The Kennedy Round 2 (KR2), now known as the Grant Assistance for Underprivileged Farmers, is a grant facility designed to assist developing countries striving to achieve food sufficiency to carry out their food augmentation plans.  The Program’s assistance comes in the form of grants-in-aid, which is used to procure farm inputs such as fertilizers, pesticides, farm machinery and other agricultural equipment.  The recipient country monetizes these farm inputs and the proceeds are used to finance agricultural projects. 

For the past two decades, the Philippine Government availed of KR2 Program under the administration of the Department of Agriculture (DA).  During the 20^th KR2 Tranche (1996), the administration of the Program was assigned to NEDA, thereby opening up KR2 to other socio-economic sectors for one year.

Beginning the 21^st Tranche, programming of the KR2 peso proceeds has been shared by  DA-National Agricultural and Fishery Council (NAFC) and NEDA at 50% for agriculture projects and 50% for social development projects/activities including LGU poverty alleviation projects and contribution to the Project Development and Monitoring Fund (PDMF), respectively.

               The ICC approved on August 2001 such programming arrangement based on the utilization framework agreed upon by NEDA and DA-NAFC

beginning the 21^st KR2 Tranche, with a specific provision that the peso proceeds be used to  fund/finance specific items identified under the Agriculture and Fisheries Modernization Act (AFMA).  The ICC also advised DA and NEDA to discuss with the Japanese Government to provide programming flexibility to the Philippine Government in allocating the proceeds of the 21^st and subsequent tranches of the Program.  The Japanese Embassy informally advised NEDA that utilization of the KR2 proceeds is the prerogative of the Philippine Government.

The ICC decision to use the KR2 peso proceeds as budget support for AFMA activities constrained NEDA to proceed with the programming of its share in support of PDMF and poverty alleviation projects, among others, under the 21^st and succeeding Tranches.  There was also clamor on the part of the DA to utilize 100% of the peso proceeds for the Department’s activities/projects under AFMA.

In response, NEDA proposed and secured DA concurrence for the 80%-20% sharing of the peso proceeds in favor of DA.  Under said arrangement, NEDA will utilize its share of the proceeds to support productivity-enhancing activities.  continue reading