COCONUT industry leaders have raised concerns over the draft implementing rules and regulations (IRR) of the Coconut Farmers and Industry Trust Fund (CFITF), including the “opaque” disposition of noncash assets and the budget for trust fund management expenses.
In a position paper, three coconut farmers groups outlined the issues they see arising from the current draft of the IRR of Republic Act 11524 or the CFITF, which utilizes the P100-billion coconut levy fund and its assets.
The position paper was signed by Kilus Magniniyog Convenor Ireneo Cerilla, Confederation of Coconut Farmers Organizations of the Philippines Executive Director Charles R. Avila and Federation of Free Farmers Chairman Leonardo Q. Montemayor.
First, the groups want to know who will be the approving authority of the rules to be proposed by the Trust Fund Management Committee (TFMC) regarding the management of the consolidated coconut levy collections.
The current IRR is currently “silent” on approving authority, leaving the TFMC—comprising three executive agencies—“bent on approving their own draft through a joint memorandum-circular,” the three groups said.
The TFMC is composed of the Department of Finance (DOF), Department of Budget and Management (DBM) and the Department of Justice (DOJ).
The groups also questioned the “limited time” provided by the DOF for the submission of stakeholders’ comments as well as the “undue haste in issuing the IRR.”
“The Supreme Court has ruled that the Trust Fund is a ‘public fund held in trust by the government for the exclusive benefit of the coconut farmers and the industry,’” they said.
“For desperately poor producers, will genuine public hearings and consultations on the Fund’s implementing rules be undertaken? How will the Executive satisfy the demand for public transparency and protecting the interests of the Fund’s beneficial owners—the country’s 3.5 million coconut farmers and farm workers?” they added.
The called “opaque” the disposition of non-cash assets which involve the United Coconut Planters Bank and the Coconut Industry Investment Fund (CIIF) oil mills.
“RA 11524 provides only for proceeds from privatization of coconut levy assets within five years to flow back to the Trust Fund. It does not specify how these assets may be used in their current state to better serve the coconut farmers and industry,” they said.
“The fates of UCPB and the CIIF Oil Mills are definitely of great concern to the coconut sector. The Presidential Commission on Good Government [PCGG] reports the total worth of shares in these companies at P30-P40 billion,” they added.
In relation to this, the group noted that disputed coconut levy assets (cash and non-cash) are not subject to reconveyance under RA 11524.
“The purpose, therefore, of including them in the IRR [Rule IV, Section 2], should be explained. How will the IRR uphold coconut farmers’ interests in negotiations related to these disputed assets?” they said.
“With DOF’s primary mandate being revenue generation, how will appraisal of asset dispositions be handled when its revenue maximization objective may not jibe with the interests of coconut farmers or the principal government agency mandated to serve the needs of farmers and coco-based industries?” the groups added.
The groups also raised issues on the budget mandated by law for the trust fund management expenses.
They noted that the fund management fee, set at 0.5 percent of the trust fund principal and is estimated to reach hundreds of millions, “may be excessive.”
“Ordinarily, fund managers are rated in terms of projected returns earned by the fund. Fund management fee has to be a reasonable portion of the fund earnings,” they said.
“The management fee must be treated therefore not as a fixed amount but as the ceiling for expenditures, which should be matched against the level of earnings generated by a fund manager,” they explained.
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