·=::J:.L::::r....--=.d=t====~:::.-==='=.=--r~:o:=="'"-==---=~=~= ==·-· ·----=t..... ' ~~·-==·=~·~ = .... ,. The general law on contracts, as found in the Philippine Civil Code, regulates the privity between and among the key players of agribusiness. Contracts are the key modes by which businesses are pursued. In agribusiness, there are at least seven contractual arrangements or schemes that the government, through the Department of Agrarian Reform (DAR), recognized as stated in its Administrative Order No. 09-06, Series of 2006. Collectively called as "Agribusiness Venture Agreements"39 (or AVAs). They are as follows: Build-Operate-Transfer- AVA scheme wherein the investor builds, rehabilitates or upgrades, at his own cost, capital assets, infrastructure and facilities applied to the production, processing and marketing of agricultural products and operates the same at his expense for an agreed period after which the ownership thereof is conveyed to the agrarian reform beneficiaries (ARB) who own the land where such improvements and facilities are located. • Joint Venture Agreement- AVA scheme wherein the ARBs and investors form a joint venture corporation to manage farm operations. The beneficiaries contribute the use of the land held individually or in common and the facilities and improvements, if any. On the other hand, the investor furnishes capital and technology for production, processing and marketing of agricultural goods, or construction, rehabilitation, upgrading and operation of agricultural capital assets, infrastructure and facilities. • Lease Agreement- AVA scheme wherein the beneficiaries bind themselves to give the former landowner or any other investor general control over the use and management of the land for a certain amount and for a definite period. • Management Contract- AVA scheme wherein the ARBs hire the services of a contractor who may be an individual, partnership or corporation to assist in the management and operation of the farm for the purpose of producing high value crops or other agricultural crops in exchange for a fixed wage and/or commission. • Marketing Agreement- AVA scheme wherein the investor explores possible markets/buyers for the ARB's produce and in turn receives commission for actual sales. It is distinct from the direct marketing arrangement/contracts of ARBs or their cooperative/association wherein the regional/provincial marketing assistance officer of DAR helps or assists in the sale and marketing of ARBs produce to a regular market, e.g., institutional buyers such as Cargill Philippines or San Miguel Corporation for yellow/hybrid com. • Production/Contract Growing/Growership -AVA scheme wherein the ARBs commit to produce certain crops which the investor buys at pre-arranged terms (e.g., volume, quality standard, selling price). This may come in the form of production and processing agreements. • Service Contract -AVA scheme wherein the ARBs engage the services of a contractor for mechanized land preparation, cultivation, harvesting, processing, post-harvest operations and/or other farm activities for a fee. • According to DAR, 75% of all AVAs are lease agreements, while 24% are growerships. The latest DAR issuance40 on the matter defines AVA as a contract entered into by an ARB or group of ARBs, or such juridical entities of ARBs owning the awarded land involved, on the one hand, and an investor, on the other, which involves the: • • • • • possession of the land management of the operations of the farming of the land control/distribution of the produce of the land, for a period of more than two cropping seasons; commitment of the owners to produce certain crops, at a determinable quantity, for a period of more than two cropping seasons such other arrangements similar to the above mentioned 39 DARA.O. No. 09-06 defines AVA as entrepreneurial collaboration between agrarian reform beneficiaries and investors to implement an agribusiness venture involving lands distributed under the Comprehensive Agrarian Reform Program. 40 Chapter 2, Section 2, DAR A.O. No. 4, Series of 2016 issued on May 27, 2016. This recent A.O. explicitly repeals DAR A.O. No. 09, Series of 2006 and A.O. No. 02, Series of 2008 16 -:.~ ··==-=-~