• Will the Coco Levy Fund end up like the Malampaya?



    The highest court decided sometime ago that the coco levy funds are public funds, meaning that these are fiduciary funds kept in trust by the government for the development of the coconut industry as prescribed by the Marcos decrees authorizing the collection of such funds by the Philippine Coconut Authority in the seventies. It took the Supreme Court three decades to determine this issue, but never mind the money is there now to be deployed to develop an industry which is the principal source of income in most of the provinces and on which millions of coconut farmers depend on directly or indirectly for livelihood. The amount involved is substantial. The proceeds from the San Miguel stock alone in the name of the Coconut Industry Investment Fund—a coco levy funded enterprise is worth no less than P70 billion. If one were to take into account the other coco levy financed enterprises—the bank, insurance company, a coco chemical plant and oil mills the figure will quickly balloon to double the amount.

    After the court decision everyone expected to find the government hitting the ground running, so to speak, and mobilizing the funds to salvage an industry that is in suspended animation due to benign neglect by the government. Aging trees that are now menopausing and badly needing rehabilitation and fertilization need to be attended to urgently. No less than the immediate massive restructuring of an industry which continues to be the principal commodity export of the economy should be of the highest priority. Strangely, apart from unconfirmed reports in media that inter-agencies are now coming up with a roadmap and bills filed in Congress await the blessings of the House leadership, there seems to be a conspiracy of silence with agencies pointing to each other for the inaction. One thing sure is that the agencies directly managing the industry like the Department of Agriculture, specifically the Philippine Coconut Authority are not getting the funds. So where is it?

    When we tried to track down the whereabouts of the funds, we were informed that it has been placed under the Anti-Poverty Commission which is allegedly preparing the roadmap for the industry. In fairness to said agency it has produced one such in cooperation with other agencies directly or indirectly involved with the industry. Ok, so why the delay in implementation?

    In the meantime because of senility the productivity of coconut areas are falling in stark contrast to the productivity gains of competing products abroad like palm oil, which we now import in large quantities to substitute for coconut oil in our own very market, especially in the cooking oil department. I thought I would never see the day for this to happen, but it has!

    So what is next? Should the coconut farmers just fold their arms and allow Mother Nature to take its toll and cause the tree of life to stop bearing nuts because of old age and lack of fertilization—not to mention the diseases that have surfaced of late which threaten to decimate large tracts of coconut lands?

    Incidentally, is it not a bit strange that the rescue of three million hectares of coconut lands in nearly 70 provinces and about one and a half million farmers should be so delayed? It is axiomatic that this would be economically the right thing to do, politically correct and socially urgent. Does the administration realize this or are there ambitious technocrats with political aspirations who dream of using the levy funds to win political pogi points. Indeed the funds can be considered a moral hazard, like the Malampaya funds. Since these funds are off-budget these could easily be realigned for optimum political gain and minimum socio-economic returns.

    Okay, granted that the government will now decide to deploy the funds, where should it go? First of is the rehabilitation of coconut farms through fertilization and replanting. This is big bucks and cannot wait. Secondly, establish coconut-based farm systems which will require both vertical (processing of products) and horizontal (intercropping) integration. For this to take off however, farmers associations— cooperativized if possible— should be organized. The authorities should also mobilize financial institutions in aid of these farmer groups. Sadly lacking today are research organizations on the ground close to the farmers who can transfer appropriate technology and identify market opportunities – these have to be organized.

    All in all a restructurings of the sector is called for. Government agencies must execute inter-agency cooperation so that the transfer of technologies, social preparation within farm gates can be delivered when needed immediately. The DAR, DA, PCA, DOST, DOT and government financial institutions must act in consonance in aid of the industry. Moreover the PCA whose mandate is that of a regulatory agency must be transformed into a developmental body making it the spearhead in the deployment of the coco levy fund.

    Finally, those coco levy funded enterprises like UCPB, the CIIF, Cocochem, the insurance companies and others must be privatized. The proceeds from the sale of the assets can go to a trust fund to augment the resources already deployed by government which will never be enough.

    This is not a pipedream—this approach is already being implemented by our neighbors like Malaysia whose successful development of their palm oil industry through the FELDA and FELCRA systems should provide this country with a useful template.


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    1. The coconut farmers themselves have been badly affected by Yolanda. They need help and it takes years before they will be able to recover.

    2. Hoping that funds will be allocated to put new laboratory equipment for the research of the coconut industry from soil analysis,fertilization and pest control,tissue culture and product developments.
      The National coco research center should be well equipped.