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January 10, 2001



SUBJECT    :     Amendments to Memorandum Circular No. 01, Series of 1998, Entitled Revised Guidelines and Procedures on the Assessment of the Level of Development (ALDA) of Agrarian Reform Communities


I.       Background and Rationale

The Department of Agrarian Reform's major thrust of poverty alleviation is envisioned to be achieved through the development of agrarian reform communities (ARCs) which will serve as a critical link for agricultural growth, rural industrialization, and household welfare. In 1999, under the new Department thrust of sustainable rural development, Memorandum Circular No. 5, Series of 1999, was issued providing the sustainable rural development framework for the ARCs. The framework emphasizes sustainability through (a) scale intervention that is area-based, comprising clusters of barangays in a municipality taking into consideration economic, socio-political, and ecological characteristics; (b) focused approach to marginalized groups in rural communities; (c) gender-sensitive program for community empowerment; and (d) integrated area-development approach linking communities of the same economic and ecological characteristics.   EAcHCI

Anchored on Memorandum Circular No. 5, Memorandum Circular No. 14, series of 1999 and Memorandum Circular No. 2, series of 2000 outline three ARC models, namely: prime, semi-prime, and satellite, and outlines the steps on how the field offices would classify the ARCs. Correspondingly, the ARCs Level of Development Assessment (ALDA) had to be revised in response to improvements in data processing, interpretation and analysis, and to be attuned with the Department's thrust of sustainable rural development.

II.      Major Areas of Improvement

In summary, substantive improvements were undertaken in the following areas:

1.         Revision of the instrument to a simple, concise and easy fill-up form. All the basic information from previous ALDA instruments is retained. The secondary computations however, were removed from the forms and are included in the database structure.

2.         Other indicators like correlates of poverty are included in the new instrument. These will not necessarily enter into the computation of the ARC ratings but are deemed useful in the analysis and interpretation of the ALDA results.

3.         Full computerization in processing the ALDA results. The secondary computations like percentages are programmed in the database structure. After the primary information is encoded, the software automatically generates the percentages.

4.         KRAs and development levels are measured through indices instead of categorical ratings. There are still six (6) key result areas (KRA). In each KRA, several indicators similar to those used in past ALDA are also used to measure the development level in that KRA. For the LTI for instance, all the indicators are meant to measure the level of development in terms of tenure improvement. Thus, the indicators representing LTI are aggregated to come up with a single index that will indicate the level of development in LTI. This would require computation of weighted average of the percentage ratings of the indicators. The weights are based on the relative importance of the indicator in assessing the level of the particular KRA. An indicator that is consistently missed for more than 50% of the ARCs in the 1998 and 1999 assessment are excluded in the analysis since it may contaminate the results based on other indicators. If an indicator(s) in a KRA is missing, then the weighted average of the percentage ratings in the non-missing indicators is computed. The idea is that since each of the indicators would actually measure the same thing, others can compensate for missing information for some.

5.         Assignment of categorical ratings is postponed until the final index. The rationale is that, if at the indicator level, the scores are already categorized, bulk of the information is lost already. This might result into a very crude measure of rural development of an ARC. Thus, from the individual indicators, ratings are averaged to come up with a rating in the KRA that is still in percentage points. Given the rating in the KRA, the weighted average of the ratings for all KRAs are computed. The weights are based on the relative importance of the KRA in assessing the overall level of development of the ARC. This index shall be known as the Index of Sustainable Rural Development (ISRD).

6.         Presentation of the ALDA result as an Index of Sustainable Rural Development (ISRD). ISRD will have a percentage value (0 to 100%). A low value (close to zero) would indicate low level of development while a high value (close 100%) would indicate the highest level of development. Given the ISRD, the development level of the ARC may be assessed depending on the ARC type (Satellite, Semi-Prime, Prime) as defined in MC 02 Series of 2000. Recognizing the environmental limitations/constraints for each ARC type, lower thresholds are used for: "Satellite" ARCs and higher thresholds are used for "Prime" ARCs.   AIDTHC

III.    Objectives

The general objective of the ARC Level of Development Assessment is to determine the growth of the ARCs and the extent by which interventions of key ARC players are translated concretely towards ARBs' socio-economic and political empowerment.

Specifically, the ALDA aims:

1.         to assess the status of the ARCs in the areas of land tenure improvement (LTI), organizational maturity (OM), economic and physical infrastructure support services (ECOPISS), farm productivity and income (FPI) basic social services (BSS), and gender and development (GAD);

2.         to classify and define ARCs based on assessed level of development; and

3.         to define the appropriate interventions to be implemented by the community, peoples' organizations and implementers of DAR, NGOs, LGUs and line agencies towards improving the ARC level of development.

IV.    Operational Framework

The development of an ARC is a complex process which is a balanced and holistic approach in facilitation economic, socio-political, and environmental aspects of growth processes. It is in this context that the key result areas of ARC development are defined as (1) land tenure improvement (LTI); (2) organizational maturity (OM), (3) economic and physical infrastructure support services (ECOPISS); (4) farm productivity and income (FPI); (5) basic social services (BSS); and (6) gender and development (GAD).

1.         Land Tenure Improvement (LTI)

            The LTI key result area is focused on assessing the extent of land acquisition and distribution, ownership, cultivation and the improvement in tenurial status of ARBs. This is composed of seven (7) indicators covering both land acquisition and distribution (LAD) and non-land transfer (leasehold) scheme.

2.         Organizational Maturity (OM)

            The OM key result area shall assess the outputs and outcomes of the intervention under the Organizational Building and Strengthening (OBAS) KRA. This KRA deals with the assessment of the organizational functionality and financial viability of the ARB organizations in the ARCs. Specifically, this KRA is composed of 27 indicators, covering four major aspects namely: (a) organizational management; (b) resource management; (c) social enterprises operations; and (d) linkages and alliance building or involvement in local governance. However, for the computation of the ALDA rating, only 22 indicators shall be included considering that in the five indicators of Financial Performance (external loan repayments, profitability-return on equity, profitability-return on capital, liquidity ratio and savings mobilization) only around 50% of data were generated during past years of ALDA. It is important to note that though this is the case, efforts to gather data on these indicators should continue. Succeeding ALDA computations would be adjusted based on the data stability of the latest ALDA results on these particular indicators.

            The organizational management aspect looks at the organizational structure, membership and leadership management, functionality of board of directors and committees, level of participation of leaders and members, and training provided.   DaScAI

            The resource management aspect defined the generation of internal resources of the ARB organization, which include: capital build-up generation, savings mobilization and employment of core management staff.

            The social enterprises operations and management aspect is focused on: (a) installation of financial and operational policies, systems and procedures (PSP); (b) projects implemented and services provided by the ARB organization; and (c) financial performance.

            The local governance and alliance building aspect pinpoints the extent of representation and collaborative work between ARB organizations and the local government units where the ARC is situated.

3.         Economic and Physical Infrastructure Support Services (ECOPISS)

            The ECOPISS key result area is concentrated on assessing the delivery of needed economic and physical infrastructure support services to the ARCs, the rural-based industries established to effect increase in ARBs productivity and household income. This key parameter is composed of nine (9) indicators.

4.         Farm Productivity and Income (FPI)

            The FPI key result area focuses on assessing the adoption of appropriate farm technology to effect increase of farm productivity and income. This parameter has five (5) indicators.

5.         Basic Social Services (BSS)

            The BSS key result area defines the existing basic social services in the ARC and the extent of access of the ARC households to these services. Six (6) indicators are assessed in this parameter. It is important to note, however, that correlates of poverty such as survival, sanitation, and housing were included in the revised ALDA questionnaire. Though these indicators are initially excluded from the computation of the ALDA rating, these information are critical in the analysis of the sustainable rural development index. Eventually, as data on these are generated, the correlates of poverty will form part of the succeeding ALDA rating computation.

6.         Gender and Development (GAD)

            The GAD key result area assesses the gender sensitiveness of the ARC development program. This parameter comprises five (5) indicators.

            For details of the key result areas, indicators, computation of ALDA rating and interpretation of results, please refer to Annex 1 — Guidelines for the Computation of ALDA Indicators.

VI.    Methodology

Based on Memorandum Circular No. 1, series of 1998, ALDA will be conducted yearly by the ALDA Team composed of DAR regional and provincial ARC coordinators, partner NGOs and representative from PO/Coop, following this process:

1.         Data Gathering and Evaluation

(a)       After the training and prior to the conduct of ALDA, the team shall convene at the field level to thoroughly review and gain mastery of the ALDA Questionnaire and the guidelines in interpreting ALDA results. They shall also agree on the data-gathering mechanics such as source documents to be reviewed, focus group discussion and interviews, observations of organization's activities and enterprise operation, etc.   DcCASI

(b)       The ALDA Questionnaire shall be used and properly filled-up during the data gathering at the ARC level.

(c)       Data/information can be both from the primary and secondary sources. The team must review all existing documents and reports such as ARCDPs, monitoring reports, coop/organization's by-laws, VMGO, written policies, financial reports, systems installed, ARC/barangay profiles, DF's chronicles and provincial/municipal development council's reports, etc.

(d)       Focused group discussion (FGD)/interview with the MARO/DF/DW/IDO and the members/leaders of the organization and some members of the community shall be undertaken for the primary data requirement. Only questions applicable to each group shall be asked during the FGD/interview.

(e)       All cooperatives/peoples' organizations within the ARC and those with majority of the members are ARBs shall be subjected to assessment. These are the organizations reported in the ARC Forms 1-11.

(f)        The respondents from the cooperative/organization shall be at least 80% of the leaders (BOD & committees members), 10% of the general membership for less than 300 total membership or at least 50 members for more than 300 members, all members of the core management staff. Some of the members of the community shall also be asked for validation.

(g)       Once the entire data requirement needed for the evaluation/assessment have been gathered and reviewed, results shall be encoded in STATISTICAL ratings computed from the automatic formulas in the database structure, levels of development interpreted and analyzed along with other information included in the questionnaire like, FAPs, correlates of poverty, year of launch, presence of tertiary organizations and the services they offer, etc.

2.         Computation of Rating

(a)       The computation of rating per indicator within a key result area i.e. LTI, OM, ECOPISS, FPI, BSS and GAD shall be done by relating the actual performance to the expected level of performance. There maybe instances that some of the indicators, are not applicable, hence, this shall not be rated.

(b)       The weighted average of the percentage ratings of the indicators are used as indicator of the level of development in a KRA. The weights are based on the relative importance of the indicator to the KRA. The ratings in each KRA are then used in computing the Index Sustainable Rural Development (ISRD). The weighted average of the percentage ratings per KRA is interpreted as the ISRD. The weighted per KRA are assigned as follows: (Please refer to Annex 2 for the computation of ratings per KRA)

Land Tenure Improvement (LTI)                          0.0928

Organizational Maturity (OM)                               0.1941

Economic & Infrastructure Support

Services (ECOPISS)                                              0.2404

Farm Productivity & Income (FPI)                        0.1669

Basic Social Services (BSS)                                  0.1929

Gender and Development (GAD)                         0.1130

            The weights were obtained using statistical methods that account for many factors including, stability of data for the KRA, overlap among the KRAs in terms of explaining Sustainable Rural Development, among others. The KRAs exhibited some degree of association. Hence, the correlations between KRAs are used in the rational distribution of weights to the KRAs to augment statistical methods.   DcaCSE

            Note that the index is supposed to measure rural development and the highest weight is given to ECOPISS. This is so since the rural growth is almost synonymous with the appropriate environment and support system for agricultural production that is provided by the activities associated with ECOPISS. BSS is also assigned higher weight as it complements the results of ECOPISS. Given proper health care, the farmers can be capable of cultivating the land. Also, education can facilitate their emancipation from the bondage of the land as they can be upgraded to the entrepreneur level. LTI has lower weight since land distribution is almost completed in many ARC. For purposes of monitoring, LTI will no longer give much information as all ARC are expected to have similar values. There will be no more differentiation between ARCs based on LTI hence, its importance in monitoring is already lessened. For OM, lower weight (compared to ECOPIS) is attributed to the qualitative information for most in the indicators. However, there is no other way to monitor OM but through these variables.

(c)       Formula for computation of Index of Sustainable Rural Development (ISRD):

ISRD =                                                0.0928 LTI + 0.2404 ECOPIS + 0.1669 FPI + 0.1929 BSS

                                                          + 0.1130 GAD + 0.1941 OM


LTI is the weighted average of the percentage ratings of the LTI indicators

ECOPIS is the weighted average of the percentage ratings of the ECOPIS indicators

FPI is the weighted average of the percentage ratings of the FPI indicators

BSS is the weighted average of the percentage ratings of the BSS indicators

GAD is the weighted average of the percentage ratings of the GAD indicators

OM is the weighted average of the percentage ratings of the OM indicators.

3.         Interpretations and Analysis of Final Index

(a)       The interpretation of final index for the Satellite ARCs shall be as follows:

Range of Rating                   Interpretation

Below 52.93             Level 1 (Low Level of Development)

52.93-59.63              Level 2 (Lower Medium Level of Development)

59.63-66.33              Level 3 (Medium Level of Development)

66.33-73.03              Level 4 (Higher Medium Level of Development)

Greater than 73.03   Level 5 (High Level of Development)

(b)       The interpretation of final index for the Semi-Prime ARCs shall be as follows:

Range of Rating                   Interpretation

Below 54.83             Level 1 (Low Level of Development)

54.83-61.37              Level 2 (Lower Medium Level of Development)

61.37-67.91              Level 3 (Medium Level of Development)

67.91-74.45              Level 4 (Higher Medium Level of Development)

Greater than 74.45   Level 5 (High Level of Development)

(c)       The interpretation of final index for the Prime shall be as follows:

Range of Rating                   Interpretation

Below 56.34             Level 1 (Low Level of Development)

56.34-63.20              Level 2 (Lower Medium Level of Development)

63.20-70.06              Level 3 (Medium Level of Development)

70.06-76.92              Level 4 (Higher Medium Level of Development)

Greater than 76.92   Level 5 (High Level of Development)

(d)       Written reports on the result of ALDA per ARC (with all the accompanying tables) shall be submitted and presented by the team to the ARC Task Force. The ARC coordinators shall present the report to the MARO/DF assigned in the ARC for them to discuss with the ARB organizations. This shall be the basis for action planning for ARB organizations and ARC players.

4.         Action Planning

(a)       The result of ALDA shall be discussed with the ARB organization and will be the basis for the action planning at the ARC level. The MARO/DF together with the leaders and selected members of the organization shall develop a one-year action plan. The plan shall identify the needs of the ARCs as a whole and the need of the organization in particular. Targets should be set corresponding to specific activities under each KRA for viable ARC, time frame, resource requirement and persons or groups responsible for the activities.

(b)       Amount and sources of funding should also be indicated in the plan.

(c)       The action plan should be presented to the community for approval and implementation.

VII.   Reporting and Feedbacking

(a)       ALDA reports and ARC action plans shall be consolidated per province to be submitted to DAR RSSD. The DAR RSSD shall likewise consolidate and prepare a written regional ALDA report for submission to BARBD. A national situationer report shall be prepared pinpointing the levels of development of the ARCs and the recommended action agenda to ensure the sustained growth of the ARCs. Revised ARC plan per province, region and national level shall be done which shall form part of the performance contract of the Regional Directors, ARDOs, and PAROs.

(b)       ALDA shall be conducted in all ARCs annually (4th quarter of the year) Reports on its conduct shall be prepared and submitted every 15th day of January.

(c)       ALDA reports shall form part of the annual reports to be submitted to the Office of the Undersecretary FOSSO and Assistant Secretary for SSO.   ISADET

VIII. Effectivity

This Memorandum Circular shall take immediately.

Diliman, Quezon City, January 10, 2001



Annex 2: Computation of Ratings in each Key Result Area

The rating for each KRA follows:

LTI =            LTIPA1x0.2409+LTIPA2x0.2268+LTIPA3x0.0713+LTIPA 4x0.0489+LTIPA5x0.0721+LTIPB1x0.1825+LTIPB2x0.1575

ECOPIS = ECOPA1x0.1324+ECOPA2x0.1081+ECOPA3x0.1630+ECOPA4x0.1332+ECOPA5x0.1776+ECOPA6x0.1183 +ECOPB1x0.1215+ECOB2x0.0458

FPI =            FPIPA1x0.0645+PYIELDSx0.2691+PINCYAVEx0.2688 +PINCFIx0.2931+FINCx0.1044

BSS =           PSERVx0.2705+BSSPC1x0.1218+BSSPD1x0.1159+BSSPD2x0.1125 +HFACNOx0.2184+BSSPB1x0.1571

GAD =         GADPA1x0.1883+GADPB1x0.3133+GADPB2x0.2864 +GADPC2x0.1124+GADC1x0.0996


OMA1x              0.0562

+OMA2x           0.0598

+OMA3x           0.0781

+OMA4x           0.0331

+OMA5x           0.0618

+OMPA6x         0.0328

+OMPA7x         0.0015

+OMPA8x         0.0366

+OMA9x           0.0519

+OMA10x         0.0335

+OMPA11x       0.0458

+OMA12x         0.0215

+OMA13x         0.0334

+OM14Ax         0.0574

+OMB1x            0.0573

+OMB3x            0.0725

+OMC1x            0.0703

+OMC2x            0.0823

+OMPC3x         0.0198

+OMPC7x         0.0115

+OMD1x           0.0615

+OMPD2x         0.0215

Computation of Overall Rating

INDEX     =              0.0928            LTI

                                +0.2404            ECOPIS

                                +0.1669            FPI

                                +0.1929            BSS

                                +0.1130            GAD

                                +0.1941            OM


Department of Agrarian Reform
Elliptical Road, Diliman
Quezon City, Philippines
Tel. No.: (632) 928-7031 to 39

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