dairy zone in these two provinces will also expand to at least 3 to 4
municipalities from 2002-2015. The existing municipalities and proposed expansion
municipalities are presented in Table 9 and Figure 3.

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Table 9: Existing and Proposed Expansion Municipalities

in the dairy Zones

ZONE

2006-2008

2009-2011

2012-2015

Cagayan
AASTEP

Tuguegarao
Amulung
Alcala
Solana
Enrile
Penablanca

Tuao
Sto Nino
Gattaran
Piat
Lallo
Iguig

Baggao

North

San Pablo
Cabagan
Tumauini
Ilagan

San Mariano
Naguilian
Gamu

Burgos
Quirino
San Mateo
Roxas
Quezon
San Isidro
Cabatuan
Ramon
Cordon

South

Jones
Echague
San Agustin
Cauayan City
Santiago City

San Guillermo
Angngadanan
San Mateo
Alicia

Isabela

Nueva Vizcaya

Bagabag
Bayombong
Ariatao

Dupax del Sur

Dupax Del Norte
Diadi

Quirino

Maddela
Diffun

Cabarroguis
Aglipay
Saguday

Ivatan
Mahatao

Uyugan
Ivan

Batanes

Basco

2. Roadmap for the Development of the Dairy Zones

Each Dairy Zone will develop at its own pace based on its own present level of development
as reflected in the situational analysis and on the resources of the existing private
entrepreneurs, cooperatives and associations.
Three major strategies are being proposed for each dairy zone along the aspects of dairy
production, milk production, milk collection, processing and marketing. For the short term,
intensive government assistance shall be extended technical assistance, capability building
and animal loan program. For the medium term, a transition period will take place with the
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cooperatives and private entrepreneurs to be slowly weaned from government assistance until
they will be able to sustain and manage their own entrepreneurship endeavors with least
intervention from government in the long term. The illustration for each stage of development
is presented in Figure 2.
3. Dairy Industry Development & Management Process
Figure 3 on the next page illustrates the proposed development and management processes
of the dairy industry of Region 02. The process involves five major stages such as dairy stock
production, milk production, and collection, processing and marketing. Major stakeholders and
private entrepreneurs will be involved in the various activities relating to the dairy industry.
Any individual dairy farmer, cooperative and commercial raiser in the dairy zones are
encouraged to become dairy entrepreneur. In order to improve the marketing system, each
dairy cooperative in the dairy zones shall establish a milk collection and distribution center.
The center shall be equipped with laboratory testing facilities, cold storage and food grade
facilities.
Collected raw milk shall be sold to cooperative member processors, raw milk consumers and
industrial users. On the other hand, processed milk can be sold to individual consumers,
groceries and other marketing outlets within or outside the dairy zones.
Under the market expansion stage, more marketing linkages for processed milk have to be
established. If small scale milk processing industries cannot accommodate all the raw milk
produced in the dairy zones, linkages can be forged with Manila-based processing plants such
as Magnolia or Selecta, among others. Within the Plan period, a Feasibility Study has to be
undertaken to determine where a Dairy Processing Plant can be established within any of the
identified dairy zones.
With the projected surplus in milk production, within the last Phase of the Plan Period (10122015), the dairy cooperatives can organize themselves and pool their resources to establish a
Dairy Processing Plant. The Dairy Processing Plant is dependent on the availability of raw milk
supply and in the effectiveness of the milk collection system. Possible dairy products to be
processed may include cheese, butter, yogurt and powdered milk.

Page 15 of 39

Page 16 of 39

IV. POLICIES AND STRATEGIES

The development of the dairy industry in the region is a private-led activity. Government
provides the necessary support needed to accelerate the industry. The overall strategy is the
development of the existing 14 Dairy Industry Zones identified per province through a strong
partnership between the cooperatives and LGUs in the identified zones.
In order to tap the development potentials and address the identified problems, the following
policies and strategies are recommended:
Production
Policy 1. Accelerate the production of dairy animals
Strategies:
Increase supply of quality breeder stock through the adoption of genetic technologies such as
massive crossbreeding using murrah buffalo;
Promote the small scale dairy animal production with at least 3 to 5 heads as start up for
higher profitability;
Conduct massive artificial insemination using dairy breed germplasm;
Increase the number of village-based technicians to provide extension services to the farmers
Establishm Liquid Nitrogen Depot in strategic location to support the LN2 requirement for the
preservation of frozen semen for crossbreeding;
Mobilize funds from all possible sources such as the Countrywide development fund of the
Congressmen, Carabao Development Fund of the Phil. Carabao Center, the Agriculture
Fishery Modernization Act Fund, 20% Development Fund of the Local Government Units
and the private sector for the importation of purebred dairy stocks, embryos and semen;
Undertake Contract Production of crossbreed dairy animals especially with private ranch
operators and clusters of small-scale raisers;
Conduct of research and development for dairy production;
Conduct of trainings for improving the proficiency and skills of village-based technicians so
that they can effectively provide the necessary extension services to the livestock
producers;

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Advocate among State Colleges and Universities an enhancement of the Animal Science
Curriculum to include Dairy Production subject; and
Encourage farmers to be on a full-time basis and raise at least four dairy animals to make the
industry viable. Sufficient attention to the industry is also necessary in order to attain the
desired productivity level.
Policy 2. Provision of liberalized financing schemes for dairy animal producers and
processors
Strategies:
Pursue a more aggressive Bull Loan Program. Purebred bulls shall be propagated in
government stations to supply the bull requirements of cooperatives, private farms and
LGU recipients. The distribution scheme of bulls is covered by a contract between the
government station and the recipient;
Extend assistance to the dairy producers through the Dairy Buffalo Module Program and the
PAIWI Loan System;
Promote and extend technical assistance to cooperatives in the preparation of proposals for
financing through the Philippine Dairy Financing Program of the QUEDAN Corporation
and the PCCI; and
Take advantage of the convergence of services and financial resources among agencies and
private sector to finance the various programs, projects and activities.
Policy 3. Adoption of scientific methods of production and feeding practices.
Strategies:
Promote the integration of corn production for fodder or silage among dairy producers;
Strengthen marketing tie-up between corn growers and dairy producers;
Promote napier production. Growing Napier grass as feed to dairy animals require regular
fertilization using animal manure (recycled) to achieve higher productivity;
Increase productivity of pasture leased areas and communal pastures;
Government dairy farms to undertake research and development on the propagation of
varieties of improved grasses and legumes as immediate sources of planting materials
needed by dairy producers in the dairy zones or by ranchers who are interested in
developing their pasture areas; and

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Aside from salt, the use of other feed concentrates and molasses as feed supplement should
also be explored or promoted for animal nutrition.
Policy 4. Utilization of idle pasture lands
Strategies:
Promote the conversion of idle pasture lands into corn farms.
Establish corn demo farms for silage production.
2. Milk Collection and Marketing
Policy 1. Improvement of the milk collection system.
Strategies:
Establish milk collection centers in the Dairy Cooperatives and other strategic areas;
Improve milk storage facilities by pasteurization, etc.;
Encourage the use of motor vehicles for milk collection;
Promote the use of appropriate food grade facilities for milk collection and marketing; and
Encourage the dairy entrepreneurs to practice e-commerce in their activities.
Policy 2. Strengthen linkage between and among milk producers, milk consumers and
dairy processors.
Strategies
Encourage LGUs, Schools and Day Care Centers to promote the nutritional value of milk and
to patronize fresh milk or pasteurized milk from dairy cooperatives; and
Establish link with multi-national dairy corporations to source their milk requirements from
local dairy cooperatives.
Policy 3. Ensure the quality of raw milk products in the market
Strategies:
Conduct laboratory tests and microbial tests; and
Conduct regular monitoring in the dairy cooperatives to ensure that they meet the standard
requirements for quality and safe milk being sold.

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Processing
Policy 1. Ensure that all dairy food products processed and sold to consumers are
properly packed, labeled with barcodes, of good quality, safe and passed all
regulatory processing requirement
Strategies:
Subject all dairy products to various laboratory tests, microbial analysis, shelf life and
nutritional facts;
Ensure that the milk processing centers adopt appropriate processing system such as the
use of suitable facilities and processing of raw milk that are of good quality;
Promote the use of safe, easyto-use and bio-degradable packaging materials;
Ensure that milk processors strictly observe the provision of the correct basic information in
all labels such as nutritional content, quantity and expiration date, among others;
Institutionalize process and product quality control systems such as Good Manufacturing
Practices (GMP), Quality Control Point (QCP) and Hazard Analysis Critical Control Point
(HACCP) in every processing center;
Upgrade skills on milk processing, labeling and packaging;
Continuous product development and upgrading through research and development;
Modernize processing facilities.
Conduct Feasibility Study for the establishment of an industrial type Dairy Processing Plant;
and
Establish industrial type processing plant when and where feasible.
Marketing of Processed Dairy Products
Policy 1. Local Dairy Industry should be supported by the national and local
government, the Non-government organizations and other stakeholders.
Strategies:
Local Government Units, Local Chambers of Commerce and Industry and DTI to encourage
dairy processors to participate in trade fairs and showcase their local dairy products;
Encourage the LGUs, Government and Non-government Organizations to patronize the local
dairy products and promote these to tourists and visitors;
Strengthen linkage with local grocery stores as market outlets of dairy products;
Set-up pasalubong centers in primary establishments;
To establish proper distribution of milk products, all processors are encouraged to have their
products packaged with trademarks, etc; and
Create market niche for products using buffalo milk as main raw material

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5. Organization and Management and Institutional Development

Policy 1.

All dairy industry enterprises should have legal personality and shall
comply with the applicable business regulatory requirements.

Strategies:
Intensify the promotion of the registration of dairy enterprises with the concerned
agencies/entities to acquire their legal personalities based on their respective categories
as follows:
Single Proprietorship- Department of Trade and Industry;
Partnership and Corporation- Securities and Exchange Commission;
Cooperatives- Cooperative Development Authority; and
Regulatory agencies shall facilitate and provide assistance to dairy entrepreneurs in the
registration and securing of regulatory permits, licenses, certificates and other
documentary requirements.
Policy 2.

Continuous development and upgrading of managerial skills and

capabilities.

Strategies:
Provide technical assistance in the conduct of capability building activities for cooperatives
and entrepreneurs in the formulation of their management plan;
Conduct training on organization, management and internal control;
Conduct team building activities; and
Provide technical assistance to cooperatives and dairy enterprises in the preparation of
project feasibility studies for possible funding.
Policy 3.

Each Dairy Industry Zone should formulate their respective dairy

development plan consistent with the framework of the Regional Dairy
Industry Plan

Strategies:
Provide technical assistance to the dairy cooperatives and entrepreneurs in the dairy zones
in the formulation of their respective Zonal Dairy Industry Plan;
Encourage all livestock breeding stations in the region whether operated by the national or
local government to incorporate in their institutional plan the development of dairy

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industry in their areas of responsibility.

Policy 4.

A Regional Dairy Industry Board shall be created to provide policy

directions for the coordination of the implementation, monitoring and
evaluation of the Dairy Industry Plan.

Strategies:
Promote strong linkage between and among dairy cooperatives;
Encourage dairy cooperatives to form a provincial and regional federation; and
Conduct annual conference for dairy cooperatives to evaluate
implementation of the Dairy Industry Plan.

the status of

Policy 5. Promote other forward and backward industry linkages to sustain the
Dairy Industry in the region.
Strategies
Promote and encourage the fabrication of metal equipments as storage facilities,
packaging, meat and hide processing industries to support the growth of the dairy
industry; and
Encourage investors to set up feed manufacturing plants using yellow corn bran,
molasses, soybean, copra meat and minerals which are abundant in the region.
VII. MAJOR PROGRAMS AND PROJECTS
1. Productivity Improvement Program
1.1.
1.2.
1.3.
1.4.
1.5.

Dairy Stock Improvement

Dairy Animal Health and Nutrition
Milk Production and Quality Improvement
Milk Processing and Quality Improvement
Research and Extension

2. Market Improvement Program

2.1 Market Expansion
2.2. Market Promotion
2.3. Research, Product Development and Extension Services

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3. Capital Investment Program

3.1. External Capital Generation
3.2. Internal Capital Generation
4. Organization and Management Program
4.1. Organizational Development and Strengthening
4.2. Managerial and Capability Building Enhancement

Page 23 of 39

CHAPTER 3
PLAN IMPLEMENTATION MECHANISM

In order to effectively implement the Regional Dairy Industry Development Plan, a strong
collaborative support by the National and Local Government including the private sector
especially the dairy cooperatives and other non-government institutions is required. The
mechanics of implementation could be briefly viewed in the structure of the operation (Figure 4 ).
I. Coordinative Mechanism
The Department of Agriculture-Regional Field Unit (RFU0 shall act as the lead coordinator in
the implementation. Under its existing Management Advisory Committee is the Dairy Advisory
Committee which shall be tasked to steer the implementation of the dairy industry plan. Project
cooperating entities will include stakeholders such as the Regional Line Agencies, Local
Government Units, State Colleges and Universities, Private Sector, Non-Government Units
and the entrepreneurs with their respective defined roles and responsibilities.
1. Roles and Responsibilities
While the development and implementation of the plan is generally private-led endeavor of
the stakeholders of the different dairy zones, assistance from various government and
private institutions/organizations affecting the growth of the industry is important, especially
during the intensive and transition periods of the plan. A Memorandum of agreement
will be forged among the cooperating agencies. These agencies and NGOs and their
respective roles and responsibilities are as follows:
The DA-RFU 02 shall:
Spearhead the coordination and implementation of the dairy industry program in the
Dairy Zones in Region 02;
Provide information, extension and communication materials relevant to the program;
Support the requirement of vaccines, dewormer, forage seeds stocks and laboratory
services of all farmers in the Region;
Support the production of crossbred dairy carabao within the dairy zone and also
encourage crossbreed contract production in areas surrounding the dairy zones in
coordination with financing institutions;
Encourage investors to venture on dairy production or any dairy related businesses
beneficial to the growth of the dairy industry;
Increase budget allocation needed to accelerate the growth of the livestock sector
particularly the dairy industry program through dairy stock infusion and
establishment of gene pool;
Spearhead the conduct of monitoring, evaluation, planning and documentation of all
activities and accomplishments of the program; and
Inform the dairy cooperatives on the latest market trend of milk and dairy products both
in the domestic and international market.
The Philippine Carabao Center shall:
Conduct trainings and research on dairy production and management, milk collection,
processing and marketing to all interested dairy farmers, cooperatives in various dairy
zones in the Region;
Provide technical training on artificial insemination to all village technicians including A.I
Page 24 of 39

paraphernalia, liquid nitrogen depots and equipment that could facilitate crossbreed dairy
animal production in the dairy zones and other areas;
Expand the bull loan program and 25 dairy buffalo modules in various dairy cooperatives
within the dairy zones in coordination with the Local Government Units and other
agencies concerned;
Assist in organizing dairy cooperatives engaged in cross breeding in the municipalities for a
sustained producer of milk or suppliers of dairy animals needed in the dairy zones;
Encourage ranch owners and private sector including the other investors to venture on milk
and crossbreed dairy animal production in the dairy zones;
Provide information, extension and communication materials related to dairy production to
interested dairy farmers, cooperatives and non-government organization;
Provide technical assistance on pasture development, including seed stocks of forage
species to interested dairy farmers in the dairy zones; and
Participate in the monitoring, evaluation, planning and documentation of GIP activities and
accomplishments.

The Department of Agrarian Reform 02 shall:

Spearhead the identification of Agrarian Reform communities within the dairy zones as
partner implementor/ beneficiaries of the program;
Assist in Information Dissemination of Dairy Production Technologies including
crossbreeding, milk collection and processing to all interested ARC farmers in the dairy
zone;
Provide technical and financial assistance in the organization and strengthening of
cooperatives including the dairy business enterprises undertaken by all ARC lead dairy
cooperatives and associations;
Facilitate the utilization of ARC areas for dairy and forage production in consideration with
rice and corn farming system used;
Assign development facilitators in ARC lead Dairy Cooperatives and Association to facilitate
the delivery of support services to all beneficiaries; and
Assist in monitoring, evaluation, planning and documentation of all activities and output of
the program.
The Cooperative Development Authority shall:
Provide training and seminar to interested Peoples Organizations and Dairy Cooperatives on
enterprise development;
Facilitate and assist in the securing of requirements in the registration of various farmers
groups into dairy cooperatives engaged in dairy production, processing or marketing;
Provide technical information on the status of dairy cooperatives in the region including their
capital investment or statement of their financial viability including membership and
development plans; and
Participate actively in the planning, monitoring and evaluation of activities related to dairy
development in the region.
The Department of Trade and Industry shall:
Provide assistance in the facilitation of packaging, promotion and marketing of dairy
products;
Prepare project feasibility studies for potential dairy entrepreneurs interested to venture on
any of the following areas like milk production, processing, marketing, crossbreed
animal production including feed mill establishment for dairy animals.
Assist in establishing market linkage with other dairy milk producer and consumer in the
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country thru the establishment of e-dairy trading system;

Represent the interest of the local dairy industry in regional, national and international
trading negotiations and agreements;
Participate in the monitoring, evaluation, planning and documentation of all program
activities and outputs; and
Extend consultancy services to dairy enterprises in fund sourcing.
The National Economic Development Authority shall:
Provide technical assistance in planning, monitoring and evaluation of the dairy industry;
Assist in the promotion of the dairy industry in the Region as a means to accelerate
employment and increasing family income; and
Include local dairy industry as priority area for foreign development assistance or as a
special project under the Office of the President.
The Department of Interior and Local Government through the Provincial LGUs ,
shall:
Identify Municipalities to be included in the dairy zone;
Provide counterpart support for the conduct of training on dairy animal management, milk
collection, processing and marketing;
Provide counterpart support in the conduct of crossbreeding activities of carabaos and cattle
and training of Village-based Technicians;
Allocate funds for the establishment of milk collection centers, procurement of processing
equipment and marketing including packaging materials;
Assist in the promotion and marketing of dairy products through participation in trade fairs
and exhibits and provide allocation for milk feeding programs of malnourish pre-school
children;
Provide yearly allocation of 25 dairy animals as loan to dairy cooperatives to speed-up the
development of the dairy industry in the province; and
Participate actively in the planning, monitoring and evaluation of program activities and
outputs.
Through the Municipal LGUs, shall:
Formulate a Municipal Dairy Development Plan in coordination with other agencies and the
private sector;
Identify potential barangays to engage in milk and crossbreed buffalo production;
Provide technical and financial assistance in organization of dairy cooperatives or
association to go on milk production, collection, processing and marketing;
Provide augmentation fund for the conduct of massive crossbreeding activities of carabao
and cattle within the milk producing areas of the Municipality; and
Participate in the planning, monitoring and evaluation of all program activities and outputs.
The Department of Environment and Natural Resources shall:
Facilitate the processing of open grassland areas for cooperative or community forage
production as source of feeds for dairy animals in the dairy zones;
Provide technical assistance in the development of pasture areas, and technology for waste
recycling and management;
Issue environmental clearance/ certificate to all dairy cooperative upon completion of the
requirements needed as specified; and
Participate actively in the planning, monitoring, evaluation of program activities and outputs

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The State Universities and Colleges shall:

Improve the curriculum in the courses in Animal science to include dairy Production
management, milk processing, product development and commercial forge production;
Conduct Research and Development on dairy milk production, animal health and forage
production for dairy animals;
Provide extension services for animal production and dairy processing;
Provide facilities for the conduct of trainings on dairy production, processing, feed production
and utilization of farm by-products to all dairy farmers in the dairy zones; and
Participate actively in planning, monitoring and evaluation of program activities and outputs.
The Department of Science and Technology shall:
Provide technical and financial assistance through Small Enterprise Technology Upgrading
Program (SET-UP) on milk processing, packaging and design;
Assist in fund sourcing for dairy equipments and supplies;
Assist dairy cooperatives in designing milk collection and processing centers in order to
attain a cost efficient operation and maintenance of equipments;
Provide technical assistance in the production of grass chopping machine, processing
equipment, silos and in the conduct of laboratory analysis for milk and dairy products;
Assist in the conduct of training on Good Manufacturing Practice (GMP) , Hazard Analysis
Critical Control Points (HACCP) for all dairy producers in dairy zones;
Through DOST-FNRI, provide information materials related to dairy production and
processing to interested dairy farmers, cooperatives and non-government organizations;
and
Participate actively in the planning, monitoring and evaluation of program activities and
outputs.
The Department of Health/ Bureau of Food and Drugs shall:
Provide technical assistance through the conduct of training on GMP, QCP and HACCP for
all dairy cooperatives in the dairy zones;
Issue license to operate to all dairy cooperative that are able to meet the accreditation
requirement;
Monitor the performance of dairy cooperative in terms of milk quality and hygiene and
recommend solutions for improvement; and
Participate actively in planning, monitoring and evaluation of all program activities and
outputs.
The National Meat Inspection Services
Provide technical assistance in the conduct of milk testing.
The Department of Education shall:
Promote the consumption of fresh milk and milk by-products produced by the dairy
cooperative, in school milk feeding program in coordination with other agencies;
Conduct IEC on the importance of milk in the diet or nutrition of the students and family;
Encourage Home-Economics Teachers to develop milk products for school instruction and
business enterprises; and
Participate actively in the planning, monitoring and evaluation of all program activities and
outputs.
The Department of Social Welfare and Development shall:
Page 27 of 39

Promote the consumption of fresh milk and other dairy products in the milk feeding program
of all pre-school children in coordination with the Local Government Unit, National Dairy
Authority and Department of Education;
Monitor the contribution of milk in the growth and development of pre-school children; and
Participate actively in the planning, monitoring and evaluation of all program activities
specifically the utilization of milk in the feeding program.
The Cagayan Export Zone Authority shall:
Facilitate/establish marketing networks/linkages in the marketing of fresh milk and other dairy
products to other cities in the country or to international market in the future;
Invite potential investors to engage in dairy production, processing and marketing and other
dairy related businesses;
Provide incentives and other benefits to potential investors as a way to attract investment in
the country; and
Participate actively in the planning, monitoring and evaluation of program activities and
outputs.
The Philippine National Police shall:
Secure the dairy zones as special environment for investment both by local and foreign
investors;
Regulate the entry and passage of illegal shipment and trading of animals and dairy products
in coordination with existing regulatory bodies and agencies;
Promote the consumption of milk and other dairy products within the rank and file of PNP in
coordination with all dairy cooperative in the Region; and
Participate actively in the planning, monitoring and evaluation of proper activities and outputs.
The Cagayan Valley Agricultural Resources Research and Development (CVARRD)
shall:
Spearhead the conduct of Research and Development including extension activities on dairy
production, milk processing, feeds production and utilization and formation of dairy
cooperatives in the dairy zones;
Establish strong linkages with other research agencies both locally and in other countries for
purposes of acquiring latest technologies, state of the art production and processing
equipment including facilities that could modernize the dairy R&D activities in the Region;
Extend packages of mature technologies to all dairy farmers in the Region, students and
extension agents in collaboration with SUCs and Local Government Units; and
Spearhead the R&D, planning, monitoring and evaluation of program activities and outputs.
The Department of Labor and Employment shall:
Provide financial support in the acquisition and infusion of dairy stocks in the dairy zones
including equipment and facilities needed in milk production, processing and marketing of
dairy products;
Provide counterpart support in the conduct of skills training and entrepreneurial capability
building of dairy cooperatives, association and other NGOs involved in the development
of the dairy industry; and
Participate actively in the planning, monitoring and evaluation of project activities and
outputs.
The National Dairy Authority shall:
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Provide training on Artificial Insemination, milk collection, processing and packaging of dairy
products;
Provide information, extension and communication materials related to the program;
Provide loan assistance in terms of dairy animals, milk collection, processing, packaging,
storage and marketing equipment to qualified recipients;
Assist in marketing of dairy products through linkaging with the DEp.Ed, DSWD and LGUs;
and
Participate actively in the planning, monitoring and evaluation of project activities and outputs.
The Philippine Chamber of Commerce and Industry (PCCI) Region 02 shall:
Provide support to the dairy industry by mobilizing resources for technology and manpower
enhancement; and
Provide marketing and consultancy services.

II. The Regional Dairy Industry Board

It is proposed that a Regional Dairy Development Board (RDDB) shall be created to act as the
governing and policy making body for the coordination of the planning, implementation,
monitoring and evaluation of the Dairy Industry Plan.
The creation of the board may not be possible within the first six years of the plan
implementation period considering the need to capacitate and strengthen the primary and
secondary Dairy Cooperatives in the short and medium term and enable them to organize
themselves into a Regional Federation.
With this scenario, it is imperative that the governing body should be created to do the following
tasks and responsibilities:
Formulate policies that would govern the development of the Dairy Industry in the region;
Represent the interest of the regional dairy industry in the National Dairy Board or Council; and
Monitor the price and volume of milk produced locally and imported dairy products and
recommend appropriate policy to stabilize price for the good of the consuming public.
Shown in Figure 4 below is the proposed organizational structure of the Regional Dairy
Industry Development Board in Region 02.
The proposed Regional Dairy Development Board (RDDB) will be organized and to be fully
operationalized by year-2012 when the dairy industry in Region 02 will be in its sustaining
stage of development. The board which will be composed of representatives from each
dairy zone will be identified by the stakeholders themselves as mentioned in the Proposed
Dairy Industry Development and Management process in Figure 4.
The board members will serve as the overall policy governing body in the implementation,
development and regulation of all concerns affecting the dairy industry of the region. It
shall be composed of seven (7) trustees who will come from the different dairy zones
region wide as shown in the figure; one representative shall come from each dairy zone
except for Cagayan which shall have two representatives because this zone is the biggest
and has the most number of stakeholders. One member of the Board will represent the
Dairy Cooperatives in Tuguegarao City while the other member will represent the other
dairy Cooperatives within the province of Cagayan.
Page 29 of 39

CHAPTER IV
WORK AND FINANCIAL PLAN
2006-2015
The sources of fund for these activities will come from various stakeholders both from the
government and private investors. The estimates based on specific number of population and
assumptions are presented within the 3-year time frame on the implementation period from 2006
to 2015 of implementation.
The Major Areas for Investment are the following:

Figure 4
Proposed Structure of the
Regional Dairy Development Board (RDDB)
Region 02

Page 30 of 39

APPENDIX A
NATIONAL DAIRY DEVELOPMENT ACT OF 1995
Republic Act No. 7884
AN ACT CREATING THE NATIONAL DAIRY AUTHORITY TO ACCELERATE THE DEVELOPMENT OF THE DAIRY
INDUSTRY IN THE PHILIPPINES, PROVIDING FOR A DAIRY DEVELOPMENT FUND, AND FOR OTHER PURPOSES.
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
SECTION 1. Title This Act shall be known as the National Dairy Development Act of 1995
SEC. 2. Declaration of Policy It is hereby declared the policy of the State to strive for national self-sufficiency in milk and
dairy products as a vital feature in the attainment of a self-reliant and independent Philippine economy in the provision of
proper nutrition and the generation of more employment opportunities for the people is also the policy of the State to
recognize the primary role of private sector in research, training, production, processing and marketing and to provide
incentives to those undertaking these activities with government limiting itself to policy-making, facilitation and regulation.
SEC. 3. Objectives The objectives of this Act are as follows:
a) To promote and provide direction for the accelerated development of the Philippine dairy industry, consistent with the
provisions of this Act;
b) To give support and assistance in the production, processing and marketing activities of all those engaged in the
business of producing milk and other dairy products particularly rural based small dairy farmers through the provision of
necessary support systems;
c) To encourage and promote the active participation of farm families, rural cooperatives and the private sector
recognizing them as principal agents in the development of the Philippine dairy industry;
d) To ensure an adequate supply of milk and dairy products at affordable prices;
e) To improve livelihood opportunities and thereby increase income level through dairying;
f) To enhance childrens and pregnant and nursing mothers nutritional intake through the promotion of locally produced
milk and milk products;
g) To develop and disseminate appropriate smallholder-based dairy technology;
h) To improve milk production from existing stock and to systematically program the build-up of productive milking herd;
and
i) To conserve foreign exchange by supporting local milk production.
SEC. 4. The National Dairy Authority To achieve the objectives of this Act, there is hereby created a National Dairy
Authority (NDA), hereafter referred to as the Authority, which shall, for the purpose of policy and program coordination,
be attached to the Department of Agriculture.

The Authority shall be the central policy determining and directing body tasked to ensure the accelerated development of
the Philippine dairy industry, in accordance with the policies and objectives set forth in this Act.
SEC. 5. The Dairy Industry Board The National Dairy Authority shall be governed by a Dairy Industry Board, hereafter referred
to as the Board, to be composed of the following:
The Secretary of Agriculture, as chairperson;
The NDA Administrator, as an ex-officio member;
The Secretary of Trade and Industry, as member;
The Secretary of Health, as member;
The Secretary of Education, Culture and Sports, as member;
The Secretary of Science and Technology, as member;
The Secretary of Agrarian Reform, as member;
The Director of the Dairy Training and Research Institute, as member; and
Four (4) other members who shall be appointed by the President of the Philippines upon the recommendation of the chairperson:
Provided, That one (1) shall come from the commercial milk processors group and the other three (3) from the dairy
cooperatives and/or national dairy federation, with one representative each from Luzon, Visayas and Mindanao: Provided,
further, that they will hold office for a period of three (3) years from the date of their respective appointments without
reappointment; Provided finally, that any member appointed to a vacancy shall serve only for the unexpired term of the
member whom he succeeds.

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SEC. 6. Powers and Functions of the National Dairy Authority The National Dairy Authority shall have the following powers and
functions:

To formulate and execute dairy programs that will generate a national impact on rural as well as urban nutrition levels and incomes;
To assist in the purchase, importation, propagation, storage, distribution and sale of dairy animals, semen, forage seeds, fertilizers,
veterinary supplies, dairy equipment and engineering supplies and such other inputs as may be needed by the dairy industry;
To encourage the integration of dairy production and local milk and the distribution of dairy products into various rural livelihood
and nutrition programs;
To assume control and supervision over all dairy-related government agency personnel and programs, including the Bureau of Animal
Industrys Dairy Division, the Livestock Development Councils Dairy Division, the Philippine Dairy Corporation, Livelihood
Corporations Laguna Processing Center and other dairy related government agencies, division, councils subject to the
guidelines prescribed by the Civil Service Commission;
To borrow, raise or obtain funds; to issue bonds and other instruments of indebtedness; or to enter into any financial or credit
arrangements in order to support or carry out its objectives and purposes, subject to pertinent laws governing public debts and
expenditures;
To receive grants, subsidies, donations or contributions from corporations, thrusts, foundations, associations and other sources from
any private or government office, agency or corporation in the Philippines or abroad;
To establish, maintain or operate field units or offices in various parts of the country in order to utilize the objectives of this Act;
To help design and implement a credit system that will finance dairy farmers and dairy cooperatives or associations;
To charge reasonable fees for services rendered for the attainment of the objectives of this Act;
To promulgate rules and regulation to carry out the provisions and policy objectives of this Act; and
To adopt, alter and use a corporate seal; to sue and be sued; and otherwise to do and perform all acts or exercise all powers as may be
necessary or incidental to carry out the objectives of this Act.

SEC. 7. Meeting of the Board The Board shall convene a regular monthly meeting and shall hold special meetings when necessary.
The presence of at least seven (7) members of the Board shall constitute a quorum and the vote of a majority of those present shall be
sufficient to transact business during any meeting; Provided, That the department secretaries can be represented on a permanent basis
by their respective undersecretaries or assistant secretaries who will have full voting power and shall be considered in the
determination of quorum: Provided, finally, that the chairperson shall not vote except in case of a tie.

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SEC. 8. Allowance of the Board Members The chairperson and members of the Board shall be entitled to per diems and other
allowable emoluments as may be fixed by the Board for every meeting actually attended subject to existing laws, rules and regulations
which, in no case, shall exceed Four Thousand Pesos (P4,000.00) per month: Provided, however, That the transportation expenses for
representatives from far places will be reimbursed: Provided, finally, That the Administrator of the Authority, as an ex-officio
member of the Board, shall receive only the remuneration and allowances which shall be provided by the Board for the said position.

Whenever the exigencies of the service demand, and the Board, for any valid reason, cannot be convened to a meeting, the
administrator, in coordination with the Board Secretary, is hereby authorized to submit any matter for resolution by memorandum and
the concurrence of a majority of the Board members and/or alternates constituting a quorum shall be considered sufficient for the
approval thereof.

SEC. 9. Management of the Authority There shall be a full time Administrator who shall manage the operations of the Authority to
be assisted by a Deputy Administrator. Both the Administrator and the Deputy Administrator shall be appointed by the President of
the Philippines.

The Administrator shall be a citizen of the Philippines; at least thirty-five (35) years of age on the date of his appointment; of good
moral character: with recognized executive ability and competence; and preferably well-versed in the various aspects of the dairy
industry.

The salary and allowances of the administrator and Deputy Administrator shall be in accordance with the provisions of R.A. 6758 OR
The Salary Standardization Act of 1989.

SEC. 10. Powers and Functions of the Administrator Subject to the control and supervision of the Board, the Administrator shall
have the following powers and functions:

Submit policy recommendations and proposed measures necessary to carry out the objectives and functions of the Authority, for the
consideration of the Board;

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Recommend to the Board, for approval, an organizational structure, and plantilla of personnel of the Authority, in accordance with
existing laws, rules and regulations;
Execute, administer and implement policies and measures approved by the Board;
Submit to the Board, in line with the national budget cycle, an annual budget and such supplemental budget as may be necessary for
its consideration and approval;
Represent the Authority in all its dealings with other persons, entities, agencies, and institutions whether public or private, domestic or
foreign, subject to the limitations and conditions herein provided;
Appoint, subject to the confirmation of the Board, and discipline or remove for cause in accordance with the civil service law, rules
and regulations, the officers and personnel of the Authority; and
Perform such other duties, which may be assigned to him by the board or by the Secretary of the Department of Agriculture.

SEC. 11. Dairy Cooperative and Farmers Organizations The Authority shall help organize small producers and processors of milk
into cooperatives or other forms of organizations to achieve the purposes of this Act including the following:

To facilitate collective arrangements that will enable cooperatives to acquire dairy animals, feeds, veterinary and other supplies,
materials, equipment, services of all kinds and other dairy inputs under favorable terms;
To provide a forum for the members of cooperatives to discuss common problems affecting production, marketing and the
cooperatives relationships with the Authority;
To help design credit systems that will provide loans, grants and such services as may be required, to dairy cooperatives and duly
accredited peoples organizations;
To assist cooperatives in developing market channels and in negotiations for bulk outlets of milk output

The Authority shall support the formation of a Dairy Cooperatives Federation among dairy cooperatives as a channel of its
coordinative function in the industry.

SEC. 12. National Dairy Campaign The Authority shall promote a nationwide campaign to boost support for the realization of the
objectives of this Act. It shall encourage the participation of womens groups in dairy and dairy-related projects including dairy
animal health care, village nutrition schemes, community-based processing, and marketing of milk and dairy products.

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SEC. 13. Priority Projects Immediately after the approval of this Act, the Authority, in coordination with other related agencies,
shall under take vigorously the following:

Educational programs for dairy farmers and dairy cooperatives including, but not limited to, the conduct of seminars, workshops,
assemblies and others;
Training programs including, but not limited to courses in animal husbandry, feed technology, dairy cooperatives management and
other related aspects of dairying;
Dairy research and development including but not limited to, breeds and breeding, herd improvement, indigenous and agri-waste feed
sourcing, product development, herbal veterinary drugs and biologics, dairy facilities fabrication, and others;
Establishment of support services to dairy farmers and cooperatives in the acquisition of basic supplies and inputs for animal health
and nutrition; and
Boost the number and quality of local animal stocks through applied technology.

SEC. 14. Dairy Development Fund To implement Section 13 of this Act, there is hereby created a Dairy Development Fund which
shall be used exclusively for the above-mentioned programs in the amount of Two hundred million pesos (P200,000,000) from the
funds in the National Treasury not otherwise appropriated. Annually thereafter, the amount of not less than One hundred forty million
pesos (P140,000,000) shall be provided to augment the fund in the General Appropriations Act.

SEC. 15. Government Agency Support The Authority shall coordinate closely with other government agencies in the establishment
of support services for the dairy industry, including, among others, needed infrastructure, and the setting of tariff rates to countervail
subsidized imports.

SEC. 16. Nutrition Programs The governments nutrition programs requiring milk and dairy products shall be sourced from small
farmers and dairy cooperatives in coordination with the Authority.

SEC. 17. Supply and Distribution The Authority shall monitor the importation, manufacture, supply and distribution of dairy
products and raw materials for the manufacture or processing of milk and dairy products, as well as the importation and exportation of
dairy animals, if the needs of the industry require, it shall, after public hearing and after consultations with the National Economic and
Development Authority, the Department of Trade and Industry, the Department of Finance, and the representatives of the dairy

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cooperatives and the commercial sector, set guidelines for the importation, exportation and pricing of dairy animals, raw materials and
other products necessary for the manufacture or processing of milk and dairy products: Provided, That within a period of three (3)
years from the effectivity of this Act, the dairy cooperatives and the commercial sector shall, subject to quality and price
considerations, mutually agree upon a volume of local milk production to be absorbed by the commercial sector.

If at the end of the three-year period, the parties mentioned above have not come to a mutual agreement, the commercial sector shall
absorb a fixed portion of the local milk supply to be determined by the Authority.

Processors who purchase locally produced milk from dairy cooperatives in excess of the volume prescribed by the Authority shall be
accorded tax credits equivalent to ten (10%) percent of the value of the excess volume purchased.

SEC. 18. Exemption from Taxes and Duties The Authority shall be exempt from the payment of customs duties and taxes on the
importation of dairy animals, veterinary and other supplies, other farm inputs, dairy equipment and machineries, including its spare
parts, for distribution to dairy cooperatives subject to the following conditions:

That said equipment and machineries, including its spare parts are not manufactured domestically insufficient quantity of
comparable quality and reasonable prices;
That it shall be actually, directly and exclusively used by the dairy cooperatives in the manufacture of its products;

That it shall not be disposed within three (3) years from acquisition, without prior approval of the Authority.
If it will be subsequently sold, transferred or exchanged in the Philippines to non-exempt persons or entities, the purchasers or
recipient shall be considered the importers thereof, and shall be liable for the customs duties and internal revenue taxes due
on such importations. The customs duties and internal revenue taxes due on such articles shall constitute a lien on the
articles itself, superior to all other charges or liens, irrespective of the possessors thereof.
Any donation, contribution, bequest, subsidy or financial aid which may be made to the Authority shall constitute as
allowable deduction from the income of the donor for income tax purposes and shall be exempt from donors tax, subject to
such conditions as provided under the National Internal Revenue Code, as amended.
Small farmers and small farmers dairy cooperatives shall be exempt from all taxes on proceeds from sale of raw milk and
milk products.

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Milk processors shall enjoy a presumptive input tax credit of four percent (4%) of the value of their gross purchases from
small farmers and small farmers dairy cooperatives.

SEC. 19. Credit Facilities The Bangko Sentral ng Pilipinas shall adopt such monetary and re-discounting policies as may be
designed to encourage rural banks, savings and loan associations, commercial banks and other credit institutions to meet the

financing and credit needs essential to achieve the objectives of this Act.

In addition, the Philippine National Bank, the Land Bank of the Philippines, and the Development Bank of the Philippines shall design
and establish special lending programs at affordable terms for small dairy farmers and dairy cooperatives.

SEC. 20. Auditor The Authority shall have an auditor and complementary personnel who shall be appointed by the Commission on
Audit in accordance with the civil service law, rules and regulations. The salaries of the auditor and the audit staff shall be
determined and paid by the Commission on Audit.

SEC. 21. Transitory Provision The Philippine Dairy Corporation is hereby abolished. The dairy functions of the Livestock
Development Council, the Dairy Division of the Bureau of Animal Industry and the Livelihood Corporations Laguna Processing
Center are hereby transferred to the Authority.

The personnel, assets, funds held, grants, subsidies and records of the abolished agencies as well as those of the Livestock
Development Council, the Dairy Division of the Bureau of Animal Industry and the Laguna Processing Center will be transferred to
the Authority.

The Secretary of Agriculture shall designate an officer-in-charge pending the appointment of the Administrator by the President of the
Philippines.

Incumbent officials and employees of the affected offices shall continue to exercise their respective functions, duties and
responsibilities, with the corresponding benefits and privileges unless and until otherwise ordered by the Board.

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The new position structure and staffing pattern of the Authority shall be approved and prescribed by the Board within ninety (90) days
from the effectivity of this Act within guidelines set by existing civil service and other laws rules and regulations on the matter. Those
separated from the service shall receive the retirement benefits to which they may be entitled under existing laws, rules and
regulations. Otherwise, they shall be paid the equivalent of one (1) months salary for every year of service or a fraction thereof,
computed on the basis of the highest salary received, but in no case shall such exceed the equivalent of twelve (12) months salary.

SEC. 22. Penalty Clause Any person or entity found guilty of violating any provision of this Act, shall be sentenced to an
imprisonment of not more than six (6) month or a fine of not more than Twenty thousand pesos (P20,000.00) or both upon the
discretion of the Court.

SEC. 23. Promulgation of Rules and Regulations The Department of Agriculture, in coordination with the member agencies and the
private sector representatives of the Dairy Industry Board shall prepare and issue the rules and regulations implementing this Act
within six (6) months from the date of its effectivity.

In addition, the Secretary of the Department of Agriculture (DA) shall report to both Houses of Congress on the status of the
promulgation of the rules and regulations within ninety (90) days from the date of the effectivity of this Act.

SEC. 24. Appropriations The appropriations of agencies, division, council, and corporation, merged, abolished or transferred
pursuant to this Act shall be turned over to the Authority. Thereafter, such sums as may be necessary for its continued operation and
maintenance shall be included in the Annual General Appropriations Act.

SEC. 25. Repealing Clause All laws, decrees, executive orders, rules and regulations or parts thereof which are inconsistent with
this Act are hereby repealed or modified accordingly.

SEC. 26. Separability Clause If any provision of this Act is declared unconstitutional or invalid, other provisions thereof which are
not affected thereby shall continue in full force and effect.

SEC. 27. Effectivity This Act shall take effect after fifteen (15) days following its publication in the Official Gazette or in any
newspaper or general circulation.

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Approved,

ORIGINAL SIGNED

ORIGINAL SIGNED

Edgardo J. Angara
President of the Senate

Jose de Venecia
Speaker of the House of Representatives

This Act which is a consolidation of Senate Bill No. 532 and House Bill No. 12821 finally passed by both the House of
Representatives and the Senate on February 15, 1995.

Original Signed

Original Signed

EDGARDO E. TUMANGAN

CAMILIO L. SABIDO

Secretary of the Senate

Secretary-General

Approved: February 20,1995

Original Signed
FIDEL V. RAMOS
President of the Philippines

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