The Philippine Coconut Industry
by
EXECUTIVE SUMMARY
This paper seeks to address three
objectives: identify and discuss the major problems and issues affecting the
current programs in the sector; discuss the effects of government policies and
programs (DA and LGU) on the sector and how these policies and programs helped
the sector go closer or farther away from the major goals in the AFMA of
poverty alleviation, sustainable agriculture,and global competitiveness; and
suggest concrete policy recommendations that will ensure government programs to
be more attuned to AFMA goals.
The coconut industry comprises the
largest farm area (3.3 M ha and 1.4 M farms)in Philippine agriculture. It hosts
some 3.4 M farmers and workers (Faustino,2006). Coconut products generate the
largest agri-food export. The industry has performed dismally over the years
due to several reasons, foremost of which are:the lack of top level resolve,
inequitable resource allocation, and implementation constraints. As a result,
low productivity prevails and, in turn, high poverty and insurgency.
Problems and Issues
Confronting the Current Programs
There are several issues that
confront the coconut industry. These include: the lack of top level commitment
which has led to a lack of a serious development program for the industry; the
severe shortage of long-term financing for perennial crops; resource allocation
criteria, which is biased toward rice; institutional issues with the PCA
implementing mostly under-funded, short duration programs and implementation
problems with limited involvement, if at all, of LGUs, the private sector, the
civil society, and the academe; lack of civil society engagement especially in
analyzing the whole gamut of problems besetting the sector; global market
access such as the campaign of overseas soybean interests against CNO in the US
food usage as well as labeling and wrong attribution of the negative impact on
all saturated fats, including medium chain triglycerides from coconut oil; and
CARP and other laws which have discouraged private investments following
provisions on retention limits as well as transferability.
Government Policies and Programs and
their Effects on the Sector and AFMA Goals
Government policies are generally
biased against tree crops in general, and coconut in particular. First, public
sector investments have focused on irrigated rice due to the decades-old drive
for rice self-sufficiency. Second, slow implementation of CARP has contributed
to investor uncertainties, and militated against investment in long-gestating
tree crops. Third, limited grace period for tree crops and the high real
interest rates resulting partly from Government macro policies had made
investment in long gestating crops unattractive (World Bank, 1999).Further, the
age old reliance on the “recovery” of the coco levy fund as a means to develop
the industry has also boomeranged. Little funds were allocated by the
Government to coconut replanting since 1986.Moreover, the AFMA funding
constraint is severely exacerbated in the case of coconut where support is
miniscule relative to the needs.
Meanwhile, programs implemented
included the World Bank-supported Coconut Farms Development Project (CFDP),
DAR’s agrarian reform communities(ARCs) program, and the GMA Coconut program
which took off from the Maunlad na Niyugan Tugon sa Kahirapan Program, and the
development of two million ha of agribusiness lands in order to create two
million jobs under the MTPDP where 1.35 million ha will be in coconut lands.
The focus has mainl ybeen on increasing the productivity and income of farmers
through replanting,fertilization and rehabilitation, as well as implementation
of coconut-based arming systems.
Overall, however, the policies and
programs of the coconut industry were characterized by lack of sustained
directions and funding.The “low intensity” approach to solving the problems of
the coconut industry meant lost opportunities in the last two decades
especially in the areas of poverty alleviation, global competitiveness,
sustainable development, rational use of resources, and people empowerment. It is
a sad commentary of what development management is not. Coconut provinces
continue to be equated with high poverty and, in many cases, insurgency. Vast
areas of lands generate low returns. The coconut industry is not globally
competitive due to failure to put in place competitive strategies and actions.
Agriculture is under threat as many coconut regions are unable to provide good
incomes. In the process, out-migration becomes the option for the rural poor.
Intercropping for
Coconuts
The Philippine Coconut Authority
released a paper regarding intercropping as early as 1999. It was written by
Dr. Severino S. Magat, Scientist IV of the Agricultural Research and Management
Department, Philippine Coconut Authority. The proposed intercropping and
primary product diversification is called Enhancement of Economic Benefits from
Selected Coconut based Farming Systems (CBFS) Practices and Technologies.
The main crops for intercropping are
the following:
1. Corn (Maize)
Under the coconut + corn cropping,
with the achievable yield of coconut of 2 tons copra (8,000nuts/ha) and 5 tons
of corn grains (2 croppings/yr), the annual total investment of PHP22,050
(US$452.7) could generate a net income of about PHP42,950 (US$881.9), and a
benefit-cost ratio (BCR) of 2:1
2. Banana (Saging na Saba variety)
a 5-year cropping period, the
average annual direct investment cost of PHP18,000 per ha
generates a total net income of
PHP434,000 (US$8911.7)/ha. The BCR increases from year 1 to 5, meaning: at year
1 = 1; year 2 = 4.0; year 3 = 5.7; year 5 = 7.1
3. Coconut Multi-storey cropping
(Coconut, papaya, pineapple and peanut)
For a 3-year cropping cycle of this
multi-storey CB FS with papaya, pineapple and peanut as component intercrops,
covering a total of 2.5 ha effective land cropping area (coconut = 1.0 ha,
papaya = 0.50 ha, pineapple = 0.50 ha and peanut = 0.50 ha), with an investment
of about PHP63,838 (US$1310.8) per ha of coconut land, it generates an annual
estimated total net income ofPHP132,409 (US$2,719) per ha Under the production
costs and commodity prices used, an average BCR of 3.43 is achievable.
4. Rootcrops
Among the root crops recommended
under CBFS are: cassava, gabi (taro), ubi (yam) sweet
potato and ginger under acceptable
ages of 1 - 6 years and 26 – 60 years-old trees. These intercrops can be
intercropped in spaces under the inter-rows of coconut (8 – 10 m, square and
triangular planting arrangements) as well. Spacing followed a re: 1) cassava –
0.75 – 1.0 m (rows) and 0.50 – 0.75 m (hills); 2) sweet potato – 0.75 – 1.0m
(rows) and 0.25 – 0.50 m (hills)
Based on a hectare basis with a land use intensity of 1.75
ha (1 ha coconut, 0.40 ha cassava and 0.35 ha sweet potato, a total annual net
income of PHP31,198 (US$640.6) is generated for this CBFS
5. Coffee
Using coffee excelsa variety grown under coconut (spaced 9 –
10 m square), at full-bearing stage (5 – 6 years), net income from coffee trees
(2 tons bean yield/ha per year) is PHP80,566 (US$1,654) or a total net income
(coconut and coffee) of: PHP 103,805 (US$2,131).
Coconut Levy
Status
In 1973 the Philippine Coconut Authority was empowered to
collect a levy from coconut millers for the benefit of the coconut farmers. In
1974, the COCOFED took control of the PCA governing board. In 1975, the PCA
acquired control of a bank and renamed it the United Coconut Planters Bank
(UCPB) to service the needs of the coconut farmers. Levies collected by the PCA
were deposited into the bank initially interest free. The President of the Bank
was Eduardo Danding Cojuangco and Juan Ponce Enrile as the Chairman.[1]
In 1983, due to a power struggle in the management of San
Miguel Corporation, Enrique Zobel sold 19.5% of his San Miguel shares to
Eduardo “Danding”Cojuangco who use the Coco Levy funds of UCPB to buy them and
effectively took control of SMC. When Andres Soriano II passed away in 1984,
Eduardo “Danding” Cojuangco took the chairmanship of SMC. This was cut short in
1986 by the EDSA Revolution where the government sequestered the shares of UCPB
in SMC.
From the time the coconut levy was
imposed up to 1982, total collections reached P9.7 billion. The money was
sequestered by the PCGG in 1986 in response to protests from NGOs and POs on
the unconstitutionality of the private character of the funds. They cited two
grounds namely: (a) only the government has the sole authority to impose a tax
and (b) the levy collected cannot be sued for private purposes. The COCOFED, on
the other hand, counter filed, a case before the Supreme Court questioning the
sequestration move by the PCGG. They claimed that the coconut is private
property with the coconut farmers as owners. Until now, the issue has not been
resolved and the funds are still sequestered and frozen.The controversy
regarding the coconut levy actually resolves around two major issues – fund
character and ownership. The levy was originally intended as public fund to be
used for financing the capital requirements of the coconut industry. However,
through “legal and political maneuverings,” the fund became private in nature.
While then President Ramos issued executive Order No. 277 declaring the funds
as “affected with public interest,” the EO did not categorically state that the
fund is public. The Supreme Court later declared that the levy funds belong to
the government.In a landmark decision rendered recently (2004?), the Sandigan
Bayan upheld two important decisions of the Supreme Court declaring the levy
funds as belonging to thegovernment (Romero, 2005).Recent events indicate
willingness by various parties for compromise in order to finally resolve the
issue and unblock the funds which from various estimates are valued at Php 50
toP100 billion for the San Miguel shares and other CIIF assets. A farmer leader
indicated (June 2006) that there is need to resolve the 8 Civil Cases (No.
0033-A to H) at the Sandigan Bayan to finally unblock the levy funds.
In 2012, the Supreme Court ruled
that 27% off SMC belonged to the coconut farmers. [2]
*The ruling is still
appealable.
