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Transcript of In Search of Alternative Coconut Development for Communties
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INSEARCH OF ALTERNATIVE COCONUT DEVELOPMENT FOR COMMUNITIESFOR THE EVENTUAL UTILIZATION OF THE COCONUT LEVY FUNDS
A discussion paper for the 2nd National Coconut Farmers Conference
Joey Faustino, Executive Director, COIR, Inc.
December 2013
Part I.COCO CONFERENCE 1 in a Nutshell: A PROLOGUEIn the Discussion Paper for the 1
stNational Coconut Farmers Conference
1held in 09
November 2012, the national coconut statistics clearly confirmed that the current state
of the industry may not at all be appropriately called a coconut industryit had merely
been a copra industry, principally for crude coconut oil processing. Crude coconut oil
(CNO) is a main export commodity of the country for centuries. The industry was
designed as such with the other high-value by-products serving only as secondary. The
copra industry had also proven to be generally dependent on the international market
from which local and multinational corporations had greatly profited fromto the
detriment of the copra producers, the millions of small coconut farmers and farm
workers of the country.
While the copra industry is said to be the
leading agricultural dollar earner for the
country, it has, ironically, caused the
coconut farmers and their communities to
slide continuingly into deeper poverty
throughout decades. And while government
recognizes that, in fact, the coconut
farmers are poorest among the poor farmers in the country, it had miserably failed to
apply a lasting solution to the age-old poverty problem. So-called band-aid solutions
have been in governments menu, administration after administrationreplanting,
1A Small Farmer-Centered Approach to Sustainable Coconut Industry Development, Joey Faustino,
Executive Director, Coconut Industry Reform (COIR) Movement, Inc.
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rehabilitation, fertilization, GMAs corn distribution program to the poorest provinces,
and the recent conditional cash transfer for the poor.
None among those contained in the past menu of programs addresses fundamental
perennial problems of the coconut farming communities and the industry. These
problems were, by choice, seen only from a limited perspective. In the Coconut Summit
of 2010, Dr. Cielito Habito cited three assertions that had flawed the growth of
Philippine Agriculture and the industry:
1. Success in the sector is not measuredin terms of production levels, but in
farmers income and welfare;
2. Farmers will not invest in improvedproductivity for as long as they
receive a meager share of their products
value; and,
3. Local monopsonies have for toolong been a persistent feature ofthe rural economy, and
contribute to non-inclusive
growth.
The 2010 Summit was held under the
watch of, then, newly appointed DA
Secretary Proceso Alcala with PCA still in the hands of the previous ArroyoAdministration appointee. But even with a change of hands in PCA the situation had
remained the same. It clearly appears that the current administration had not taken
heed of such logical advises and simply continued to replicate earlier passing
interventionsas is, where is!
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By October 5, 2012 the Coconut Industry
Investment Fund preferred shares2in
San Miguel Corporation was redeemed,
as offered by Eduardo Cojuangco Jr. The
redemption of said shares raked in over
Php20 billion gains for SMC. SMC paid
the amount of Php 71 billion. The
principal amount of P56.5 billion was
taken to the National Treasury while the
rest (over P14 billion) was deposited to the United Coconut Planters Bank. Government
offered no explanation for splitting depositories. What is obvious is that the principal
was taken to the National Treasury and the dividends handed to UCPB implying a
difference in treatment between the two.
As if in perfect synchronicity, the Supreme Court issued a final decision on the case of
the CIIF-SMC shares earlierdated September 4, 2012 but released September 27in
time for the October 5 redemption of the said shares. This decision declared final theearlier Sandiganbayan pronouncements that: the CIIF Oil Mills, the 14 Holding
Companies and the CIIF-SMC shares are public, owned by government in trust for all the
coconut farmers. The decision went on to say that the funds may be used only for the
benefit of all coconut farmers and for the development of the coconut industry.The
Entry of Judgment, however, has yet to be served.
2The sequestered CIIF-SMC shares were originally common shares which were converted to preferred
shares in 2009 with an offer of redemption by Eduardo Cojuangco Jr. under a guaranteed value of Php75
per share after three years. The Philippine Commission on Good Government (PCGG) under the Gloria
Macapagal-Arroyo administration, chaired by Camilo Sabio, fostered the deal and asked permission from
the Supreme Court. With a vote of 8 justices, a decision issued on September 17, 2009 by the Supreme
Court, not only permitted, but even ordered the PCGG to convert the common shares to preferred shares.
The conversion took out government from the board of SMC leaving everything under Cojuangcos
leadership, including the other sequestered block of shares (20%) which were named to his dummy
companies. Consequently, government lost over Php20 billion (common vs. preferred value) upon
redemption to the advantage of SMC. Parallel to these events, Chief Justice Reynato Puno, who was one
of the 8 justices, retired on May 2010 and became Independent Director of SMC by January 2011.
23 September 2012
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Since then a scramble for the use of the monies by various government agencies
ensued. Under the guidance of the Presidential Task Force on Coco Levy, created May
2011, various sitting agencies (PMS, PCGG, DAR, NAPC, DA, PCA, DBM & DOF) discussed
the drafting of an executive order to govern the use of the moniesthis was practically
being drafted even before any determination of the funds utilization. The Philippine
Coconut Authority and the National Anti-Poverty Commission both crafted their own
roadmaps for development: one for the industry and another for poverty reduction in
the coconut farming sector.
Both roadmaps had been found
to lack exhaustive discussion
with the coconut farmer
groups. The programs
presented in both roadmaps
were considerable coconut
programs that have been
traditionally considered under
General Appropriations butappeared inappropriate for the
application of coco levy fundsa special fund in trust for the benefit of the coconut
farmers and the industry. Moreover, the presence of two separate roadmaps for the
industry and the farmers was alarming. Definitely, such a perspective had failed to
consider that the development of the coconut farming communities ought not to be
separate and distinct to achieve a sustainable coconut industry.
The Cojuangco-controlled United Coconut Planters BankCoconut Industry Investment
Fund Group of Companies3 immediately joined the fray. UCPB and Cocolife sounded off
3President Aquinos choice of appointees to key positions in the UCPB-CIIF Group of Companies are either
close associates or supportive of his uncle, Eduardo Cojuangco Jr., except for former Sen. Wigberto
Tanada who was appointed as Chair of the Oil Mills Group.
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to claim Php 7.5 billion each for investment contributions made in the CIIF-SMC shares
care of PCGG Chair Andy Butista. (Does this explain the split in depository?) Even the
CIIF Oil Mills forwarded a claim of more than P2 billion
from the said funds. Reports have it that the
Department of Finance backed the idea of re-financing
the coco levy funded companiesthe same
companies used by the Cojuangco clique to dupe the
coconut farmers. And to deceive the public of a
popular farmer backing, the Cojuango Group staged
a conference with the Cocofed on top, supported by
the Pambansang Koalisyon ng mga Magsasaka at
Manggagawa sa Niyugan (PKSMMN) and the Philippine
Association of Small Coconut Farmers Organizations
(PASCFO)4to lay claim on the levy funds.
It was primarily these alarming considerations that pushed the Coconut Industry Reform
(COIR) Movement to exhaust efforts to hold the 1st
National Coconut Farmers
Conference in November 2012 in cooperation with the Department of Agriculture.There was a great need to have an alternative forum where the issue of the coconut
levy and industry development may be more sanely discussed.
After inputs, open fora and serious discussions / workshops on the current conditions,
including that of the recovered coco levies, the 1st
Conference supported 2 basic
programs for inclusion and integration to the coconut industry development roadmap:
4The PKSMMN (Efren Villasenor) and the PASCFO (Charles Avila) all ran for Partylist under Cocofed in the
2012 elections but was disqualified by COMELEC. The Supreme Court upheld the disqualification.
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The Bukod-Kopra Program
Bukod-Kopra is a strategy to utilize other resources in the coconut farms. While
in the state of the copra-based
industry there are still several
options that can be taken to
somehow effect increased
incomes or improve lives of the
poor coconut farmers, farm
workers and their communities
particularly the optimization of the
use of the coconuts and the coco
lands, whichever is applicable.
These options may do well to
serve during a transition stage
from the copra-based industry to
the new fresh (fresco) coconut
industry.
The FRESCO Program
The new fresh coconut (FRESCO)
industry is essentially non-copra-
based. The movers of the fresco
industry had proven that copra production utilizes only 25% of the real value ofcoconuts. Fresco is a method where fresh mature coconut serves as raw material
for a long chain of interlinked (integrated) processing resulting to various stage-
by-stage products and by-products capable of being economically feasible in
smaller village-level scales. The products are food-grade and clean as
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differentiated from the traditional copra-making. These products, mostly food
and oil, would not have to depend on the international oil market prices for
farm-level value. In fact, even the local communities where processing or semi-
processing facilities are positioned can partake of benefits and consume the
healthy food products themselves. Most importantly, the new coconut industry
must be made accessible to the farming communities which they can call their
own.
For consideration of the Aquino Administration, the Conference posed the following
resolutions and recommendations, addressed to Sec. Proceso Alcala:5
(1) Protection of the coconut levy funds shall be ensured by declaring it a COCONUT
FARMERS TRUST FUND. Pending legislation, the President may issue an Executive
Order to carry on the same purposes. But to allow adequate protection of the funds
for the coconut farmers and the industry, the President can certify HB No. 5070 / SB
No. 2978 as urgent. To acquire coconut farmers' confidence, it is highly recommended
that Oscar Santos and Wigberto Tanada be appointed members of the Trust Fund.
(2) Preservation of the coconut levy funds for continuing support to poor coconut
farmers programs and development of the industry shall be made by managing them
as perpetual funds, utilizing only annual interests / dividends for the programs and
related spending.
(3) Programs funded by coco levies shall be special programs (not mere extension
programs of government) with oversight of a special body specifically tasked for the
various purposes covered (management, utilization, monitoring and feedback,
recovery of other coco levy assets)with adequate (majority) representation by the
5The Conference resolutions were formally forwarded by the Coconut Industry Reform Movement to
Secretary Proceso Alcala in a letter received by the DA-OSEC on 14 November 2012. (Refer to ANNEXES
Part 1).
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sector.
(4) Massive information dissemination on the true state of the coconut industry and
promotion of the various potentials of the coconut fresco products thru tri-media shall
be launched by government in partnership with civil society organizations, especially
for the understanding of the farmer-producers and their communities. Capability-
building seminars and trainings to couple information dissemination.
(5) Programs funded by coconut levies shall be a product of continuing consultations
with the coconut farming sector and the participating local communities thru local
mechanisms such as the Local Coconut Industry Development Councils and the like.
(6) Village-level integration of production thru processing of the coconut products
shall be a primary agenda with the use of coco levy funds, to include optimization of
the farms thru multi-cropping and /or livestock raising.
(7) Transparency on utilization of the coconut levies shall be ensured and reported to
the publics thru tri-media and the internet together with offsite-onsite third-partymonitoring and feedback mechanisms from the beneficiaries.
(8) Continuing research and market studies for products of the new fresco coconut
industry shall be conducted for dissemination to the participating communities.
(9) Recovery of other portions of the coco levies shall be vigorously pursued on behalf
of the farmers and the industry.
(10) Adequate coconut farmers representation in the coconut levy funded companies
shall be made to drive the companies into fulfilling its original mandate while under
governments care and control.
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(11) A declaration of policy made on the need to fast-track agrarian reform in coconut
lands in line with the development of the coconut industry.
Other recommendations that required further studies were put on record such as the
coconut registry and social security for coconut farmers.
Secretary Alcala, during the
conference, responded on
the positive to carry the
position of managing the
recovered coco levies as a
perpetual trust fund and
that the funds should
benefit the coconut farming
communities. He further
asked COIR to immediately
help out his team in crafting a presentation, narrative & PowerPoint, of programsspecifically
village-level processingfor the President and the Presidential Task Force on the Coco Levy.
Part II.COCO TRENDS & REVIEW (November 2012 - November 2013)
The prices of copra had stayed close to
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years, coconut oil prices in the international market surged enormously pegging copra
prices at Php 40-50 per kilo. The condition renewed the interest of the farmers on the
crop but production had stayed low. And as in any commodity, such a trend did not take
long to normalize as copra production increased and things were back just as they were
for the farmers. The coco farmers would not even notice that increased prices of raw
material copra had also increased prices of all finished products using coconut oil
products which they will never be able to afford as long as they produce and sell only
copra. Even the CIIF Oil Mills Group and oleochemical manufacturers, at the point when
prices of copra became too high, started using the alternative palm oil of Malaysia and
Indonesia.
A COIR countdown showed a total of 22 provinces that had established Local Coconut
Industry Development Councils (LCIDCs)6at the provincial level. Davao Oriental,
Compostela Valley, Quezon and Camarines Norte and Sur, COIR program areas, account
for a total of 29 municipal-level and 293 barangay-level LCIDCs. Not all of the LCIDCs,
however, have been actively functioning.
COIR TARGET ACHIEVED UNPLANNED
20
Municipal-Based LCIDCs
120
Barangay-Based LCIDCs
29
Municipal-Based LCIDCs
293
Barangay-Based LCIDCs
22
Province-Based LCIDCs
Provincial-level LCIDCs
Luzon Visayas Mindanao
COIR Project Areas
Quezon Davao Oriental
Camarines Norte
PCA-COIR Project-initiated7
Isabela
Catanduanes
Mindoro Occidental
Ilocos Norte
Leyte
Catarman
Siquihor
Bohol
Tawi-Tawi
6Local Coconut Industry Development Councils are local sectoral mechanisms under the Local
Development Councils to involve the coco farmers and the communities in planning and implementing
development initiatives for coconut industry development. The LCIDC Concept originated from studies
and consultations by the Coconut Industry Reform (COIR) Movement.7The Project Report on LCIDC Building through the PCA remains unavailable more than a year after
implementation. The only source of documentation for the said project is PCA Director Rafael Sarucam
(Refer to ANNEXES Part 2: Ka Raffy and LCIDC Building).
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Camarines Sur
Mindoro Oriental
La Union
Albay
Palawan
Pangasinan
SorsogonAurora
Marinduque
Negros Oriental
15 5 2
Under COIRs watch thereare 3 communities, 2 in Davao Oriental and 1 in Camarines
Norte, which pursued the Bukod-Kopraand FRESCOconcepts:
1. The ARSK in Brgy. Nangan, Gov. Generoso
Ms. Conchita Silor-Masin also known as Nanay Ching chairs theAgraryong
Repormang Samahan ng mga Kababaihan (ARSK)8. She attended the 1
stNational
Conference. Nanay Ching and the Association of mothers all aspire for the
development of the 65-hectare coco land awarded them by CARP. There was a
time when COIR supported the ARSKs copra trading endeavor with a small grant
from Bread for the World, Germany. But that
effort hardly made any impact to the
beneficiaries.
After attending a training organized by COIR,
where Mr. Jun Castillo was resource person,
Nanay Ching taught the ARSK the production of
the coconut water concentrate, an oyster sauce-like
gourmet sauce. With 120 trees per hectare and quite agood yield of 60 nuts per tree (due to organic vegetable
production), the association could muster 156,000 liters
8The ARSK is composed of 120 women farmers in Barangay Nangan, Governor Generoso, davao Oriental.
(Refer to ANNEXES Part 2: The Bukod-Kopra Women of Governor Generoso, Davao Oriental)
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The inventor inspecting ARSK farm.
of mature coconut water per year or 7,800 liters of coconut water concentrate.
Having this in mind, the women farmers started collecting coconut water from
copra-making, cooking and selling the sauce (200 pesos/liter)in their neighboring
communities. The product eventually gained popularity in and outside Barangay
Nangan, Governor Generoso. Today one could hardly find available stocks of the
sauce in the ARSK farm since consumers order as far as Davao City.
Apart from the sauce, the Association had also pioneered producing an energy
drink from the mature coco water in the Barangay. The production had already
been partly supported by the local government unit, the Mayors Office.
Employees of the municipal office have ordered the pasteurized energy drink for
10 Pesos/ 250 ml. So far the feedback had been positive. The consumers had
found the drink to be hydrating and also helpful to those with diabetes. For
ARSK, value addition to the coconuts is
not simply limited to increased earnings
of the women farmers, but that they also
contribute to the development of the
coconut industry as well by introducingcommunity-based products which is in
accordance with their own needs and
resources. Today some consumers
deliver mature coconut water to Nanay
Ching in exchange for the sauce or pasteurized energy drink.
Interestingly, the ARSK had embraced the FRESCO concept and had realized howthe copra industry had kept them poor through time. Through a linkage with the
COIR networks, they are now tying up with Sarlo Gentapan, the inventor of coco
biolubricants9, to gain more value-addition to their coconuts. COIR is helping out
9Refer to Annexes Part 6: Coconut Biolubricant by Sarlo Gentapan
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in locating direct markets for the biolube through Corporate Social Responsibility
programs of companies with social passion and environmental concern.
2. The Municipality of San Isidro
The municipality of San Isidro is strategically located at
the center of the five municipalities of District 2 in
Davao Oriental. It also houses the soon-to-be world-
renowned Mount Hamiguitanthe bonzai mountain.
In previous years Local Coconut Industry Development
Councils (LCIDCs) were established in all of San Isidros 16 barangays. Recently,
under the leadership of Mayor Tina Yu, the municipality created its municipal-
level LCIDC. From hence on the municipal leadership had prioritized coconut
development in the area. Combining the opportunities to come via the opening
of UNESCO of Mt. Hamiguitan and surveying its biggest agricultural asset,
coconuts, the municipality ventured to craft a clear direction for its coconut
farmers and the industryapplying a concept of COCO-TOURISM. Simply put,the Mayor believes that value-addition to coconuts can be organized for the
small farmers to benefit from, especially with the expected influx of tourists Mt.
Hamiguitan will bring. To start up the concept, the municipality is now planning
to set up two FRESCA stations: one at the entrance to the municipality and
another at the foot of Mt. Hamiguitan. The FRESCA stations shall produce Fresh
Coconut Oil (FCO) and the Coconut Milkflour for use in the municipality. The
mature coconut water shall be used for concentrate to produce the gourmetsauce and healthy
energy drinks
combined with
Mt. Hamiguitans
The Mayor meeting with the
Barangay LCIDCs.
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spring water. The FCO may also be utilized to produce essential oils blended with
the mountains special herbs.
3. MAGSACA in Labo, Camarines Norte.
The Magsasaka at Manggagawa sa Niyugan ng Camarines Norte (MAGSACA)is
a local peoples organization (PO) affiliated with the Nagkakaisang Ugnayan ng
mga Maliliit na Magsasaka at Manggagawa sa Niyugan (NIUGAN), a national
coconut farmers organization.The local PO initiated the creation of the Local
Coconut Industry Development Council (LCIDC) in Labo, Camarines Norte to stir
up discussions on coconut community development. In the following years some
28/52 barangays followed and organized their own LCIDCs. The MAGSACAChair,
Ka Raffy Sarucam also became chair of the Labo Coconut Industry Development
Council and, later, a member of the Philippine Coconut Authority Governing
Board. Since then several trainings on alternative uses for coconuts have been
conducted in the municipality via the LCIDCs.
The 28 participating barangay LCIDCs and the Labo Coconut IndustryDevelopment Council agreed on the following idea: Walang lalabas na niyog sa
Labo. The LCIDCs aspire to process the raw material, coconuts, in the area and
not sell them as copra or whole nut. Copra and whole nuts usually go all the way
to Quezon province for processing.
Thus the LCIDCs are now engaging
with the newly elected local
government officials andparticipating in the Local
Development Councils to craft a
short-medium-long term coconut
development plan for the municipality of Labo. The Labo LCIDCs are targeting to
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set up FRESCA stations in two areas: the Poblacion, the center of business, and in
Talobatib, a hub that leads to other municipalities in the Tagalog-speaking
District. Relevant in the choice of site is the visibility of the stations so that it may
be replicated in the whole of Labo.
Notable during the period, too, was the devastating effect of Typhoon Pablo (December
2012) in the biggest coconut producing region of Davao. Never before hit by typhoons,
the region was not just ready for a super typhoon. The provinces of Compostela Valley
and Davao Oriental were hit the most felling houses and trees on its path. Hundreds
perished and thousands were evacuated to safer grounds. After the storm there were
few houses to go back to with no crops left for foodincluding coconuts. The
Department of Agriculture estimated losses on coconuts to reach Php 8 billion. The
Davao Oriental Provincial Coconut Industry Development Council estimated at least 2
million coconut trees wiped out in the three municipalities of Boston, Cateel and
Banganga. More importantly, the major source of income for the majority in the
communities affected was copra. The countrys other coconut producing regions, often
hit by typhoons before, saw coconut trees weathering out the storms in due time.
Coconut trees in Davao Oriental, in the 3 municipalities, were literally felled by TyphoonPablo. Such is a seeming trend in recent years in facing climate changestronger
typhoons hitting previously typhoon free zones.
And, indeed, Typhoon Yolanda (November 2013)
showed the world how a super typhoon of
category 5 can wreak havoc to the population
and the areas affected. Yolanda made landfall in
6 provinces and affected a total of 36 provinces,most in the Visayas and its coconut areas. Guian
in Eastern Samar, one of the few coconut-
forested areas10
, was completely devastated
10Coconut forest is a COIR-term for areas that go way beyond the PCA recommended spacing for planting
coconuts.
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along with Tacloban City. Death toll appears unparalleled and reports have yet to be
firmed up as to crop-damage. Existing video-documentation of the tragedy show only
coconut trees left standing in the affected areas. According to PCA, more than 208,000
hectares are planted with over 22 million trees in Leyte, providing a living for 122,000
families, or around 600,000 people. ABSCBN reports that ground reports and aerial
views of Leyte and nearby Samar Island tell the same story -- coconut trees either
toppled, snapped or sheared when Typhoon Haiyan scythed across the region on
November 8, packing winds of up to 315 kilometers (195 miles) per hour.
In a related coconut levy case, the Supreme Court issued yet another final decision on
the United Coconut Planters Bank case (July 9, 2013). The Court pronounced:
We, therefore, affirm, on this ground, that decision of the Sandiganbayan
nullifying the shares of stock transfer to
Cojuangco. Accordingly, the UCPB
shares of stock representing the 72.2-
percent fully paid shares subject of the
instant petition, with all dividends
declared, paid or issued upon thereon,
as well as any increments thereto
arising from, but not limited to, the
exercise of preemptive right, shall be
reconveyed to the government of the
Republic of the Philippines, which as we previously clarified, shall be used only
for the benefit of all coconut farmers and for the development of the coconut
industry.
After the small coconut farmers won the case of the 24% SMC shares in September
2012, the recently declared decision by the Supreme Court on UCPB as government-
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owned is yet another triumph. Unfortunately, these great victories are yet to translate
favourable to its absolute beneficiaries the small coconut farmers. The primary
question still remains will the small coconut farmers actually benefit from the
recovered funds? The answer must be obvious as the coconut farmers, in principle,
should be direct participants in and beneficiaries of the development and growth of the
coconut industry. But is there anything at all to recover from the once-again Cojuangco-
controlled UCPB (thanks to PNOY)?
On the contrary, the UCPB-CIIF Group was fast
to jump the gun on the SC decisions not
favourable to Cojuangco. On December 2012
the UCPB with Cocolife filed a Motion for
Declaratory Relief11
in Court to ask for a take on
the recovered Php71 billion funds at Php7.5
billion each like taking a chunk of what had
been lost to give back to Cojuangco. Atty. Nilo
Divina, himself a part of the UCPB Board as
Presidential Appointee, acted as counsel for the said Motion. This Motion, obviously,had the blessings of PCGG Chair Andres Bautista (Divinas de facto partner -in-law) who
sits in both boards of UCPB and Cocolife. This refinancing strategy is reportedly
perceived by DoF and PCGG to be, again, sadly, for the benefit of the coconut farmers!
The CIIF Oil Mills Group had followed this lead as well claiming more than Php2 billion to
be used for its operational capitalization.
The more important note, however, should be that the decision on the UCPB case maybe utilized considerably in reopening the case of the 20% SMC block granted to
Cojuangco worth well over Php50 billion.12
The government, instead of leading the
farmers in efforts to recover the coco levies, tends to tail the initiative. Coconut farmer
11Refer to ANNEXES Part 3: Special Civil Action for Declaratory Relief
12Refer to ANNEXES Part 4: True worth of SCs Coco Bank ruling, Joey Faustino
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groups who filed a complaint13
against Associate Justice-Ponencia Bersamin in the Ethics
Committee are now contemplating on filing impeachment charges against the same for
misleading the Court in saying that there existed no law defining ill-gotten wealth.
Moreover, the government cannot even stand to collect the still unpaid 4% of the
original 31% CIIF-SMC shares, now worth another Php17.5 billion, from Cojuangco and
SMC. These shares have been ordered by the SC to revert to government since year
2000. The only word so far from Malacanang came from Presidential Spokesperson
Abigail Valte saying that the Palace has left the decision and management of the UCPB
to PCGG.
Previously in 2011, it was reported that a late 2010 US trip by
PNoy raked in some USD 15 million investments for the
countrys coconut industry. Leading the commitments were
Vita Coco, a New York based firm marketing natural and
fruit-flavored coconut water in tetra packs. The President
announced that buko juice (young coconut water) had a
big market in the United States. Like many others, he was not
informed that it was actually matured coconut water that was being used for the coco
drinks. Multinationals Coca Cola and Pepsi Cola followed suit by contracting desiccating
plants (Peter Paul, Franklin Baker) all over the country as a source of matured coconut
water for their health drinks.
While the investments undoubtedly may have added to the countrys economy, it did
not change, in any manner, the lives of the of poor coconut farmers. The investing multi-
national companies, which normally boast of serious Corporate Social Responsibility, are
13Refer to ANNEXES Part 3: Panawagang Imbestigahan ang Hindi Maitatangging Kamalian sa Desisyong
Pbor Kay Ginoong Eduardo Danding Coujuangco, Jr.
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now under scrutiny by Oxfam studies14
for product traceability.
Coming from this rather unclear understanding of the huge market for coconut water
from his US trip, President Aquino had again bragged in July 2012 about what he
thought was a big boost for the countrys coconut industry.In his State of the Nation
Address, the President announced a milestone in the coconut industry:
Tingnan rin po natin ang
industriya ng niyog at ang
cocowater na dati tinatapon
lang, ngayon,
napapakinabangan na ng
magsasaka. Noong 2009
483,862 liters ng cocowater
ang iniluwas natin. Umangat
po ito ng 1,807,583 liters noong 2010. Huwag po kayong magugulat:
noong 2011: 16,756,498 liters [applause]puwede ho bang ulitin
iyon?16,756,498 liters ng cocowater ang in-export ng Pilipinas.(Let us
take a look at the coconut industry, coconut water that was merelywasted before now benefits the coconut farmers. In 2009 we exported
483,862 liters of coconut water. It increased to 1.8 million liters in 2010.
Amazingly, in 2011, we exported 16.7 million liters can I repeat that
(very proudly)? the country exported 16.7 million liters of coconut
water.
Obviously the President was astonished by the sheer growth in volume of coconut waterexports during his term. But apart from not understanding that the poor coconut
14Coconut Water Supply Chains in the Philippines: Opportunities and Risks for Small Farmers, Oxfam / The
Coco Water Craze: How are Small Coconut Farmers Benefiting?, GROW and Oxfam.
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farmers did not benefit at all from such cocowater exports15
, he was also unaware that
the country produces 5 billion liters of coconut water per year (computed as 1/3 liter
per nut @ 15 billion nuts per year)the 16 million liters, therefore, is merely .0032 of
the products potential.
Apart from reporting on the coconut water
exports, the President presented what
intercropping of coffee can do to increase coconut
farmers income. NOTHING REGARDING THE MORE
IMPORTANT ISSUE ON THE COCO LEVY COULD BE
HEARD FROM THE PRESIDENT.
This deafening silence from the President on the
issue of the coco levies had even encouraged the
Danding Cojuangco camp to think of taking chunks
from what had already been recovered by government. After decades of benefit and
perks from the UCPB-CIIF Group of Companies, Cojuangco still wants to be paid for
bridging the deal between First United Bank and the PCA in 1975.
Looking back, Ka Oca Santos had approached the President at the time of his electoral
campaign to ask that efforts be made so that coconut farmers can benefit from the coco
leviesto continue what his mother had started when she was President. Ka Oca, then,
hardly got a reply. Last November, Ka Oca again wrote that PNoy has 2.5 years left to
speak out and give clear marching orders to all agencies concerned to do what is
just
16
15Suppliers of coconut water buy the whole nut from the farmers, the price of which is based on existing
copra prices as well. If copra is priced at Php 16 per kilo, the price of the whole nut shall be pegged at Php
4 per nut (more or less) as it takes 4 nuts to make a kilo of copra.16
Refer to ANNEXES Part 4: PNoy can still help coco farmers, Ka Oca Santos.
09 August 2013
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The Department of Agriculture (DA), as committed by Sec. Alcala during the 1st
National
Coco Farmers Conference, had carried the position of utilizing the coco levy funds
annual interest earnings to establish
village-level agro-industrial hubs.
The DA seeks to put value-addition for
farmers into the coconut communities
up to the level of equity ownership.
How it can be done might rest in the
shoulders of a newly created body by
the Executive under the DAa Project
Management / Coordinating Office.
Obviously there have been serious
doubts if the Philippine Coconut Authority can deliver the much-needed results given
the long experience and focus on mere copra and oil production.
But prior to application of the village-level hubs, the 1stConference can claim a small
contribution in influencing the roadmaps prepared by the PCA and the NAPC. The two
roadmaps have now been incorporated by NEDA to include the village level hubs. It is
now called the Integrated Coconut Industry and Poverty Reduction Roadmap17
. In one of
the meetings of the Free Trade Alliance (05 November 2013), COIR was invited as one of
the panel of reactors on the NEDA presentation of the so-called integrated roadmap.
COIR applied traffic light signals to comment on the said presentation: green for go,
yellow for caution, and red for stop. The following points were raised (to which NEDA
had no direct reply to except all points noted):
17Refer to ANNEXES Part 5.
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Caution The presentation does not look like a roadmap yet for its lacks basic
directions for the farmers and the industry to take and indicators for them
to follow. So far the contents presented appear to be merely a compilation
of information to consider in making the roadmap. The information,
however, mainly considers poverty among the millions of small coconut
farmersa positive indication for whom the roadmap should be designed
for.
Caution The presentation lined up 12 provinces with high poverty incidence. Not all
the cited 12 provinces, however, are lead coconut producing areas. This
implies that the poverty in the other 8 areas may have been caused by some
reason other than dependence on the copra industrymay be applicable
for another roadmap.
Caution While the inclusion of building Local Coconut Industry Development
CouncilsLCIDCs being a product of COIRs studies in the programs is
relevant, there appears no indication on its role in the roadmap. The lack
of details and processes for which the LCIDCs may be of great value tend to
undermine coco community participation.
STOP The roadmap found its importance with the recovery of a portion of the
coconut levies. The making of the roadmap was an offshoot of the
discussions in the Presidential Task Force on Coco Levy. But while this is so,
not necessarily all details in the resulting roadmap may be applied using the
levy funds. Fast-tracking agrarian reform, for example, should be an
important feature of the roadmapbut to be sourced out from the
appropriations for CARPer and not the levy. The Conditional Cash Transfer
(CCT) and related programs may be anti-poverty measures of government
that is sourced out from appropriations of the DSWDlevy should not be
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used in particular for the coco farmers as it will disadvantage them from the
other recipients. Being a special fund for the benefit of the farmers and the
industry would also not permit it to be used for disaster relief operations
just the same. But at one point in time, the anti-poverty roadmap made by
NAPC was targeting Php2 billion per year from the coco levy funds. It is
relieving to know from NEDA now that the roadmap is now perceived by
agencies to be sourced out from General Appropriations. I hope that is now
the official view so as to stop confusing and complicating matters for the
coconut farmers.
STOP Do not proceed without considering the policy environment surrounding
the industry. Policies concerning matters related to the industry need to be
directed as well in order to ensure that the roadmap may be
implemented meaningfully. The Agri-Fisheries Modernization Act does not
consider coconut lands to be prime agricultural lands. The PCA charter is
limited to copra and the oil industry (as well as other palm oils). The
Biofuels Act may not be applied verbatim to the coconut industryit was
more for sugar and ethanol. Trade policies would most especially affect the
industry.
GO The integration, especially with programs to build village-level processing
hubs for value-addition to coconuts, should be pursued with aggressiveness.
This is where the coconut levy funds can contribute greatly. There is actually
no sense in trying to develop an industry without considering the huge
implication to its major workforcethe coconut farmers and farm workers.
This is exactly why, in the first place, the copra and oil industry is into never-
ending perennial problems. The farmers and their communities need not be
limited to producing raw materials only.
GO Raising blends of coconut methyl ester into the diesel fuel would add to the
domestic use and demand for coconuts. This shall immediately lessen the
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degree of dependence on the international market price for crude coconut
oil (CNO) and add, somehow, to stabilization of copra prices. Impact to the
beneficial-owners of the coco levy, however, may be reached if
communities are empowered to process such value-addition to coconuts.
This holds true with oil, coco milk and flour processing among others.
The Department of Budget and Management, in a
memorandum18
, following the same information coming
from NAPC (12 provinces), had set guidelines for the
preparation of the 2014 budget. The memo was hinged on
a framework of rapid and inclusive growth and featured
a focus on the 12 coconut areas. The justification offered
was that a good portion of these areas have no access or
lacks the access to national highways, ergo poverty ridden.
And in order to promote growth, farm-to-market roads
should be builtUSING THE COCO LEVIES??? Subsequent
press releases by the DBM denied that coco levies will be tapped for such purpose on
technical groundsthat the entry of judgment had not yet been served so the
government may not use the funds yet. Worried that the idea would not really directly
benefit the coconut farmers, Ka Oca Santos wrote Malacanang to reiterate that the
PNoy Administration must see to it that meaningful programs are made as coconut
farmers are expecting to benefit from the coco levy funds. Press Secretary Sonny
Coloma responded in a letter19
assuring Ka Oca that the President already has, in his
possession, a copy of the integrated roadmap and that the DBM had issued a
memorandum stating that coco levy funds shall be used starting 2014to include
building of highways to bring about inclusive growth!!!
18National Budget Memorandum No. 118, April 25, 2013 (ANNEXES Part 5).
19Letter to Ka Oca Santos from the Presidential Communications Operations Office, July 09, 2013.
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The letter actually confirms the lack of appreciation the Administration has on the
special fund called the coconut levies which was defined by the Supreme Court to be
utilized only for the benefit of all the coconut farmers and the industry. Indeed the
farm-to-market roads might benefit the coconut farmers to either transport their
produce or allow investors to reach the areas. That, however, will not solve the
perennial problems including poverty of the coco farming communities as they will,
obviously, not have the vehicles to transport the still low value copra. Again, farm-to-
market roads should be a responsibility of government via General Appropriations and
not via contributions of the coconut farmers. The coco levy funds, limited as they are
have to be utilized for programs that will bring direct benefits to the coconut farmers.
Utilizing the coco levies for this purpose (F-M-R) takes inclusive growth a notch higher
to include contractors and, probably, a number of government officials.
The Agawang-Buko20
is expected to get more intense as the possibility of billions of
funds is nearing release. As the saying goes, there are more guerilla fighters after the
war than when it was being fought.
The militant left is campaigning to CLAIM21
the coco levy funds in cash. The Secretary
General of the Kilusang Magbubukid ng Pilipinas had often been quoted in news dailies
to distrust in the Aquino Administration and convincing farmers to instead take the
money in cash (runs contrary to SC decision where public funds were converted to
private ownership). Anyway, this approach would get each coconut farmer a one-time
windfall of less than Php20,000hardly sustainable at all and will still not solve the
perennial problems of the farmers and the industry. Later on the KMP was saying that it
20Agawang-Buko is a local term for a traditional game in coconut producing provinces. The object of the
game is to steal (agawin) a greased young coconut (buko) from an opponent to gain points. The result is a
chaotic condition where all competitors try to get their hands on the greased nut for themselves.21
Coco Levy Fund Ibalik sa Amin Movement (CLAIM) is a Kilusang Magbubukid ng Pilipinas-led
movement.
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would want the farmers to benefit thru a social pension. Definitely, the left would not
want the funds to be in the hands of government in perpetuity until such time, maybe,
that they control government. The militant left, therefore, needs further study on the
matter to be true to the farmers own benefit instead of merely issuing varying political
statements thru media.
Other parties who are more in the social arena had formulated / recommended
measures for consideration of either the Legislative or the Executive. There are now 4
versions of a draft fiat being lobbied to govern the recovered coconut levies:
1. DRAFT E.O.: PROVIDING THE GUIDELINES FOR THE MANAGEMENT OF THE COCOLEVY ASSETS, THE PROCEDURE OF RELEASES FROM THE COCO LEVY SPECIAL
FUND FOR THE BENEFIT OF THE COCONUT FARMERS AND THE COCONUT
INDUSTRY, THE CREATION OF INTER-AGENCY COORDINATING COMMITTEE ON
THE COCONUT INDUSTRY, AND FOR OTHER PURPOSES
Proponent: DoF / DBM / Presidential Task Force on Coco Levy
Features Remarks / Comments
A Statement of Policy prioritizing smallcoconut farmers.
The statement takes policy a nick
higher than simply all coconut
farmers to, presumably, address
poverty issues.
Identification of coco levy assets to be
composed of (but not limited to) the
UCPB-CIIF Group of Companies, the 14
Holding Companies, the 24% CIIF-SMC
shares and 4% SMC Treasury shares.
Non-reference to 20% ECJ shares in
SMC may go either way, pursue or give
up on efforts to recover the said
shares.
Privatization of all coco levy assets is
implied.
Further audit and studies need to be
made on the UCPB-CIIF Group of
Companies. A number of them may be
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useful for programs for the small
coconut farmers.
Procedure for fund releases from the
DBM is defined with final approval bythe President.
High probability of delay due to the
many concerns of the Office of the
President.
No limit or cap on amount and period,
whatsoever, was considered allowing
the use of the entire resources as long
as the specified program dictates.
Creation of a Multi-Sectoral
Coordinating Committee on the
Coconut Industry
Composition: DA, DBM, DTI, NAPC,
PCA, (2) coco farmers, (2) civil society.
The President shall appoint the Chair.
The 5:4 government and private
combination reflects 22% participation
of coconut farmer organizations
granting that the public consultations
are in order.
General responsibilities of theCoordinating Committee to be:
a) Formulate a comprehensive andintegrated poverty reduction
roadmap for the benefit of small
farmers and farm workers;
b) Develop a comprehensive andsustainable Coconut Industry
Development Roadmap for the
revitalization and development
of the Philippine Coconut
Industry;
c) Determine priority areas andcommunities for programs and
projects undertaken pursuant to
the above-mentioned
As in previous observations, the
Administration tends to move towards
a direction of a totally separate
program for the farmers and another
for the industry (a & b).
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roadmaps;
d) Conduct an annual review andevaluation of the projects;
and,
e) Perform all acts that may benecessaryAdditional Note: There is no reference made to earmark of define the coco levies
to form a Trust Fund rendering it less secure from AND FOR OTHER PURPOSES.
2. S.B. NO. 455. AN ACT PROVIDING FOR THE DISPOSITION OF THE COCONUT LEVYASSETS BY THE PRIVATIZATION AND MANAGEMENT OFFICE, CREATING THE
COCONUT INDUSTRY FUND COMMITTEE, AND PROVIDING FOR THE
MANAGEMENT, INVESTMENT, AND USE OF PROCEEDS FOR SUCH ASSETS FOR
AND IN BEHALF OF THE COCONUT FARMERS AND FOR OTHER PURPOSES
Proponent: Sen. Ralph Recto
Features Remarks / Comments
A Declaration of Policy to consolidate,
expedite and deliver the benefits due
to coconut farmers, especially the poor
and marginalized, to attain a balanced,
equitable, integrated sustainablegrowth and development of the
industry.
Makes a prioritization to the poor and
marginalized farmers.
An audit of the coco levy assets by COA
for privatization purposes.
Creation of a Coconut Industry Fund,
earmarked as Special Fund for the
benefit of the coconut farmers and the
development of the coconut industry;
to be utilized within a period of ten
(10) years.
The defined fund renders it more
secure to be used solely for its
purpose. More importantly, the
definition is in accordance with the SC
ruling, in its rightful order of priority:
1) Benefit of the coconut farmers;and,
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2) Development of the coconutindustry.
No rationalization of the 10-year
period was referred to even in the
Explanatory Note.
Creation of the Coconut Industry Fund
Committee
Composition: NEDA (Chair), DoF (Vice-
Chair), DoJ, DA, PCA, Private Sector
Banking, (3) accredited coconutfarmers organizations (appointed by
the President from nominations by
PCA/NAPC).
Renders a 5:1:3 ratio of participation
by government, private sector and
coconut farmers organizations (33%
participation in decision-making)
Committee Powers and functions:
Identify all portions of the Coco Levy
Assets for liquidation, privatization and
disposition x x x;
a) Formulate / amend x x xinvestment guidelines;
b) Make, approve any and alldisbursement from the Trust
Fund x x x;
c) Designate governmentdepository banks x x x to
administer the Trust Fund;
d) Appoint and procure fundmanagers x x x to manage
investments of the Trust Fund;e) Establish guidelines xxx for the
conservation, rehabilitation and
disposition of the Coco Levy
Assets by the Privatization
Management Office;
f) Approve x x x the sale or
The Powers and Function of the
Committee is heavier on the
management aspect of the assets. The
focus on management of the assets
may have led to identification of the
10-year period instead of perpetual
utilization.
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disposition of the assets x x x;
g) Approve xxx rehabilitation ofCoco Levy Assets pending
disposition by the Privatization
Management Office x x x;
h) Exercise xxx ownership withrespect to such assets x x x;
i) Approve xxx financialrequirements of the PMO in
relation to the Act x x x;
j) Appoint x x x and fixremuneration of personnel of
the Committee;
k)
Prepare the RationalizationPlan for the development of the
coconut industry x x x (among
others, coconut productivity
and investment programs,
replanting, industry
rehabilitation, scientific and
medical research, integrated
downstream processing, and
market promotion programs);
l)
Exercise such other functions xx x as necessary x x x.
The term of the Committee shall be
coterminous with the term of the Trust
Fund which shall be limited to a term
of ten (10) years. Upon lapse, all assets
and liabilities shall be assumed by the
National Government.
The term limits may work both ways,
protect the fund from political changes
or preserve the political status quo in
terms of coconut industry
development.
Reporting requirements of the
Committee is pegged on semi-annual
basis made to the President and
Congress.
Monitoring is not defined, most
especially not thru consultations with
the coconut farmers. Indicators for
reporting, therefore, may follow the
same flawed current measurements in
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growth in agriculture (increased
production, increase in volume of
exports, etc.)
Accreditation of Coconut Farmers
Organizations by PCA and NAPC.
PCA has been noted to put biases on
farmer organizations it has organized
in the past decades. First there was
Cocofed, then the SCFO. NAPC has its
own share of this. The effect is such
that not the entire coconut
communities are recognized in the
process.
3. DRAFT S.B.: AN ACT CREATING THE COCONUT INDUSTRY TRUST FUND,PROVIDING FOR ITS MANAGEMENT AND FOR OTHER PURPOSES
Proponent: Cocofed, Villasenor, Avila et al.
Features Remarks / Comments
A Declaration of Policy to accelerate
development and vertical integration
of the coconut industry through
medium and long-term financing
(capital investment) and social services
for coconut farmerswith assistance to
coconut farming organizations under a
Coconut Industry Trust Fund that shall
be administered by a PhilippineCoconut Farmers Foundation.
The statement appears to be ALL-IN
at the onset! Very definitive, indeed!
But for certain specific interests
mainly. Cocofed, the party indicted in
the coco levy cases, has not changed
any since martial law days and the 2
other organizations are riding on it
with blessings from Danding
Cojuangco.
Creation of a Coconut Industry Trust Like Cocofed in the dark days of martial
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Fund for the following purposes:
a) Finance developmental /operating expensesof
recognized coco farmer
organizations (scholarships,
nurseries, replanting);
b) Finance establishment andoperation of industries and
commercial enterprises and
research;
c) Finance social services forcoconut farmers (social
benefits); and,
d) Finance programs to hastenand advance industrializationand diversification.
rulewhen the coco farmers were
milked with the levypublic funds
were used to sustain private
organizations. Now the 2 others want
the same as well.
Creation of a Philippine Coconut
Farmers Foundation with principal
office in Makati City.
Composition: (15) Board of Trustees;
(8) from government provided PCA is
one; (7) from coconut industry sector
provided that COCOFED, PKSMMN, and
PASCFO are included.
Benefit is by exclusive membership
only and not the farmers as a class. The
more empoweredthe 3
organizations mentionedshall take
over the lesser ones. ESPECIALLY THAT
IT CONCENTRATES ALL POWERS TO
THE FOUNDATIONTHE ONLY
CONCERN REALLY IS TO PERPETUATE
THEMSELVES IN POWER BY SECURING
ACCESS AND CONTROL ON THE COCO
LEVY FUNDS. All hail the wannabe
Kings!
No justification / rationale offered for a
Makati office.
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Powers and functions of each officer of
the Foundation.
For SEC registration maybe???
Limitation and allocation of trust funds
to only net income subject to following
stipulations:
5% admin / operations
25% revert to trust fund
70% programs / projects
Proposes to use the trust funds in
perpetuity.
UCPB as Depository of fund. No justification offered either.
Cojuangco, Cocofed and PKSMMN,
however, are back in control of the
UCPB-CIIF Group of Companiesthe
only logic.
Ground survey of coconut farmers by
representatives of PCA, COCOFED,
PKSMMN, and PASCFO.
Still assured dominance by the 3
organizations.
Additional Note: This draftstarting with the Declaration of Policy until the end
was obviously proposed primarily for certain specific interests with consideration
of the coconut farmers, in general, only coming second.
4. DRAFT E.O.: DECLARING IT A NATIONAL POLICY TO EXPEDITE THE DELIVERY OFTHE BENEFITS DUE TO THE COCONUT FARMERS AND THE COCONUT INDUSTRY
UNDER VARIOUS PRESIDENTIAL DECREES BY CONSTITUTING THE COCONUT
FARMERS TRUST FUND COORDINATING COUNCIL FOR THE COORDINATION
THEREOF
Proponent: Muti-Sectoral Task Force on Coco Levy Recovery (MSTF)
Features Remarks / Comments
A Declaration of Policy to consolidate,
expedite and deliver the benefits due
to coconut farmers, especially the poor
and marginalized, to attain a balanced,
equitable, integrated sustainable
Makes a prioritization to the poor and
marginalized farmers.
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growth and development of the
industry.
Constitution of a Coconut Farmers
Trust Fund for the development of the
coconut industry and the ultimatebenefit of the small coconut farmers
and farm workers(assistance to
coconut farmers, increased
productivity, development of coconut-
based enterprises, promotion of anti-
poverty programs).
The Fund is declared firmly to be
primarily for the (marginalized) small
coconut farmers and farm workers in
line with the development of the
industry.
Capitalization of the Fund The CIIF-SMC block of shares as initial
capital (open to other recovered coco
levy assets, donations and grants) is
proposed to be perpetually
maintained.
Designation of Trustee Bank To be designated by the President as
allowed by applicable laws.
Creation of the Coconut Farmers Trust
Fund Coordinating Council toadminister and determine disposition /
utilization of earnings and incomes.
Composition: President (Chair), (4)
from government being DA, farmer
representative of the PCA Governing
Board, NEDA and ______, (2) Private
Banking Sector, (6) representatives
from Coconut Farmers Organizations.
Renders a 5:2:6 ratio of participation
by government, private sector and
coconut farmersorganizations (46%
participation in decision-making).
With the President as Chair, all
concerns shall be within the approval
of the President.
Members of the Council to be
appointed by the President with a 3-
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year term, maximum of 2 terms.
Functions and Responsibilities of the
Council:
a) Coordinate with PCA x x x;b) Coordinate and integrate,
plans, programs and projects of
the other implementing
agencies x x x;
c) Formulate an annual budget onthe Work and Financial Plan for
the utilization and allocation of
the funds x x x;
d)
Recommend to the Presidentthe investment policy of the
Trust Fund in consideration of
coconut industry development
studies and plans, specifically
establishing priorities for
preferential assistance to small
coconut farmers and farm
workers, to be reviewed
periodically for any revision
necessary.
e) Formulate the rules andregulations governing the
allocation, utilization and
disbursements x x x;
f) Formulate the ImplementingRules and Guidelines of the
Order;
g) Perform such other acts as maybe necessary x x x.
The Functions and Responsibilities is
that of oversight with direct
coordination and command on
planning and implementation of
programs and projectsall with the
Presidents approval.
Cooperation with the Council by any
instrumentality of government may be
called upon when needed.
With the diversity of programs needed
for the farmers and the industry, the
whole government bureaucracy may
be mobilized.
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The coconut farmers still have reason to celebrate. While real and actual benefits are
not tangible as of yet, the whole policy debate has advanced from basic legal doctrines
to actual development initiatives.
Since decades ago Danding Cojuango and cohorts were claiming that they contributed
to the coco levies and not the farmers who till the coconut lands. The term coconut
farmers contained in the Presidential Decrees then was interpreted to be the landlords
and big plantation owners who declared, but not necessarily paid, real estate taxes.
After the fall of the Dictatorship the debate focused on the basic nature and character
of the coco levies. The political nature of the case had caused the Courts to deal with
issues with extreme caution for decades. The Supreme Court finally concluded the
major cases half blinda portion public for the millions of coconut farmers and another,
private for a single individual.
The current political trend appears to be quite depressing still with Cojuangco and
cohorts back at the helm of the UCPB-CIIF Group, complements of the latter GMA
Administration. The PNoy Administration even strengthened Cojuangcos hold further.
The current PCGG appears no better than its most recent predecessor which converted
common shares of the CIIF-SMC to preferred shares to the advantage of Cojuangco in
SMC. Danding Cojuangco may be expected to slip out with the other block of 20% SMC
shares if efforts to recover are left to government alone today.
But in any case, the government now holds on to some Php71 billion in cash from the
recovered coco levies. The sheer amount involved dictates the importance of engaging
the government from policy to implementation of projects and programs for the
farmers, their communities and the coconut industry.
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Each of the policy proposals have its own merits and strengths; disadvantages and
weaknesses just the same. The Cocofed proposal, though, deserves the least attention
for simply being self-serving more than anything else. The positive points that present
high-probability impact on the coconut farmers in the discussions, so far, are the
following:
Positive Points Proponent/s
Creation of a Perpetual Trust Fund that will secure the
funds to serve its rightful intent and purpose.
MSTF, Cocofed
Creation of a Council / Committee composed of a mix of
government, private and farmer representatives to
manage, administer and coordinate execution of an
integrated plan.
DoF, MSTF, Sen.
Recto
The need for a rationalization plan or an integrated
roadmap one for both farmers and industry
development.
MSTF, Sen. Recto
The need to focus programs on marginalized small
coconut farmers and farm workers and their plightagainst poverty.
DoF, MSTF, Sen.
Recto
The participation of coconut farmers organizations in
various levels of concern: decision-making,
implementation and monitoring / evaluation.
DoF, MSTF, Sen.
Recto
Compliance of strict governance and accountability in
management and administration of the Trust Fund.
DoF, MSTF, Sen.
Recto
But all these are still on the table and whatever result comes out will, definitely, be a
choice of President Benigno Simeon Aquino III. So the battle is merely half-done and
the war is far from over. What is definite is that justice had not been served the
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millions of genuine coconut farmers as of yetnot after more than one year that
government had held on to the recovered levy funds .
Such a concern was also the subject of a
two-hour documentary on the coco levy
funds scamCOCORAKOT. Noted
Journalist, Cheche Lazaro, featured the
opposing claims by farmers, advocates for
coco levy recovery, and Marc Cojuangco,
the son of Danding. Ms. Lazaro
established the issue on the coco levies by
comparing it to the present reaction of
the public on the issue of pork-barrel and
the Php10 billion scam by Janet Napoles.
The coco levy scam happened decades
ago and is well worth over Php100 billion
todayyet left only to the farmers and a
few advocates handling.
True to form, Marc Cojuangco echoed that his father should be rewarded for taking care
of the coco levy monies for the farmers and investing it in profitable instruments such as
SMC shares. Cojuangco also noted that the real beneficiaries of the coco levy should be
the farmers that pay real estate taxes. He referred to the tillers and farm workersas
merely seasonal and, therefore, not entitled to direct benefits.
Ka Oca Santos contributed his wisdom to the documentary as based on his timeless
experience from the time the levy was collected (he was Batasan Pambansa Member) to
the time the funds were audited by government (he was PCA Chief), and as private
citizen-petitioner to the cases in the Sandiganbayan and the Supreme Court. Ka Oca
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cited that the erred decision of the Supreme Court on the 20% SMC shares in favor of
Cojuangcothe benefit of a single individual against that of millions of farmersshould
not be left to stay in the archives of the Judiciary for it will diminish an institution that
was supposedly founded on fairness, truth and justice.
Towards the end of the documentary, Ms. Lazaro presented contradicting positions
taken by various farmers groups and advocateson the handling and use of the
controversial coco levy funds. What was common among them, though, is that:
a) government should be watched with vigilance to ensure that benefits do reachthe small coconut farmers; and,
b) the coconut farms should be geared towards value chain addition in order toeffect meaningful changes in the poverty situation of the farmers and
ultimately improve the industry.
In sum, the overall condition presents no other more appropriate time to promote and
set up an alternative coconut development for communities who had suffered more
than long enough from the traditional copra industry. Admittedly it is government thatwould take on the biggest role in such a perspective, primarily with the use of the coco
levy funds. And for any government effort to be a success, the genuine participation of
the farmers and their communities is highly essential.
Part III. COCO DEVELOPMENT ALTERNATIVES FOR COMMUNITIESThe coconut levy funds, being declared as public funds, shall be the responsibility and
obligation of the government, especially the President, primarily to the small coconut
farmers and farm workers. In determining which path (tuwid na daan) to take,
appropriate guides (in the following order) are recommended:
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U tilizationConsult, study and determine meaningful utilization of the
funds to optimize direct impact to the beneficial ownersthe
coconut farmers. This direction may be reflected in the
integrated plan alongside priority areas.
M anagementBased on such studies and determination, the management of
the funds may be set for good governance purposes. Ergo,
investments & returns needed to implement the plan, securing
the funds in trust (Trust Fund) and its purpose by a fiat.
dministration
Transparency and accountability is of utmost importance in
administering the special funds. Programs and projects
implemented must be completely traceable and open for
changes if needed. Monitoring and evaluation, therefore,
should be an inherent element apart from modes of releases
and technical, often bureaucratic, requirements.
The participation of the coconut farmers in all three levels of concern is necessary to
achieve impact on the poor communities. All problems besetting the industry find its
way to the farms and the farmers / farm workers who compose 92% of the industrys
workforce. What plagues the industry plagues the farms and the farmers / farm
workers. Any solution, therefore, should be directed towards making impact on the
farms and the farmers / farm workers. The abovementioned guide aptly reflects where
the coconut levies should be directed to: UMAis a visayan term for farm. The coconut
levies should be directed to benefit the (UMAand the MAG-UUMA SA LUBI) farms and
the coco farmersthe coconut communities. This will ultimately spell sustainability of
the coconut industry.
Ergo, the discussions should really be about which programs / projects would benefit
the coconut communities most; and, how the programs / projects can be delivered to
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them judiciously. These should be programs / projects that contain the following
elements:
1. Direct community and/or local government participation in production andconsolidation;
2. Value chain-addition to coconuts (copra and non-copra, other uses) thruvillage-level processing / semi-processing and technology transfer
communities become more than mere raw material suppliers; and,
3. Joint business cooperation for equity sharing with the communitiesthemselves.
Through continuing consultations and studies, COIR had aided selected coco
communities to build on an OPTIONS MENUfor village-level coconut industry
development. The OPTIONS MENU is aimed at providing various choices of development
initiatives that may be
implemented at the
community level. The
impact expected out of
each may be projected
to aide in the
communities choice of
alternatives, whether
piecemeal or in
combination. The said
menu may be utilized
by barangays and
municipalities for localVillage-level Coconut Industry Development Menu
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development planning.
Coconut farms compose the base of the menu. From farm and pest management
concerns, the menu moves horizontally to raw materials from coconuts and intercrops,
and vertically to value-addition of each. This means that even in the choice of intercrops
value-addition to coconuts, the main crop, ought to be a consideration i.e. coffee and
cacao in combination with coconuts as finished productsnot just raw materials. At the
center is the main raw material, coconut meat, to which value is added vertically.
The menu provides a wide range of options for village-level consideration which the
communities can use in planning and feasibility study making. Government and other
donors can also utilize the menu to select a certain level of impact to be achieved in a
given area. It contains both general and specific integrated value-addition to coconut
farms under short and medium-term periods. And most importantly, local and domestic
markets have been considered for the main products more than that of export.
The menu was developed from a series of consultations and workshops with the LCIDCs
of Camarines Norte and Davao Oriental, starting with benchmarking coconut profiles ofbarangays. The main course of the menu, so called, is FRESCA and FRESCO.
Advocates of the New Coconut Industry contend that copra production for oil
processing takes out 75% of the real value of coconuts. Traditional copra-making throws
away the matured coco water as the interest is only drying the meat. The husk is
oftentimes wasted unless there is a buyer or decorticating plant nearby. The shell is
usually made into charcoal for value-addition. But under current traditional practices all
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other parts are taken for granted and largely wasted in order to produce the low-value
copra.
In the farm, it takes hard labor to harvest, gather, dehusk and separate the coconut
meat from the shell. Then it takes days to dry coconut meat in the tapahan or
underneath the sun so it can be used as input in the far-away big-scale mill (500-750
metric tons per day) for oil production. Farming communities are paid for the dried
meat (copra) by a chain of traders who transports it to the millsthis takes another set
of days. By the time the copra reaches the mills it would have lessened in volume or
accumulated moisture. The oil then, largely exported, is processed further for various
finished products (food, pharmaceuticals, biofuel and oleochemicals). Further
processing, however, basically entails chemical processes to take out infirmities from
the unclean copra input.
The other alternative to copra at present is selling whole nuts for use by desiccating
plants. Whole nut selling entails less labor cost for the farmers. The usual price offered
for the whole nut, however, is still based on the prevailing buying prices of copra (copra
price divided by four on the average). The desiccating plants are also big in scale(400,000-700,000 nuts per day) and far away from most of the source/supply areas. So
the traders role becomes crucial in bringing the whole nut supply to the plants.
Bottomline, the coco farmers and the communities take the smallest slice of the volatile
copra valuehigh when demand is greater than the volume of supply and, most often,
low as production and export volume increases. The whole low-technology and low-
value utilization set up had been in existence for centuries keeping millions of smallfarmers and farm workers in dire poverty. To effectively address the dire situation of the
marginalized coconut farmers and their communities, therefore, the following operative
terms should become prime concerns:
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VALUE CHAIN-ADDITION Vs. Raw Material Supplier
Processing / semi-
processing facilities
and technologies
required
VILLAGE-LEVEL / COMMUNITY-
BASEDVs. Large-scale
Workable units along
the production sites
within reach of the
farming communities
INTEGRATED PROCESSING Vs. Single Product-line
Value-chain for various
uses and markets
FARM OPTIMIZATION /
INTEGRATIONVs. Monocrop
Maximization of use of
land in consideration of
processing / semi-
processing facilities
EQUITY SHARING Vs. Investor-dependent
Stakes and ownership
by the communities
themselves
COMMUNITY/AREA-SPECIFIC Vs. General direction
To consider other
assets and conditions
prevailing in the area
FRESCAis a concept of village-level integrated DRY processing of fresh matured nuts at
the volume of 1,000-5,000 nuts per dayas differentiated from FRESCOswetprocessing.
The FRESCAHAN is likened to that of the Koprahansites but designed for efficiency
and value-chain addition. Fresh matured coconut is centralized and its parts separated
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for integrated use or processing. The fresh matured coconut is basically processed
immediately into its primary products, clean and edible Fresh Coco Oil and Milkflour.
The integrated design allows coconut water to be collected and processed into Coconut
Water Concentrate and Purified Coco Water. The Coco Water Concentrate (gourmet
sauce) may further be processed to make a health and energy drinkReconstituted
Coco Water as what Pepsi Cola, Cocoa Cola, Vita Coco and Lucio Tan companies sell.
Other products of the FRESCAHAN may come from the solid fuel (husks and shells) used
for burners i.e. charcoal, liquid smoke (natural pesticide) and coco ash (cleaning agent).
Apart from the fact that not a single part of the fresh matured coconut had been put to
waste, the resulting finished products accumulate value in every step. In fact, the
resulting products from FRESCA stations are even used for further value chain
processing and are marketable / consumable in the communities themselves. The
integrated value-chain addition also allows a genuine computation of the value of the
raw materialthe fresh matured coconut (husk, shell, meat and water)initially at
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Php 8-10 per kilo. With a designed capacity of 5,000 nuts per day, a Fresca station is
expected to mainly produce the following (conservatively computed at 1 kilo : 5 nuts)
per day:
600 kgs. Fresh Coco Oil 400 kgs. Milkflour 1,600 liters Coco Water (1/3 liter per nut) for concentrate and purified water Liquid smoke, coconut charcoal and ashup for actual testing
Moreover, such community enterprise concept of value-adding to existing assets
(coconuts) offers high probability of being able to expand by its own means either byduplication or simply by volume
capacity upscaling. Other nearby
communities may later be capacitated
to join in on the entire value-chain as
satellite semi-processing zones
(community grinder / dryer)all
depending on how the communities
can cooperate among themselves.
The prospects appear simply inviting.
The FRESCA station is but part and
parcel of a larger value-chain hub called
FRESCO stations. The FRESCO stations normally combine dry and wet processes to
produce higher value products from coconuts. The concept fits well with what the
coconut industry terms as downstreaming. In addition to the products of FRESCA, the
wet process essentially allows the separation of the coco milk and the coco flour. The
production of coconut skimmed milk yet leads to another set of value-chain at larger
UPSCALE
FRESCA
STATION
COMMUNITY
GRINDER /
DRYER
COMMUNITY
GRINDER /DRYER
COMMUNITY
GRINDER /
DRYER
COMMUNITYGRINDER /
DRYER
COMMUNITY
GRINDER /
DRYER
COMMUNITY
GRINDER /DRYER
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scales with wider variations when combined with other processed agricultural products
such as coffee and cacao.
FRESCO STATION(DRY & WET PROCESS)
UPSCALE
FRESCA
STATION
FRESH COCO OIL
COCOSKIMMED MILK
COCO FLOUR
VALUE-ADDEDMILKPRODUCTS
BREAD, PASTRIES, CAKES
VALUE-ADDED OILPRODUCTS
CENTRIFUGE
COCO MILK / CREAM
FROZEN SECTION
NEUTRACEUTICAL
OLEOCHEMICAL
Real-valued raw materials, job generation, value-chain addition and profit-sharing,
increasing local purchasing power and spurring local economies, increasing
communities health and financial sustainability are really what make up the New
Coconut Industry. Allowing the opportunities at hand to be taken only by the
traditionally big players / investors will change nothing and keep the coconut
communities poor foreverselling whole nuts that are based on prevailing copra prices.
Definitely, this is a primary area where the coconut levies
ought to be utilized.
Today there exist no reliable coconut farmer registry, much more the coconut farms.
Government through the PCA would have a list of farmer organizations and a masterlist
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of those who have been covered by life insurances under Cocolifesome of whom may
not even be farmers. Coconut statistics are really made through random sampling by the
Bureau of Agricultural Statistics. In many cases, even the local government units depend
on these centralized random statistics. The United Coconut Associations of the
Philippines gathers coconut statistics as well, presumably from government too, but
sells the information. The PCA website would also hardly contain detailed statistics, and
especially not any analysis, on the farmers and the industry that may be of great use for
development planning and market-matching. Ergo, it is difficult to find hard, actual and
reliable statistics on coconuts.
More importantly, the devastating experience of Tacloban, Leyte and Eastern Samar
(2013) would show how critical an advanced registry can be when all physical records
are destroyed after a disaster hits.
This realization gives way to the importance of having a coconut farmer registry with a
relational database that is stored in and accessible from a cloud. Such a program
exists but has not been tapped by government. The database, apart from registering
individual farmers, their lands, trees and nuts, also has the capacity to monitor volumesof production (raw or processed) and the farmers economic activities.The said program
would have more use if applied at the local communities with the help of the local
government units.
In view of the suggestions coming from some participants in the 1st
National Coconut
Farmers Conference,COIR took the initiative to meet with Officials of the Social
Security System. Like other farmers and agricultural workers, the small coco farmers and
farm workers would not have access to the SSS unless they are hired under big business
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companies. To widen its reach in the agri sector, the SSS accredited cooperatives as
collecting agents.22
Coconut communities are far and wide in 69 coconut producing provinces. A greater
number of coconut farmers, as of yet, have not formed or joined cooperatives. Under
these circumstances, with a low capacity to pay and/or collect, social security for the
farmers would have to be subsidized. SSS Officials computed social pensions for coconut
farmers to reach an e