Coconut farmers could get short end of LBP, UCPB merger
The principal thrust of the Coconut Farmers and Industry Trust Fund Act (Republic Act No. 11524) is to privatize assets acquired through coconut levies and consolidate proceeds in a trust fund to uplift the economic and social conditions of at least 3.5 million farmers, farmworkers and other stakeholders in the coconut industry.
The law created a committee, headed by the Department of Finance (DOF), to manage the fund. Day-to-day administration will be handled by the DOF-assigned trust fund manager and secretariat.
Aside from the initial P76 billion in cash available for the fund, it is estimated that the sale of the United Coconut Planters Bank (UCPB), the various oil mills, and other assets using the levy will infuse an additional P30-40 billion to the fund.
Last June 25, however, President Rodrigo Duterte issued Executive Order No. 142 approving the merger of UCPB and Land Bank of the Philippines (LBP).
Under the EO, the two banks, in consultation with the Governance Commission for Government-Owned and/or Controlled Corporations (GCG), shall determine the mode of merger and implement the same with the approval of relevant government agencies.
Since UCPB and LBP are technically under DOF supervision, it will be DOF that will effectively decide on the manner of merger.
There is a perceived conflict of interest here since the finance secretary, as LBP board chair, was expected to protect the interest of LBP more than that of UCPB. The terms of merger might be lopsided against UCPB. If this happens, coconut farmers’ share in UCPB assets will likewise be negatively affected.
As the implicit and indirect owners of UCPB, coconut farmers should be involved in the determination of the mode of merger of LBP and UCPB. At the very least, their views and sentiments should be heard and respected.
Genuine consultation will also prevent the possible perception in the future that UCPB was acquired in a fire sale. In the words of the secretary of finance, “we (the trust fund committee) must ensure that we perform our functions with transparency, accountability and prudence”.
EO No. 142 also does not mention how the value of UCPB’s assets will be ascertained. It merely states that the LBP shall acquire the outstanding preferred shares held by the Philippine Deposit Insurance Corporation (PDIC) in UCPB, taking into account recovery of the financial assistance given to UCPB by the PDIC (an agency attached to DOF and chaired by the secretary of finance).
Does this mean that UCPB will not be appraised on the basis of its current valuation? If so, this is grossly unfair to UCPB since it has prime real estate and many other tangible assets, whose values have increased substantially over the years, not to mention its goodwill and trade mark values.
Also, what happens to the numerous art works which UCPB owns and are currently in its possession? These paintings and other creations by great Filipino artists—from Fernando Amorsolo to Fernando Zobel—are now probably worth billions of pesos.
Will the DOF sell them to augment the trust fund established by RA 11524 for coconut farmers? If not, will coconut farmers be granted at least the consuelo de bobo of viewing these masterpieces? (Leonardo Montemayor is board chair of Federation of Free Farmers and former agriculture secretary)