After the Supreme Court has spoken –
Let the coconut farmers speak out.
The Gardener’s Tale of the Continuing Coconut Saga
Summed Up by Ka Charlie Avila
National Chairman, PASCFO
(Phil. Association of Small Coconut Farmers’ Organizations)
The past few months saw a lot of consultation among the biggest coconut farmers’ organizations at regional levels regarding the coco levy funds.
Even before the latest final ruling of the Court, these organizations had already scheduled a national congress to be held in Metro Manila toward a national consolidation of their views on the topic. Coincidentally in the last week of their preparation, the Supreme Court decided with finality to resolve certain fundamental issues.
THE RULING[1]
The Supreme Court ruled with finality (in GR # 177857-58) that the coco levy funds and assets which consists primarily of the 753,848,312 San Miguel Corporation (SMC) shares and their accumulated dividends:
1) are owned by the government in trust for the coconut farmers.
It ruled that these coco levy funds and assets are
2) to be used exclusively for the benefit of all the coconut farmers and
3) the development of the coconut industry.
The funds are therefore public trust funds – with government as trustee for the beneficial owners who are the coconut farmers. The precise nature of government ownership in this case is not absolute ownership but trusteeship.
There is dual ownership here:
by government because a levy is a tax and must result in funds that are public in character – thus owned by the government,
and by the farmers for whose benefit and from whom government levied the tax in the first place and in a manner that made the Filipino coconut farmer the most heavily taxed citizen in all Philippine history, barring none.
For many decades now in our country, the word “levy” has been understood to refer to “coconut levy” with implications of plunder and powerlessness, of wealth and poverty. In any dictionary of any country, at any time of history – anywhere – there has never been any doubt about the meaning of that word “levy”, namely, that it is a tax – an imposition of the state on the people to generate public funds.
But equally clearly, a levy is distinguished from a general tax in that the latter are funds raised for the general revenues while a levy is a special tax not for the general revenues but for the benefit and use of that sector in society from which it was collected in the first place.
Quite concretely in the Philippine context, the original law provided that “the proceeds from the levy shall be …a separate trust fund which will not form part of the general fund of the government.”[2] Therefore the government of the Republic ought merely to consider itself a Trustee of such funds, public though they may be, for the real beneficial owners who are the farmers themselves from whence the funds came in the first place.
WHAT IS LACKING IN THE RULING – An administrative mechanism
However, clear as the Supreme Court decision is on the dual ownership of the levy funds (who is the trustee, for whose benefit, and to what purpose), it does not provide for an administrative mechanism to ensure that the funds are managed prudently and properly as intended by law.
The decision does not provide guidelines for the management and use of the coco levy funds for the benefit of the coconut industry and the coconut farmers.
This is a dangerous situation for the coconut farmers who bore the burden of the coconut levy.
In fact other sectors have started posturing to get their hands on the coconut levy funds. Worse, these “other sectors” and agencies are not even connected in fact or by law to the coconut industry, and their proposed use of the funds is not necessarily for the benefit of the coconut industry and the coconut fanners.
So, from the Supreme Court the action must now go to the legislature of the government via a strong and urgent certification by the executive branch for the passage of a remedy.
THE FARMERS INSIST
Hence, the three biggest national coconut farmers’ organizations are coming together in this congress, after regional consultations all over the country, to manifest to the Philippine government, the Filipino nation, and Philippine society:
that there is a great need to constitute by law the coconut levy funds and assets into a Coconut Industry Trust Fund (CITF)
and provide the administrative structure, also by law, that will manage the trust funds and ensure that its use will benefit all the coconut farmers and the coconut industry.
That structure is proposed to be a Foundation to be called the Philippine Coconut Farmers’ Foundation (PCFF).
HOW WILL THE FOUNDATION BE CREATED?
By law (i.e. an R.A. or a Republic Act), there shall be created under the Office of the President the Philippine Coconut Farmers’ Foundation (PCFF), which shall manage, administer, utilize or dispose certain assets of the Coconut Industry Trust Fund (CITF). It shall be organized by the appointment of a 15-person Board of Trustees within 6 months from the effectivity of the proposed Republic Act.
Who will compose this 15-person Board? The corporate powers of the PCFF shall be vested in a Board of Trustees to be appointed by the President of the Philippines consisting of fifteen (15) trustees, eight (8) of whom shall represent the government sector provided that the Philippine Coconut Authority (PCA) Administrator shall be a Trustee, and seven (7) of whom shall come from the coconut industry sector provided that the three largest nationwide coconut farmers organizations, namely, the Philippine Association of Small Coconut Farmers Organizations (PASCFO), the Pambansang Koalisyon ng mga Samahang Magsasaka at Manggagawa sa Niyugan (PKSMMN), and the Philippine Coconut Producers Federation,Inc (COCOFED), shall have one nominee each.
The depository bank — United Coconut Planters Bank (UCPB) if it remains such shall have one nominee as well as the coconut industry umbrella organization United Coconut Associations of the Philippines, Inc (UCAP). Other nationwide coconut farmer organizations duly recognized and accredited by the Philippine Coconut Authority maybe represented in the Board, provided that in their absence, in the meantime, the
PASCFO, PKSMMN and COCOFED shall jointly nominate such trustees.
The 8-7, 51-49, government-farmer ratio is consistent in applying the dual ownership of the funds: public, yes, but with sure farmer participation as guarantee for the proper stewardship of these trust funds.
The corporate powers of the PCFF shall be exercised, all business conducted and all property of the Foundation controlled and held by this Board of Trustees whose term of office will be for six years, receive no salary but board meeting per diems only, and hire officers and professional management to assist them in the stewardship of these public trust funds.
WHO WOULD BE THE MEMBERS/ BENEFICIARIES OF THE FOUNDATION (PCFF)?
For purposes of determining the respective identities and addresses of coconut farmers who will be eligible to become members of the PCFF, a ground survey of coconut farmers (Ground Survey) under the supervision of the Philippine Coconut Authority (PCA) through its Coconut Development Officers who are stationed in all municipalities of the coconut regions of the country shall be conducted and completed within two (2) years after the appointment of the first Board of Trustees of the Foundation.
Any coconut farmer may apply as a Coconut Farmer Member Beneficiary of the PCFF. A coconut farmer is a natural person who:
1 Owns and tills the coconut farm by himself and/or with the assistance of members of his family, or farm laborers;
2 Owns the coconut farm but does not till it by himself but with the assistance of farm laborers;
3. Is a lessee, usufructuary, who tills the coconut farm by himself and/or with the assistance of the farm laborers;
4. Is a mortgagee, who tills the coconut farm by himself and/or with the assistance of the farm laborers;
5. Harvests and processes the coconut product and is compensated in the form of the produce which he sells as his own; or
6. Works in the coconut farm and is compensated either in cash or in kind.
BUT HOW WILL THE TRUST FUND BE CREATED?
By law there shall be created a trust fund to be known as the Coconut Industry Trust Fund (CITF) from the funds and assets of the so-called coconut levy funds consisting of the 753,848,312 CIIF Preferred SMC shares and their accumulated dividends; the United Coconut Planters Bank (UCPB); the Coconut Industry Investment Fund (CIIF) Oil Mills; the 14 Holding Corporations; the United Coconut Planters Life Assurance Corporation (COCOLIFE); and all their respective assets, subsidiaries and affiliates to the extent that the Supreme Court has ruled or may still rule in other cases to be owned by the government in trust for the coconut industry and the coconut farmers, or their cash equivalent if redeemed or sold.
All of this together could be in the conservative ballpark figure of at least more than two hundred billion pesos. By law, they shall be recognized and declared anew as special trust funds with the government as trustee for the beneficial owners who are the coconut farmers. Needless to say, the CITF shall not form part of the general fund of the government and shall be used only as provided by law.
WHAT, THEN, WOULD BE PURPOSES AND USES OF THE FUND?
In general the fund should be used for the following ten purposes:
1) Promote the steady, accelerated and orderly development and verticalintegration of the coconut industry; right now we do not have a coconut industry so much as a coconut anarchy;
2) Develop and establish coconut based farming systems including but not limited to the establishment of model coconut farms; each hectare of coconut land has normally about 0.8 hectare more to spare for high value synergistic intercrops which must be utilized;
3) Hasten and advance industrialization in the coconut industry and the diversification and proper utilization of coconut products and by products; we should no longer be hang up on copra, an intermediate non-product, but we should rather have centers for both food and nonfood uses of the coconut’s numerous high demand products and byproducts;
4) Promote the effective utilization and marketing of coconut products and byproducts in the domestic and foreign markets and preserve the competitiveness and reliability of the country as a major producer and supplier of these products;
5) Increase production by expanding the planting and replanting program of coconut trees in strategic areas identified as having the most potential;
6) Conduct scientific researches and investigations in all areas pertaining to agricultural, industrial, marketing and socio-economic aspect of the coconut industry and encourage the participation of small farm holders in research and technology;
7) Encourage and promote the organization of coconut farmers cooperatives, associations, and organizations and provide them grants, credit and financing schemes;
8) Generate and disseminate information and communication to farmers, producers and other sectors to ensure the appreciation and adoption of appropriate technology and practices, inventions, as well as the proper awareness and correct understanding of issues and development in the coconut industry;
9) Finance the developmental/operating expenses of legitimate/recognized coconut farmer organizations including projects such as scholarships for the benefit of deserving children of the coconut fanners and the establishment of coconut seedling nurseries and the farmers planting/replanting program;
10) Finance social services for the coconut farmers for their mutual assistance, protection and relief in the form of social benefits, such as life, medical, and accident insurance coverage of the coconut farmers.
POVERTY REDUCTION VIA DEVELOPMENT AND PROSPERITY OF THE COCONUT INDUSTRY
Philippine poverty is mainly rural poverty. Rural poverty mainly stems from the coconut sub sector, which has produced to date only poverty and misery for millions of Filipinos while giving incredible wealth to a few global and local corporations. Therefore the government must realize that there is no surer way of effectively reducing poverty in the country than applying the coco levy funds to the economic self-empowerment of millions of coconut farmers throughout the land.
In the Philippines, some 3.11 million hectares of nearly 1.6 million holdings (averaging less than 3 hectares in size) are devoted to coconut. Out of 78 provinces, 64 grow coconut as a major crop employing some 3.4 million small farmers, tenants, lessees and farm workers. And it is generally recognized that the coconut industry provides livelihood to some 25 million Filipinos today.
So many coconut farms remain monocropped, with farmers unable to adopt new farming technologies, and the industry as a whole not able to compete globally. A coconut farmer earns so incredibly little per year in a one-hectare monocropped farm –sure prescription for rural poverty. Eighty percent or 8,000 sq. m. of a typical one-hectare monocropped farm is so wastefully unutilized in much the same way that in such a situation the coconut farmer’s labor potential on a 45-day harvest cycle is also wastefully reduced to 9 days of work.
NATURE’S GIFT TO THE PHILIPPINES
Natural Competitive Advantage
And yet it is clear that not just any spot on earth can grow coconut – it is a special gift for certain tropical lands between latitudes 20 degrees North and 20 degrees South on the planet. One in three coco hectares on earth is presently found in the Philippines. It is here, more than anywhere else, that coconut has no difficulty growing in comfort and quasi-self-supporting prosperity. It is the Philippines’ natural competitive advantage.
Natural – because it is almost the nature of this archipelago to grow hundreds of millions of these trees bearing billions of fruits yearly. National – because the nation has nothing quite like it if it were developed as it should, a true industry with so many products and byproducts, food and nonfood, in growing demand by just about all peoples and nations. Instead of a billion dollars annually we should be making a hundred times more, at least.
GROWING GLOBAL DEMAND
In the past, it is true, coconut always experienced volatility in prices due to competition from other edible oils on one hand, and on the other hand, due to the demand for alternative fuel sources.
But now research and development efforts worldwide continue to make breakthrough discoveries in the various medicinal, dietary, agro-ecological and bioenergy related benefits of coconut-based products.
It is not hard to see how all that will surely continue to diversify revenue streams along the coconut value chain (that should also benefit producers) and drive global demand for coconut products and by-products higher.
One need only look at the current increasing demand from industrialized countries in North America and Europe for coconut oils in their diet and personal care products alongside the rapid urbanization and purchasing power growth in China, India and other emerging markets in the Middle East, Southeast Asia and Africa that likewise drive exporting opportunities for coconut producing countries, foremost of which is the Philippines.
Additionally, the domestic demand for biofuels is strong due to the minimum additive requirements in the petrol industry. Demand for many other non-food coconut derivatives due to an increasingly ecologically conscious world is also quite on the rise, and man y of these products provide higher margins than traditional products.
THE TASKS IN BRIEF
Be all this as it may, the picture herein drawn will remain a perpetual possibility – absent a serious reform, rethink and redesign of the coconut industry in the Philippines where millions of small holders need to be organized, new capital mobilized for the appropriate pre-and-post-production infrastructure, and the transformation will happen at last launching the massive movement from:
- From monocrop to multicrop
- From solo CNO to oleo chemicals and a diversity of other products
- From subsistence cropping and single farm to nucleus estates or coconut districts
- From vertical to include horizontal integration
From the poverty-causing exclusively copra mode of production, we need to bring the coconut industry to a prosperous state of rural industrialization mode where one fresh coconut produces at least five or more finished products of food and fuel. We have before us challenges of heroic proportions considering that the not-too-visible stakeholders of the coconut industry are both local and international, and old poverty-making habits die hard, and not too many are able to think of a win-win program in the interests of poverty reduction, food security, environmental protection and sustainable development over-all. FINIS.
Charles Avila – The Gardener
[1] See – sc.judiciary.gov.ph/jurisprudence/2012/september2012/177857-58.pdf
[2] (Sec.1, P.D.276).