Coconut levy levity

Treating the coconut levy with levity must stop. Levity is defined by the Oxford dictionary as the “treatment of a serious matter in a manner lacking due respect.” For 45 years, the levy has been a cruel joke for 3.5 million coconut farmers. They till 3.3 million hectares, compared to 2.5 million hectares for rice and 1.4 million hectares for corn. They are in 69 out of 81 provinces, and constitute the poorest in the agriculture sector.

On April 16, in a meeting with the Agri-Fisheries Alliance (AFA), President Duterte committed to put an end to the coconut levy delay.

On Aug. 31, a Senate hearing on this issue was held. Three of the five agriculture stakeholder coalitions that make up the AFA participated: Alyansa Agrikultura (farmers and fisherfolk), Philippine Chamber of Agriculture and Food (agribusiness) and the Coalition for Agriculture Modernization in the Philippines (academe and science). They were joined by coconut farmer champions such as former Senator Bobby Tañada and former Assemblyman Oca Santos.

The hearing was held by Agriculture Committee chair Francis Pangilinan and vice-chair Cynthia Villar. In addition to their bills, three more bills authored by Senators Bam Aquino, Risa Hontiveros and Ralph Recto were discussed. The discussion focused on three important coco levy components: who decides, how the money is spent and jumpstarting levy use.

The following is the AFA position on these three issues.

Who decides

Instead of the money being given in cash, the consensus is that this should be put in a trust fund, to be owned by the government in trust for the coconut farmers.

Because of government ownership, the initial proposal was that the Coconut Farmers and Industry Trust Fund Committee would be composed of government officials. The coconut farmers would then be left out again.

The AFA position is that this committee should instead have a majority composed of the private sector. Representatives should come from the science and finance sectors, but most importantly, from the coconut farmers themselves. In addition, this committee should decide which coco levy assets should be privatized, and which should not.

Farmer leaders Omi Royandoyan, Joey Faustino and Rene Cerilla argued that assets unrelated to coconut farmer incomes such as car insurance should  be privatized. But those in the coconut value chain such as coconut oil mills and coconut processing assets should remain under the control of the coconut farmers.

These value-adding assets are where significant profits are made. Therefore, they should go to the coconut farmers who, through their levy contributions, created these assets.

How money is spent

The fund should not finance traditional government activities such as farm-to-market roads, coconut tree planting and re-planting and fertilization. Instead, it should complement these activities with value-adding projects, as well as social protection components such as health insurance.

An executive branch official stated that if the Philippine Coconut Authority (PCA) does not do the coconut planting and re-planting, the levy would take care of this. The consequence is that the coconut levy would be used to replace government funds that would otherwise be gotten through the government appropriation process.

Out of the more than P80 billion annual DA budget, the PCA was allocated only P1.3 billion for 2016 and 2017. Because of this, it is feared that the coconut levy will be used as a milking cow to supplement the PCA budget. This should be prevented. The PCA should instead go through the government appropriation process for additional funds.

In one of the Senate bills, it states that after 10 years, “any and all money in the trust fund shall revert to the general fund of the National Treasury.” This will motivate the government to make minimum use of the Trust Fund so that it can gain control of it after 10 years. For the coconut farmers, this is yet another cruel joke.

Jumpstarting fund utilization

The problem with the current proposal of using only the interest income from the current P71 billion coco-levy trust fund is that, at an assumed three percent annual rate of interest earnings from government securities alone, this would be only P2.1 billion a year. This is a pittance compared to more than the P80 billion annual DA budget.

A proposed Senate bill provision allocates a P10-billion release in the first two years. Considering the 45-year wait of the coconut farmers, at least P10 billion for each year is more reasonable. The components funded by this release will be decided upon by the Coco-levy Fund Committee.

The five senators who filed the Senate bills should be commended for taking these important initiatives to finally give the coconut farmers their due.  Calling the hearing last Aug. 31 will hopefully result in additional significant improvements to these bills.

Congress must approve the consolidated version of this bill immediately. This will finally put an end to the coconut farmers’ 45-year wait, when the coco levy was treated with unjust and unconscionable levity.

(The author is chair of Agriwatch, former Secretary for Presidential Flagship Programs and Projects, and former Undersecretary for Agriculture, and Trade and Industry. For inquiries and suggestions, e-mail [email protected] or telefax 8522112.)