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CO-SPONSORSHIP SPEECH
SEN. RALPH G. RECTO
09 March 2015
From the Farmers to the Farmers:
Tapping Coco Levy Funds for the Industry's
Renaissance
There are two recommended ways of
authorizing the management of coconut levy
assets.
First is via the executive route, where a
factotum who cannot probably distinguish a
palmera from a coconut tree will draft an order
for the Presidents consideration.
The other is through legislation, where a bill,
like copra, is processed under the sun, and in
this age of crowdsourcing, stakeholders can
participate in its writing, as had been done on
the bill at hand
Not only is the latter more consultative, its
product a republic act is also more durable.

So when it comes to managing coco levy funds,

we need a law that can withstand time and
shifting political winds, which we know can cut
down an executive fiat by a stroke of a pen, like
a typhoon does to a coconut tree.
I would like therefore to congratulate the
chairperson, Senator Cynthia The Better
Villar, for crafting an excellent piece of
legislation which, like coconut lambanog, distills
its many ingredients.
If this bill, which designs how an asset can be
preserved, validates anything else, aside from
her obviously pro-farmer heart, it is the
suspicion that she is actually the one
responsible for one mans reentry into that
Forbes list.
The husband gets the credit, but she raised the
cash.
So when she tells us that this is the way an
asset should be preserved, then we must take

heed.
If prudent stewardship of funds is the thrust of
this bill, then the best person who can tell us
how it is done is a lady from whom her
billionaire husband gets his weekly allowance.
Mr. President:
We live in a country under a canopy of coconut
trees.
68 out of 81 provinces, 2 out of three towns
grow coconut in some 3.5 million hectares
which are cultivated by 3.4 million farmers.
One hectare in every four is planted to
coconuts.
There are 34 coconut trees for every Filipino.
From that versatile tree we get a wide array of
products from the oil we use to fry our food,
the liquor that our alcohol-proof friends love to
drink, even the diesel which runs our cars is
blended with biodiesel.

We do not have oil rigs; we have coconut trees

instead.
From 2009 to 2011, we exported $1.6 billion of
coconut products annually. This should not
come as a surprise as we are the worlds
biggest exporter after Indonesia.
It is the fourth c among our foreign exchange
earners, after contract workers, call centers,
computer and communication parts.
Despite these, the coconut farmer remains
poor. NAPC says 9 in 10 live below poverty
line.
The irony of their penury is best captured by
this observation: Kung sino pa ang magniniyog
ay sya pang minsay hindi makabili ng kahit
isang kutsara ng mantika.
Not only are the coconut farmers always in
financial ICU, many coconut trees are also in
the throes of extinction. Many are withering,

shriveling and wilting.

About 44 million trees or one in seven are
past their productive age. As a result, yield per
tree has plummeted to 40 nuts a year from an
ideal 75 nuts.
The joke is that when rural health workers came
to lecture about birth control it was the trees
who listened - and complied - and not the
people.
So this bill comes at a critical time of the
Philippine coconut industry.
Yes, the monies it will seek to manage and
dispose is big, but it is not the cure-all solution,
certainly not some sort of a VCO which can
salve many ailments.
While they may have been freed at a
providential time, at best, however, coco levy
funds will just be a part of the resources needed
to boost this important industry.

It should not be a substitute for regular

appropriations.
It is not an excuse for the government to
abdicate on its duty to appropriate funds for an
industry from which it draws so much taxes.
And this bill enforces these principles.
It puts all the coco levy assets raised by virtue
of RA 6260, PD 276, PD 582, PD 1468 and PD
1842 into a trust fund called the Coconut
Farmers and Industry Trust Fund.
It puts a firewall between the Trust Fund and
the General Fund, which prevents its migration
to the latter.
It places the management of this fund under a
committee of nine men, chaired by the
Secretary of Agriculture, who will lead the
contingent of four government officials.
Completing the composition of the committee
are five representatives from the coconut
sector.

It calls for the drafting of Coconut Farmers and

Industry Development Plan by a broad coalition
of stakeholders.
It instructs the trust fund committee to use this
plan as guide in the utilization of trust fund
income.
It sets the negative list of programs and
projects which cannot be funded by either the
trust fund principal or income and this includes:
replanting, planting, fertilization, farm-to-market
roads, direct lending, all of which shall fall under
the ambit of regular appropriations.
It lays down a conservative fund management
approach by requiring that the trust fund shall
only be invested in government securities, that
only income from the latter can be used, and
that only 5 percent of the principal can be
mobilized as initial capital.
It calls for an audit of the coco levy funds and
assets in the wake of clashing estimates of their

present worth.
Mr. President:
I will not propose amendments to this bill.
With your indulgence, however, let me air my
observations about this measure, for your
consideration.
So that when the trust fund committee
convenes as a fund-dispensing machine, and
they will refer to the transcript of our debates, to
discover what the legislative intent was behind
the prose of the law, this will also serve as my
memo to them.
First, let us increase the transparency quotient
of this proposed law.
We can require that trust committee spending
and the status of the trust be reported out in
detail in the annual Budget of Expenditures and
Sources of Financing (BESF) for reportorial
purposes.

This is the same approach we are proposing for

tax incentives and the BESF is replete with
accounting of off-budget items.
To give us a true and gross picture of the
coconut industry-related expenses, perhaps we
should add, for recording purpose only, the
indicative level of trust fund spending for the
next fiscal year in the proposed budget, say, of
the DA using the same language in which
Malampaya fund spending and MVUC spending
are reckoned in the budgets of the DOE and
DPWH.
In the selection of the director of the trust fund
committee we should reiterate that he or she
must be able to hurdle Governance
Commission for GOCCs vetting and pass the
fit and proper rule required of officers who
manage a huge portfolio of public funds.
In the implementation of projects approved by
the trust fund committee, dont you think we
should reiterate that such comply with the

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Government Procurement Reform Act and

other government, budgeting, accounting and
auditing laws?
This must be specified in the trust fund charter
because at present, rules governing the
utilization of grants are nebulous and must be
recalibrated in the light of recently discovered
irregularities in the release of funds to nonpublic sector entities.
The trust committee functions as a quasi-super
appropriations body with the power to approve
projects worth half-a-billion pesos each.
I find the quorum requirements to be lax
considering that it is a body of nine persons, na
pwede mong isakay sa isang FX van. Pwede
silang mag-caucus sa loob ng L300.
Why not make the approval of any project,
regardless of the amount, be contingent on
getting the majority vote of all members and not
just of the members present?

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If the House appropriations committee with 150

members, or equal to the passenger manifest of
an Airbus 320, must get the assent of majority
of its members for the appropriation provision of
a local bill then the same requirement must be
imposed on the trust fund committee.
Napansin ko rin po na sa trust fund committee
walang fund manager or investment banker na
kasama.
If you want to nurse a fund into perpetuity then
get as one of the stewards one who has
the competence on how to achieve such
objective.
Releasing funds is easy, retaining the worth of
the fund is harder.
Speaking of the longevity of the fund, this bill
circumscribes that the principal can only be
invested in government securities and only the
yield can be disbursed.
Ang tanong ko po kung ang yield ng T-bills ay

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under 2 percent at meron kang annual inflation

rate na 4.6 percent, na syang average from
2005 to 2014, hindi po ba in the long run may
erosion of real value ang trust fund?
If in every year, 3 percent will be lost to
inflation, then in ten years, the value of the trust
will diminish by almost one-third.
If that will be the trend, then this fund will shrink
in one generations time. Isn't it that the
obligation to nurse the fund to perpetuity carries
with it the duty to ensure that it will not
evaporate over time?
Halimbawa, sa SLEX po ang guaranteed
returns dyan ay 18 percent per annum. Sa PPP
for school building, ang 800,000 mo, magiging
1.4 million in ten years.
Restrained po ba tayo in investing the trust in
safe instruments?
Ano po ang leeway na pwede nating ibigay sa
trust committee para naman kung may

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exigencies or contingencies in the future they

won't be handcuffed from directing funds to
activities enumerated in the negative list?
Can we put an emergency button on this bill
which the committee can press so they can
fund projects not contemplated under the bill in
the future?
Or should we put them in a straitjacket leaving
no wiggle room for them at all?
Sinasabi ko lang naman ito kasi one feature of
a good law is to embed provisions which can
give it reasonable flexibility which when
judiciously invoked prevents it from ending up
as a dead-letter law.
We are legislating not only for the present but
also for the future. Sadly we do not have
clairvoyant powers nor a crystal ball to divine
whats ahead, so what we can do is to arm
those who will implement it with some
reasonable degree of flexibility.

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We should not legislate out of fear, out of hurts

inflicted by the past. Let us write laws instead
motivated by the good that we and the future
can deliver. I also urge my colleagues to
consider a higher startup capital. The five
percent of the trust fund may be too little, too
late. If the coconut industry has so many
problems, then it needs a one-time stimulation
fund, and not the drip-drip of money this bill
ordains.
Starving a troubled industry of funds is not the
way to save it. It can only spend its way out of
the doldrums.
If the industry is in need of large investments, if
farmers need assistance in a large way, then
thrift in spending is not the answer.
Hopefully, my concerns will be answered by the
audit to be done.
For example, if other revenue streams from
productive assets will boost the available
working fund, then the initial capital this bill

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suggests to be taken from trust principal might

be enough.
Mr. President:
Half of the farmers who contributed to the
levies, or from whom these were exacted, are
probably dead by now.
This is the gift of the past generation to the
present, and the best way to honor what they
have bequeathed us is to use it judiciously, and
preserve it so the generation after us will benefit
from it as well.
One of the challenges is to make the fund
maintain its worth, and not, like copra,
dessicate over time.
Farmers have raged against the architects of
the levy. But figures do not lie: The fund grew
by an annual 8 percent during their watch. It is
a fund that doubled every 9 years, a rate no
bank would offer today.

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If we are better than them, then in conserving

this fund, we should use this as a benchmark
we must surpass.
Having said all of these, let me reiterate what
I've said that I will not propose any
amendments. It is enough that I've put on
record my thoughts on this bill.
The most important is that we pass it. Now.