Only way to ‘unlock’ coconut levy funds

An executive order that touches on the coconut levy has been drafted. It is dated April 7, 2014. Titled “Providing the Administrative Guidelines for the Utilization of the Coco Levy Assets,” its key sections propose the privatization of the coconut levy assets and the organization of a Multisectoral Consultative Committee for the Coconut Industry, with the Philippine Coconut Authority (PCA) as the implementing arm.

Indeed, its overall tone is the privatization of the assets— the physical assets. This is contrary to the original intent of the coco levy, which is to support the socioeconomic needs of the coconut farmers through the coco levy-funded corporations (e.g., the coconut oil mills of CIIF Oil Mills Group, Coco Chemicals) and to provide a permanent solution to the capital-credit problems of the coconut farmers (Presidential Decree No. 755).


Privatization will only deprive farmers of assets essential to building their capacity to create coconut-farm development programs. If coconut farmers can gain a decisive hold on these assets, their status as “price takers” can dramatically shift to “price makers.” Democratizing the ownership of CIIF-owned mills can better serve our objective to reduce poverty among coconut farmers.

Modernizing the coconut industry includes freeing farmers from cyclical debt and poverty. The government’s goal to reduce poverty in coconut farming communities will be compromised if farmers lose access to these assets because big traders will dominate the industry even if a shift to fresh or whole nut processing takes place.


If the intent is to provide a mechanism to use the coconut levy funds, the proposed executive order is in fact no longer necessary. The Department of Finance is of the opinion that under PD 1468 and PD 961, the PCA Governing Board is the sole authority to administer, manage and disburse the levy funds. This view is in accordance with the Supreme Court’s decision declaring that the power to allocate and disburse coco levy funds rests with the PCA. Thus, without legislative concurrence, the draft executive order will be illegal. The Supreme Court has made it clear: “(A)n executive order cannot repeal a presidential decree which has the same standing as a statute enacted by Congress.”

Since there is already the PCA “to administer, manage and disburse the levy funds,” it is thus clear that the draft executive order is aimed at privatizing coconut levy assets. But, on the other hand, to let the PCA handle and manage the use of the coconut levy funds is like asking Marcos crony Eduardo “Danding” Cojuangco and the Philippine Coconut Producers Federation (Cocofed) to administer, manage and disburse the coco levy funds, which are public funds.

The PCA is governed by Marcos decrees: PDs 1468, 961 and 232.  Section 2 of PD 1468 provides that all collections of the Coconut Consumers Stabilization Fund Levy shall be utilized by the PCA for its purposes. Since these presidential decrees have not yet been amended, they remain operative.

Under these decrees, Cocofed and Cojuangco have a direct role in the selection of the composition of the PCA Governing Board, which is composed of three members recommended by Cocofed, one member recommended by the United Coconut Association of the Philippines,  and one member recommended by the owner and operator of the hybrid coconut seed nut farm.

If signed, the draft executive order embodies what the alliance of coconut farmers feared 16 years ago: “Our worst fear has come. Those who perpetrated the systematic plunder of the coconut industry will again lord it over the industry.”

What is the alternative to this draft coco levy executive order?

Revive and certify as urgent former representative Erin Tañada’s bill: “An Act Establishing the Coconut Farmers’ Trust Fund to Provide Adequate Financial Protection to the Coconut Industry and Its Workers…. ” This bill simply states that the coconut levy funds are public funds and their use should be governed by the rules on special fund for special purpose that are not attached to or hampered by Marcos decrees and the finance department’s privatization scheme.


The bill expresses the sentiments and aspirations of the coconut farmers.

In addition, the bill clearly establishes that the trust fund is intended for the coconut farmers to be administered and managed by the Coconut Farmers Trust Fund Committee composed of 12 members with strong representation from coconut farmers. Unlike the PCA Governing Board, the president of the Philippines sits as chair of the committee, the very same committee that decides on the disposition, utilization and allocation of the funds and assets intended for special purposes. Unlike the proposed Trust Fund Committee, the PCA Governing Board can easily be influenced by politicians given that Congress dictates the annual budget of the PCA.

Moreover, the bill’s investment policy promotes a social contract that addresses the needs and demands of the farmers and farm workers. To wit: poverty alleviation and social equity; increase in the productivity of small coconut farmers; full-scale rehabilitation of the coconut industry and promotion of coconut-based farm systems; protection of small coconut farmers and farm workers from unfair competition; and medical/health and life insurance services for small coconut farmers and farm workers.

The best provision that the bill offers is that the trust fund shall be perpetually maintained and preserved. Only the income, interest, earnings, and monetary benefit realized by and accruing on the trust fund shall be used and disposed by the committee. Making the fund “perpetually maintained and preserved” is the only guarantee that the coconut farmers are assured of its safe and judicious use. This particular provision is absent in the draft executive order.

The DOF believes that the easiest way to unlock and utilize the coconut levy funds is through executive action since legislative enactment will take time: The draft executive order “is the best option in view of the critical need to address the current urgent development challenges confronting the coconut farmers and the industry.” But this was the same rationale used and capitalized in  EOs 312 and 313 issued by former President Joseph Estrada to hoodwink the coconut farmers and the public. EOs 312 and 313 were nullified by the Supreme Court.

The legislative track, under the present condition, is the only judicious and proper way to “unlock” the coco levy funds for the benefit of the coconut farmers. If President Aquino was able to use all his “magic” powers to mobilize both houses of Congress to remove Chief Justice Renato Corona, why can’t he do it again for the benefit of millions of poor coconut farmers and farm workers?

Omi C. Royandoyan is the executive director of Centro Saka Inc., and a member of the Alyansa Agrikultura.

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TAGS: coconut levy, Coconut levy funds, Commentary, Executive Order, Omi C. Royandoyan, opinion
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