Duterte signs law creating trust fund for coconut farmers

Published February 26, 2021, 10:19 PM

by Genalyn Kabiling

A measure creating the coconut farmers and industry trust fund has been signed into law by President Duterte.

(MB FILE, Keith Bacongco)

Under Republic Act No. 11524, the government will dispose of P75-billion worth of coco levy assets in the next five years to establish a trust fund for the benefit of the coconut farmers and development of the industry. The new law, also known as the “Coconut Farmers and Industry Trust Fund Act,”  is expected to benefit coconut farmers who own not more than five hectares of coconut farm.

The coconut levy funds refer to the funds generated from the taxes imposed on coconut products and collected from coconut farmers, millers, refiners, exporters, and other end-users decades ago.

The new law mandates the Bureau of Treasury (BTr) to transfer P10 billion to the trust fund in the first year, P10 billion in the second year, P15 billion in the third year, P15 billion in the fourth year and P25 billion in the fifth year. 

The trust fund will be maintained for 50 years under the Coconut Farmers and Industry Development Plan that will also be formulated.

“All Coconut Levy Assets in the name of the Philippine Government shall be sold within the period of five years after the effectivity of this Act,” the law read.

“All other coconut levy assets that may hereafter be recovered shall likewise be disposed of within five years from the time it is declared as belonging to the government, and the proceeds shall be transferred to the Trust Fund for the benefit of the coconut farmers,” it added.

The trust fund will be used on the following:

– Development of hybrid coconut seed farms and nursery for planting and replanting (20 percent);  

– Training of farmers and their families listed in the coconuts farmers registry on coconut production and processing technologies, sustainable farming methods, financial literacy, among others (8 percent);

– Research, marking, and promotion to be implemented by the Bureau of Micro, Small and Medium Enterprise Development (5 percent);

– Crop Insurance (4 percent);

– Farm improvements through diversification and intercropping with livestock, dairy, poultry, coffee, cacao production (10 percent);

– Shared facilities for processing (10 percent);

– Organizing and empowerment of coconut farmer organization and their cooperatives (5 percent);

– Credit programs through Development Bank of the Philippines and Land Bank of the Philippines (10 percent);

– Infrastructure development in identified coconut producing local government units (10 percent);

-Scholarship program for farmers and their families (8 percent); and,

-Health and medical program for farmers and their families (10 percent)

A committee, composed of the Department of Finance, Department of Budget and Management, and the Department of Justice, will also be created to set the investment strategy of the trust fund. The finance department is designated as trust fund manager.

“All cash Coconut Levy Assets shall be invested in Philippine Government securities and other securities guaranteed by the National Government. On the other hand, the BTr may hold, manage and invest non-cash Coconut Levy Assets, only upon approval of the DOF,” the law read.

Under RA, the Coconut Farmers and Industry Development Plan will also be prepared by the reconstituted Philippine Coconut Authority to increase productivity and income of farmers as well as rehabilitate and modernize the industry. The plan is subject to the approval of the President.

The development must include a national program for community-based enterprises to boost incomes of coconut farmers, social protection for  farm workers and their families, coconut farmers organization and development, innovative research projects, and integrated processing of coconut and downstream products.

Under the new law, the PCA will be reconstituted and strengthened to ensure participation of coconut farmers in crafting the Coconut Industry Development Plan. A coconut farmers registry will also be established with annual verification in coordination with local government units and the agriculture department.

The Secretary of the Department of Agriculture will sit as chairman of the PCA board while the Secretary of the Department of Finance serves as vice chair.

The board also includes the Secretaries of the Department of Budget and Management, Department of Science and Technology, and Department of Trade and Industry; administrator of the authority, and three members from the coconut farmers sector representing Luzon, Visayas and Mindanao. 

In 2019, President Duterte vetoed a measure creating the coconut farmers trust fund due to concerns about possible violation of the Constitution as well as lack of safeguards “to avoid the repetition of painful mistakes committed in the past.” Duterte claimed then that the proposed trust fund could “disproportionately benefit wealthy coconut farm owners” due to the absence of a limit on the covered land area for entitlement of benefits.