Press Release
March 9, 2015

From the Farmers to the Farmers:

Tapping Coco Levy Funds for the Industry's Renaissance

There are two recommended ways of authorizing the management of coconut levy assets.

First is via the executive route, where a factotum who cannot probably distinguish a palmera from a coconut tree will draft an order for the President's consideration.

The other is through legislation, where a bill, like copra, is processed under the sun, and in this age of crowdsourcing, stakeholders can participate in its writing, as had been done on the bill at hand

Not only is the latter more consultative, its product - a republic act - is also more durable.

So when it comes to managing coco levy funds, we need a law that can withstand time - and shifting political winds, which we know can cut down an executive fiat by a stroke of a pen, like a typhoon does to a coconut tree.

I would like therefore to congratulate the chairperson, Senator Cynthia "The Better" Villar, for crafting an excellent piece of legislation which, like coconut lambanog, distills its many ingredients.

If this bill, which designs how an asset can be preserved, validates anything else, aside from her obviously pro-farmer heart, it is the suspicion that she is actually the one responsible for one man's reentry into that Forbes list.

The husband gets the credit, but she raised the cash.

So when she tells us that this is the way an asset should be preserved, then we must take heed.

If prudent stewardship of funds is the thrust of this bill, then the best person who can tell us how it is done is a lady from whom her billionaire husband gets his weekly allowance.

Mr. President:

We live in a country under a canopy of coconut trees.

68 out of 81 provinces, 2 out of three towns grow coconut in some 3.5 million hectares which are cultivated by 3.4 million farmers.

One hectare in every four is planted to coconuts.

There are 34 coconut trees for every Filipino. From that versatile tree we get a wide array of products - from the oil we use to fry our food, the liquor that our alcohol-proof friends love to drink, even the diesel which runs our cars is blended with biodiesel.

We do not have oil rigs; we have coconut trees instead.

From 2009 to 2011, we exported $1.6 billion of coconut products annually. This should not come as a surprise as we are the world's biggest exporter after Indonesia.

It is the fourth "c" among our foreign exchange earners, after contract workers, call centers, computer and communication parts.

Despite these, the coconut farmer remains poor. NAPC says 9 in 10 live below poverty line.

The irony of their penury is best captured by this observation: Kung sino pa ang magniniyog ay sya pang minsa'y hindi makabili ng kahit isang kutsara ng mantika.

Not only are the coconut farmers always in financial ICU, many coconut trees are also in the throes of extinction. Many are withering, shriveling and wilting.

About 44 million trees - or one in seven - are past their productive age. As a result, yield per tree has plummeted to 40 nuts a year from an ideal 75 nuts.

The joke is that when rural health workers came to lecture about birth control it was the trees who listened - and complied - and not the people.

So this bill comes at a critical time of the Philippine coconut industry.

Yes, the monies it will seek to manage and dispose is big, but it is not the cure-all solution, certainly not some sort of a VCO which can salve many ailments.

While they may have been freed at a providential time, at best, however, coco levy funds will just be a part of the resources needed to boost this important industry.

It should not be a substitute for regular appropriations.

It is not an excuse for the government to abdicate on its duty to appropriate funds for an industry from which it draws so much taxes.

And this bill enforces these principles.

It puts all the coco levy assets - raised by virtue of RA 6260, PD 276, PD 582, PD 1468 and PD 1842 - into a trust fund called the Coconut Farmers and Industry Trust Fund.

It puts a firewall between the Trust Fund and the General Fund, which prevents its migration to the latter.

It places the management of this fund under a committee of nine men, chaired by the Secretary of Agriculture, who will lead the contingent of four government officials. Completing the composition of the committee are five representatives from the coconut sector.

It calls for the drafting of Coconut Farmers and Industry Development Plan by a broad coalition of stakeholders.

It instructs the trust fund committee to use this plan as guide in the utilization of trust fund income.

It sets the "negative list" of programs and projects which cannot be funded by either the trust fund principal or income and this includes: replanting, planting, fertilization, farm-to-market roads, direct lending, all of which shall fall under the ambit of regular appropriations.

It lays down a conservative fund management approach by requiring that the trust fund shall only be invested in government securities, that only income from the latter can be used, and that only 5 percent of the principal can be mobilized as initial capital.

It calls for an audit of the coco levy funds and assets in the wake of clashing estimates of their present worth.

Mr. President:

I will not propose amendments to this bill.

With your indulgence, however, let me air my observations about this measure, for your consideration.

So that when the trust fund committee convenes as a fund-dispensing machine, and they will refer to the transcript of our debates, to discover what the legislative intent was behind the prose of the law, this will also serve as my memo to them.

First, let us increase the transparency quotient of this proposed law.

We can require that trust committee spending and the status of the trust be reported out in detail in the annual Budget of Expenditures and Sources of Financing (BESF) for reportorial purposes.

This is the same approach we are proposing for tax incentives and the BESF is replete with accounting of off-budget items.

To give us a true and gross picture of the coconut industry-related expenses, perhaps we should add, for recording purpose only, the indicative level of trust fund spending for the next fiscal year in the proposed budget, say, of the DA using the same language in which Malampaya fund spending and MVUC spending are reckoned in the budgets of the DOE and DPWH.

In the selection of the director of the trust fund committee we should reiterate that he or she must be able to hurdle Governance Commission for GOCCs' vetting and pass the "fit and proper" rule required of officers who manage a huge portfolio of public funds.

In the implementation of projects approved by the trust fund committee, don't you think we should reiterate that such comply with the Government Procurement Reform Act and other government, budgeting, accounting and auditing laws?

This must be specified in the trust fund charter because at present, rules governing the utilization of grants are nebulous and must be recalibrated in the light of recently discovered irregularities in the release of funds to non-public sector entities.

The trust committee functions as a quasi-super appropriations body with the power to approve projects worth half-a-billion pesos each.

I find the quorum requirements to be lax considering that it is a body of nine persons, na pwede mong isakay sa isang FX van. Pwede silang mag-caucus sa loob ng L300.

Why not make the approval of any project, regardless of the amount, be contingent on getting the majority vote of all members and not just of the members present?

If the House appropriations committee with 150 members, or equal to the passenger manifest of an Airbus 320, must get the assent of majority of its members for the appropriation provision of a local bill then the same requirement must be imposed on the trust fund committee.

Napansin ko rin po na sa trust fund committee walang fund manager or investment banker na kasama.

If you want to nurse a fund into perpetuity then get as one of the stewards one who has the competence on how to achieve such objective.

Releasing funds is easy, retaining the worth of the fund is harder.

Speaking of the longevity of the fund, this bill circumscribes that the principal can only be invested in government securities and only the yield can be disbursed.

Ang tanong ko po kung ang yield ng T-bills ay under 2 percent at meron kang annual inflation rate na 4.6 percent, na syang average from 2005 to 2014, hindi po ba in the long run may erosion of real value ang trust fund?

If in every year, 3 percent will be lost to inflation, then in ten years, the value of the trust will diminish by almost one-third.

If that will be the trend, then this fund will shrink in one generation's time. Isn't it that the obligation to nurse the fund to perpetuity carries with it the duty to ensure that it will not evaporate over time?

Halimbawa, sa SLEX po ang guaranteed returns dyan ay 18 percent per annum. Sa PPP for school building, ang 800,000 mo, magiging 1.4 million in ten years.

Restrained po ba tayo in investing the trust in safe instruments?

Ano po ang leeway na pwede nating ibigay sa trust committee para naman kung may exigencies or contingencies in the future they won't be handcuffed from directing funds to activities enumerated in the negative list?

Can we put an "emergency button" on this bill which the committee can press so they can fund projects not contemplated under the bill in the future?

Or should we put them in a straitjacket leaving no wiggle room for them at all?

Sinasabi ko lang naman ito kasi one feature of a good law is to embed provisions which can give it reasonable flexibility which when judiciously invoked prevents it from ending up as a dead-letter law.

We are legislating not only for the present but also for the future. Sadly we do not have clairvoyant powers nor a crystal ball to divine what's ahead, so what we can do is to arm those who will implement it with some reasonable degree of flexibility.

We should not legislate out of fear, out of hurts inflicted by the past. Let us write laws instead motivated by the good that we and the future can deliver. ??I also urge my colleagues to consider a higher startup capital. The five percent of the trust fund may be too little, too late. If the coconut industry has so many problems, then it needs a one-time stimulation fund, and not the drip-drip of money this bill ordains.

Starving a troubled industry of funds is not the way to save it. It can only spend its way out of the doldrums.

If the industry is in need of large investments, if farmers need assistance in a large way, then thrift in spending is not the answer.

Hopefully, my concerns will be answered by the audit to be done.

For example, if other revenue streams from productive assets will boost the available working fund, then the initial capital this bill suggests to be taken from trust principal might be enough.

Mr. President:

Half of the farmers who contributed to the levies, or from whom these were exacted, are probably dead by now.

This is the gift of the past generation to the present, and the best way to honor what they have bequeathed us is to use it judiciously, and preserve it so the generation after us will benefit from it as well.

One of the challenges is to make the fund maintain its worth, and not, like copra, dessicate over time.

Farmers have raged against the architects of the levy. But figures do not lie: The fund grew by an annual 8 percent during their watch. It is a fund that doubled every 9 years, a rate no bank would offer today.

If we are better than them, then in conserving this fund, we should use this as a benchmark we must surpass.

Having said all of these, let me reiterate what I've said that I will not propose any amendments. It is enough that I've put on record my thoughts on this bill.

The most important is that we pass it. Now.

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