In Search of Alternative Coconut Development for Communties

7/22/2019 In Search of Alternative Coconut Development for Communties

1/50

P a g e

1

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.


2/50

P a g e

2

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!


3/50

P a g e

3

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


4/50

P a g e

4

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.


5/50

P a g e

5

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.


6/50

P a g e

6

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


7/50

P a g e

7

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).


8/50

P a g e

8

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.


9/50

P a g e

9

(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


10/50

P a g e

10

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).


11/50

P a g e

11

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)


12/50

P a g e

12

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


13/50

P a g e

13

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.


14/50

P a g e

14

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


15/50

P a g e

15

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.


16/50

P a g e

16

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-


17/50

P a g e

17

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


18/50

P a g e

18

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.


19/50

P a g e

19

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.


20/50

P a g e

20

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


21/50

P a g e

21

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.


22/50

P a g e

22

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


23/50

P a g e

23

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


24/50

P a g e

24

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.


25/50

P a g e

25

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.


26/50

P a g e

26

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


27/50

P a g e

27

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).


28/50

P a g e

28

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


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,


29/50

P a g e

29

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.


30/50

P a g e

30

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


31/50

P a g e

31

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.


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


32/50

P a g e

32

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.


33/50

P a g e

33

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)


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.


34/50

P a g e

34

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-


35/50

P a g e

35

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.


36/50

P a g e

36

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.


37/50

P a g e

37

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


38/50

P a g e

38

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


39/50

P a g e

39

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:


40/50

P a g e

40

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


41/50

P a g e

41

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


42/50

P a g e

42

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


43/50

P a g e

43

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:


44/50

P a g e

44

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


45/50

P a g e

45

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


46/50

P a g e

46

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


47/50

P a g e

47

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


48/50

P a g e

48

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


49/50

P a g e

49

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

In Search of Alternative Coconut Development for Communties

Documents

Transcript of In Search of Alternative Coconut Development for Communties