The tragedy of the coconut levy recovery

There are two claimants to the coconut levy shares (San Miguel Corp.’s shares). The coconut farmers, through the government, and Eduardo Cojuangco Jr. (ECJ).

The Supreme Court has spoken: The shares are “owned by the government in trust for the coconut farmers.” Clearly, the ruling speaks of partnership between the government and the coconut farmers.

The 753 million shares are now worth P75 billion, the long-awaited funding that farmers hope will help ease their daily struggles.

Also, the ruling includes assets such as the United Coconut Planters Bank (UCPB), the six Coconut Industry Investment Fund Oil Mills Group and the CIIF Holding Co., among others.

But the Supreme Court has also spoken to the other claimant: It gifted ECJ 494,881,157 shares worth P58.3 billion (P118 per share at time of the Court ruling). The Court ruled that ECJ shares are not ill-gotten.

However, the coconut farmers claimed that ECJ used the levy funds to acquire the shares through loans and advances from UCPB and CIIF in violation of fiduciary rules.

With the Court’s decision, SMC must be extremely happy.

Yet, the Court’s ruling declaring the funds in trust for the benefit of the farmers is now in limbo. On June 30, 2015, the Court issued a temporary restraining order not to proceed with the implementation of then-President Benigno Aquino III’s two executive orders regarding the privatization (EO 179) and reconveyance (EO 180) of the coconut levy funds.

After three years of inaction, coconut levy bills are back on the legislative agenda — House Bill No. 5745 and Senate Bill No. 1233.

But these two bills do not reflect the sentiment of small coconut farmers. At the core is negligence to make these assets productive enough, such that they could change farmers’ relations of production within and outside the farm, the supposed locus of development intervention. While the bills speak of farm productivity, and contain provisions worth pursuing like social protection, these proposed measures can be implemented even without the levy funds, since these are state obligations.

It now appears that the government is utilizing the levy funds and assets as a substitute to the state’s failure to provide support to coconut farmers and farm workers.

The congressional bills’ aim to uncouple the funds from the assets (physical assets) is quite problematic: utilizing the funds but privatizing the assets? The fund is a condition, a sine qua non toward the utilization of the assets, and vice versa.

This is because the Court did not make any fine distinction between the two. It simply said to utilize the assets for the coconut farmers’ benefit. Separating the two will make the proposed measures a half-baked development and more like an
ordinary countryside development fund program of the legislators.

It is important that the assets address what has long been ailing coconut farmers. For example, the multitiered trading marketing scheme has plagued the coconut industry sector for more than a decade, not to mention the nonimplementation of agrarian reform in coconut lands.

The proposed privatization of coconut levy assets will only further marginalize small coconut farmers. These productive assets are key to increasing farm incomes and productivity, because farmers will then have direct access to the assets, thus reducing interaction with the traders. This will help transform farmers from price takers to price makers.

Also, subject to privatization, UCPB can serve as primary source of socialized credit support to farmers by having it converted into an agricultural bank. Its mandate is to provide a permanent solution to credit problems of coconut farmers. Credit is sorely lacking for practically all small agricultural producers. They need direct access to banks, not universal banking where poor farmers have difficulty complying with unnecessary requirements.

There is no sense in waging costly fights to recover these public assets, only to be privatized and then reverted to industry players that took advantage of the levy assets in the first place. There is no doubt these assets are crucial in achieving social justice for poor coconut farmers. Congress should reverse its course.

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Omi C. Royandoyan is executive director of Centro Saka and founding chair of Alyansa Agrikultura.