FINANCE/ACCOUNTING ISSUES

Philippine Carabao Center is a national government agency that aims to improve the general wellbeing of rural farming communities and to promote carabao-based enterprises.. Since it is not a
profit-oriented organization and its main source of fund is the national government, there are only
few financial constraints and issues within the organization.
BUDGET AND FINANCE MANAGEMENT
The PCC has continued to improve its compliance to all mandatory financial accountability reports
as prescribed by regulating and coordinating agencies such as the Commission on Audit,
Department of Budget and Management, and the Department of Agriculture. Budgetary
requirements of the operating units of the center were provided on time and in accordance with the
approved plans.
Likewise, a more responsive process flow was adopted to address activities/emergencies not
included in the approved work plans. Coordination among units involves in the process flow of
property accountability and procurement was strengthened, appropriate process flow to institute
regular coordination was revised and implemented. This resulted to increased number of dropped
property accountabilities at the NIZ, Gene Pool, and Lomboy areas. An aggressive housekeeping of
records and properties are on-going.
Appropriate administrative policies, procedures and processes were also issued and implemented to
enhance transparency of operation and minimize lead time in processing financial claims and
administrative services.
HOW DO PCC OBATAIN ITS FUNDS?
First, they prepare annual budget in relation to the following budgetary thrusts:
Budgetary Thrusts FY 2013
Program Component I: Germplasm Pool Of Superior Swamp And Riverine Buffalos And
Cryobanking Of Animal Genetic Resources
Program Component II: Intensification Of The National Carabao Upgrading Program
Program Component III: Carabao Based Enterprise Development
Program Component IV: Research And Development
Highlights of FY 2013 Budgetary Expenditures
The PCCs FY 2013 budgetary expenditures are anchored on the RUMINANT ROAD MAP 20112034, a recently approved program that placed a unifying umbrella to the on-going and long-term
program for ruminants in the country. Dairy development based on buffalo is an important
component. The PCC Strategic Plan for 2013-2025 is anchored on the ruminant road map
specifically focusing the next 15 years of producing at least 2.0 million calves directly affecting 1.5
million families. Consistent with a well-coordinated push jointly undertaken by the government and
private sector within the framework of comprehensive long-term scheme of the ruminant road map,
the PCCs budgetary expenditures for FY 2013 budget is focused on three areas:
a. Herd Development and Productivity Improvement thru Expanded AI Program.

Artificial Insemination (AI) is a frontline service of the government for enhancing herd build-up
and for the development of genetically superior dairy buffaloes. This require production of superior
genetics semen donor bulls from the National Gene Pool, and expanded semen processing
laboratories to produce adequate volume of frozen semen for use in AI. Another major critical
element is massive training of AI technicians. To date, PCC has so far set-up functional village-level
artificial insemination technicians (VBAIT) rendering AI services in strategic locations nationwide
leading towards privatization of services.
In 2013, we propose to increase the number of VBAITs, increase frozen semen production five
times that of the current level, establish additional one (1) bull farm and two (2) semen laboratories.
The expanded program will also require other AI logistics support in order to meet the target of at
least 150,000 AI services in 2013, and setting up the fundamentals for 2014 and on, requiring
support to enable AI services of at least 350,000 services/year.
Fund Requirements for VBAIT training, distribution of LN2 and frozen semen are:
ITEM
MOOE
Establishment of Bull Farm
Land & Infrastructure (63.0 M)
Farm Machineries (17.8 M)
Establishment of 2 Semen Laboratories
Infrastructure (20.0 M)
Lab Equipment and Farm Machineries (49.8 M)
LN2 Tanks (22.4 M)
Transportation Equipment ()
VBAIT Training (300 VBAIT)
Liquid Nitrogen, semen, synchronizing hormones, AI guns,
AI supplies, AI Services
Monitoring and Other Services
TOTAL

In Million Pesos
CO
TOTAL
80.8
80.8
92.2

92.2

9.9
9.0
70.0

12.0
70.0

15.0
94.0

15.0
276.9

182.9

b. Small-holders Enterprise Development

To date, there are small-holder producer cooperatives, assisted by our centers nationwide. These
groups are in varied stages of development, ranging from newly organized to semi-commercial
operations. With the utmost intent of making them viable dairy cooperative enterprises, capability
enhancing support has to be in place. Thus, sustained organizational and entrepreneurial
strengthening development programs are to be carried out in 2013.
For FY 2013 budget, we propose activities which involve full private sector participation in
providing critical services and support enterprises from farm to consumers. An aggressive move
will be undertaken to mobilize smallholder farmers, private sector and LGU in various segment of
the ruminant animal industry from production, post-harvest and processing to marketing and
distribution to various markets, including the supply of production inputs, professional and
technical services, and other relevant enterprises.
Critical activities are towards changing the mindset of farmers, vigorous extension, social
preparation and training efforts through convergence of interventions in identified impact zones.
This is apparently the completing activities after all the production related items have been
installed. Without this component, the desired enterprise development among smallholders may not

be successfully achieved. A total of P94.0 million budget is needed to be able to cascade the
interventions nationwide.
Fund:
ITEM
Organization and training of existing
crossbred owner
Monitoring and provision of technical
services
Provision of post-harvest services
development and management of the dairy
supply chain
TOTAL

MOOE
8.0

In MillionPesos
CO

TOTAL
8.0

51.0

51.0

35.0

35.0

94.0

94.0

Expected output of 2013 of herd development and productivity improvement thru AI and Bull
Loan and Enterprise Development:
Jobs :

Income :

Food Security:

The program is expected to create about 18,000 jobs in the first 5 years and to
grow geometrically thereafter, if the purebred male calves are used for
crossbreeding with native animals
The income average per farmer from milking and related dairy activities
would be about P 52,500/ Lactation. Plus additional income of at least
P5,000/ Lactation out of the female offspring.
At a conservative estimate of 50% calving rate, the program will contribute
about 1.5 M liters per year or 3.0 m liters per year of cow-milk equivalent,
worth P 52.5M. This will grow considerably about 4 years as offspring start
to produce milk. Yearly offspring is valued at about P50.0M per year.

c. Harnessing Biotechnology R and D and Cryobanking of Animal Genetic Resources

In 2013, PCC shall sustain and expand implementation of Biotechnology R and D across
major ruminant commodities being the lead agency in the Livestock Biotechnology as
contained in the Department of Agriculture Administrative Order 9, series of 2008.
One major effort is Animal Resource CryoBanking, consisting of frozen semen, embyo
oocytes, somatic cell and DNA
R&D efforts shall focus on reproductive biotechnology (in Vitro Maturation/ in Vitro
Fertilization, ovum pick Up, Embryo transfer, cloning) in support to the over-all genetic
improvement program in domestic animals. Emphasis shall also given to SPERM SEXING to
produce sex predetermined calves, e.g. all female calves for dairying.
DNA-maker assisted selection (MAS) shall be sustained and expanded as a tool for accurate
and faster selection, for breed ID and traceability, particularly on animal products for export
market, and for screening genetic defects. Requirement for this aspect are summarized below:

Fund:
ITEM
Operation of the New Biotech
laboratories
Conduct of R&D across major
ruminant commodities
R&D on AnGR & Crobanking
TOTAL
Output:

MOOE
16.05M

In Million Pesos
CO

TOTAL
16.05M

19.75

19.75

12.42
48.22

12.42
48.22

Cryobanking for all domestic and indigenous livestock species for long term
genetic conservation and genetic improvement.
Development of applicable biotechnologies for improving livestock
productivity.
System for screening genetic defects among domestic animals.
Foundation for initiating traceability related to breed, parentage, and
products.

JUSTIFICATION
PROPOSAL FOR ABOVE THE CEILING
In Million of Pesos
1.0 Establishment of additional two semen laboratories to sustain the requirements of
Expanded AI Program
MOOE
26,900
Liquid nitrogen, synchronizing hormones, AI supplies, and supplies other
logistics for semen production
Trainings, professionals & technical services
Other operating costs
Capital Outlay
Construction of Semen Laboratories
Laboratory equipment
Farm Machineries and Equipment
LN2 tanks
TOTAL

18,900
2,800
5,200
81,000
20,000
40,000
9,800
11,200
107,900

PCC strategic planning for the next 15 years is focused on producing at least 2.0 Million calves that
will directly impact on 1.5 Million Families. This is consistent with the goals of the Ruminants
Industry Road Map 2010-2034. It is envisioned that in next 5 years, 2013 until 2017, through AI

and bull loan programs, a total of 510,000 breedable females/year can be produced. This population
is expected to contribute significantly to the dairy sector. This requires production of superior
genetics semen donor bulls from the National Gene Pool, and expanded semen processing
laboratories to produce adequate volume of frozen semen for use in Artificial Insemination (AI).
Thus, there is a need to establish additional two (2) buffalo semen processing laboratories in order
to achieve the targets.
This requires 26,900 Million above the ceiling requirements for MOOE and P 81.00 Million capital
outlay for the construction of the two (2) semen laboratories and for all the necessary equipment in
the lab and in the field.
2.0 Productivity Improvement thru Expanded AI Program and Small-holders Enterprise
Development
MOOE

70,400

AI Technician training and conduct of AI services

Organization and training of existing crossbred owners
Provision of post harvest services development and management of the
dairy supply chain
Monitoring and Provision of Technical Services
Capital Outlay

20,700
18,500

Transportation equipment (Motorcycle)

Total

14,400
16,800
6,800
6,800
77,200

The next element is the conduct of AI services which can only be done by increasing the number of
AI technicians in the villages. The strategic activities leading towards this critical element is
massive training of AI technicians
After adequate numbers of AI Technicians are trained, massive AI services are to be carried out.
This would require information campaign drive for AI, coordination/ collaboration with partner
LGUs and the carabao-farmer raisers, and distribution of the LN2 and AI supplies.
And finally, the development of viable dairy cooperative enterprises for small-holders is the end
products of the value chain of the PCC programs. This move would involve mobilizing the
smallholder farmers, private sector, and LGU in various segments of the industry from production,
post-harvest and processing to marketing, and including the supply of production inputs,
professional and technical services, and other relevant enterprises. A funding requirement of
P70.4M is proposed for those items.
Mobility is of utmost for Extension aspect, promoting higher adoption of suitable technologies.
Therefore, we propose a P6.8M budget for the acquisition of motorcycles to be distributed to the
field technicians doing extension services in 13 regions.
3.0 Harnessing Biotechnology R&D and Cryobanking of Animal Genetic Resources
Personal Services
MOOE

0.497
39.017

Conduct of R&D across major ruminant commodities

Conduct of operational research across product/operating centers
Operation of the new Biotech Laboratories
R&D on AnGR & Cryobanking
Total

14.700
19.250
3.000
2.067
39.615

The additional Personnel Services budget is the salary differential of DR. CLARO MINGALA, who
was appointed Scientist I in the Scientific Career System effective 12 December 2011 by the
Scientific Career Council. Dr. Mingala previously held the position of Farm Superintendent II SG15 with an annual PS budget of the Php 0.391 while total annual PS budget needed for a scientist I
position including RATA is Php. 0.888.
The requirements for additional MOOE is needed for PCC to sustain expand implementation of
Biotechnology as contained in the Department of Agriculture Administrative Order 9, series of
2008.
With the proposed above the ceiling MOOE requirements, R&D efforts shall focus on operational
research across production/operating centers, reproductive biotechnology (In Vitro Maturation/In
Vitro Fertilization, Ovum Pick Up, Embryo Transfer, cloning) in support to the over-all genetic
improvement program in domestic animals. Emphasis shall also be given to SPERM SEXING to
produce sex predetermined calves, e.g. all female calves for dairying.
SOURCES AND USAGE OF FUNDS
The agencys main sources of funds to support its operations are provided by the national
government through the General Appropriations Act (GAA). Table 9 presents the details of
allotment and utilization. 24
Table 9 PCC Sources and Utilization of Funds as of December 31, 2013 (Php Million)
Fund Source
Authorized
Usage
%Utilization
Allotment
GAA-Current &
621.97
606.49
98%
Continuing
Personnel Services
80.19
79.92
100%
Maintenance &
267.80
264.82
99%
Other Operating
Expenses
Capital Outlay
273.98
261.76
96%
Agri-Pinoy
170.00
40.23
99%
Livestock - Current
& Continuing
Maintenance &
162.00
152.00
94%
Other Operating
Expenses
Capital Outlay
8.00
8.00
100%
Revolving Fund68.59
49.36
72%
Dairy Business
Module
Foreign Assisted
48.00
18.00
38%
Projects

TOTAL

908.56

714.08

79%

Table 10 presents the PCCs Statement of Financial Condition at the end of FY 2013. The PCCs
total assets as of December 31, 2013 are valued at Php2,572.82 million comprising mainly of the
agency Property, Plant & Equipment (PPE) and Breeding stocks or Other Assets. The significant
change in other assets or breeding stocks represents the booking of the cost of 1,203 heads of
imported Italian buffaloes.
Total liabilities posted Php171.55 million and total equity reached Php2,401.27 million. Significant
decrease in liabilities represents the payment for the imported buffaloes. Likewise, increase in
equity is attributed to the investment of the government for the infusion of dairy buffaloes.
TABLE 10. Statement of Financial Condition as of December 31, 2013 (Php Million)
Particulars
FY 2013
FY 2012
% Change
Assets
Current Assets

752.59

868.92

-13%

Property, Plant & Equipment

919.92

798.69

15%

Other Assets (Breeding Stocks)

900.31

541.95

66%

2,572.82

2,209.55

16%

171.55

584.82

-71%

Government Equity

2,401.27

1,624.74

48%

Total Liabilities & Government Equity

2,572.82

2,209.55

16%

Total Assets
Liabilities

Table 11 presents the PCCs Statement of Income and Expenses for the year end of 2013. The
PCCs total income for the year reached Php913.08 million comprising mainly of the subsidy from
the national government. The business income represents the sales of milk, meat, live animals, and
other by-products as a consequence of the operation of the institutional dairy business module of the
regional centers.
Personnel services expenses posted Php86.30 million, while total maintenance and other operating
expenses including non-cash expenses for the depreciation is Php277.16 million giving a net
income or surplus from operation of Php492.35 million. The decrease in net income for FY 2013 is
attributed to the decrease in subsidy from the national government.
Table 11 Statement of Income and Expenses for the period ending December 31, 2013 (PhpM)
Particulars
FY 2013
FY 2012
% Change
Income
Subsidy Income
844.19
877.11
-4%
Business Income
68.59
53.16
29%
Other Income
0.31
32.44
-99%
Total Income
913.08
962.71
-5%
Expenses

Personnel Services
Maintenance &
Operating Expenses
Non-cash expenses Depreciation
Total Expenses
Net Income

86.30
277.16

81.50
248.97

6%
11%

57.27

41.24

39%

420.73
492.35

371.70
591.01

13%
-17%