CONFRONTING THE CHALLENGES OF THE PHILIPPINE COCONUT INDUSTRY:

A PERENNIAL CONTROVERSY OF THE LIFEBLOOD OF 3.4 MILLION COCONUT

FARMERS AND WORKERS IN THE PHILIPPINES
A Case Analysis

CASE READINGS

The Coco Levy Controversy

 
Admittedly the virtual source of resources needed to develop the coconut industry had been
locked in for a long period in the coconut levy controversy. More than two hundred civil and
criminal cases, with 72 different respondents, have been filed by government in lieu of the efforts to
recover the huge wealth from Eduardo Cojuangco, Jr. and his associates.
The huge sum now runs over a hundred billion pesos worth of assets and shares in
companies where the coco levies were invested. Not only are the companies important as a
potential source of huge funds for government but also because portions of the investments were in
coconut related firms that has a stronghold on the coconut industry. Understanding the coco levy
controversy, therefore, is an integral part of any analysis that is to be made regarding the coconut
industry. From 1973 - 1982, under the Marcos dictatorship, a coconut levy was imposed via
Presidential Decree 276 as amended. P.D. 276 states that, “a levy, initially, of P15 per 100
kilograms of copra resecada or its equivalent in other coconut products, shall be imposed on
every first sale,” effective August 20, 1973. This levy, called the Coconut Consumer
Stabilization Fund (CCSF), was initially intended to subsidize domestic consumption of
coconut-based commodities premised on a crisis brought about by an abnormally high price in
the world market for fats and oils.
However, through succeeding presidential decrees, the original purpose was soon
amended to cover “investments for coconut farmers” (Coconut Industry Investment Fund) and
“development of the industry” (Coconut Industry Development Fund). Later on the
investments were made to appear as “private” funds even though it was exacted from the
millions of coconut farmers.
 The CCSF levy which started at the rate of Php 15 ballooned to as large as Php 100 per
100 kilos of copra during the nine-year period, depending largely on its export price, or Php 60
on the average. Total collections without any receipts reached Php 9.695 billion. The CCSF is
the “bone to pick and casus belli” coconut levy fund drawn from the “blood, sweat and tears” of
the million and a half small coconut farmers through an elaborate series of Marcos laws, decrees
and orders reputedly inspired by the ACCRA Law Office of Edgardo Angara, Raul Roco,
Franklin Drilon, et al. The burden was shouldered by the small coconut farmers for the coco levy
was deducted from the usual price of the copra they sell in accordance with the levy rates.
This paper assesses the coconut industry by first surveying basic facts about the industry
– its contribution to the national economy, the composition of its export earnings, the decline in
coconut productivity coupled with coconut tree cutting and land conversion. The study observes
that although small coconut farmers and farm workers constitute 92% of the industry’s
workforce which supplies over 40% of the value of agricultural exports, they have remained
gravely marginalized. This is due to lack of control and ownership of land, imperfect competition
downstream in the supply chain, limited participation in policy and decision-making processes,
and foreign market control and disadvantageous international trade policies. The study discusses
government initiatives for industry and farmer development, the coco levy controversy and the
status of coco levy related cases. Finally, this industry assessment gives policy recommendations
for industry and farmer development and coco levy recovery.

EXECUTIVE SUMMARY

The state of the Philippine coconut industry is that of an enormous paradox – an irony of
incessant proportions. While the industry is a major contributor to the national economy,
government hardly appropriates enough for its development. Perennial problems had been left
ignored for decades, thus, pushing the industry from bad to worse. The continuous decline in
copra production, for example, had long been expected as the rate of senile and nutrient deficient
trees increase every year but hardly can the Philippine Coconut Authority attune its programs
with the meager budget it obtains.
Copra trading have proven to be a vast source of wealth for the industry’s stakeholders but
some 3.4 million small coconut farmers and farm workers live in dire poverty. Big companies and
individual dealers find copra trading to be very profitable but a coconut farmer with one hectare can
hardly cope with an average earning of Php 30 per day at a relatively decent price of Php 17 per
kilo at the farm gate. With barely two years left for the completion of the Comprehensive
Agrarian Reform Program (until 2008) coconut lands, comprising twenty- five percent of the
country’s total agricultural area, constitute the biggest balance (estimated 60%) of undistributed
lands by the Department of Agrarian Reform.
Coconut had always been the country’s top agricultural export. Eighty percent (80%) of the
country’s total copra production sees its way into the export market while twenty percent (20%) is
consumed locally. But coconut lands are not regarded as prime agricultural lands by the
Agricultural and Fisheries Modernization Act (AFMA) since these lands are usually not
irrigated.
The Coconut Preservation Act of 1995 was passed into law to abate indiscriminate cutting
of coconut trees as it might prove to be detrimental to the dollar-earning industry but the same had
been the source of rampant cutting in its implementation. Moreover, the Philippine Coconut
Authority estimates the ratio of replanting at 1:23, 1 seed nut planted for every 23 cut.
One hundred to a hundred and fifty coconut trees are normally planted to a hectare. The
actual space occupied by the trees covers only twenty percent (20%) of the land area but the
remaining eighty percent (80%) is seldom optimized by the farmers. Two-thirds of 3.2 million
hectares devoted to coconuts are monocropped.
Tons of research papers on the industry grow on desks of government and private
institutions. Various technologies for coconut processing have been made but only very few reach
the actual production areas. Until today the farmers burn the higher value coconut husks / shell to
dry the lower value output that is copra. In 1996 the Philippine Coconut Authority launched the
Small Coconut Farmers Development Program and distributed chemical fertilizers to the farmers
for free through the government-initiated Small Coconut Farmers Organizations (SCFOs). The
program, though, was a US$ 121 million loan from the World Bank. Most of the farmers did not
use the fertilizers for their coconuts but for some other purpose. Some reported sightings of
fertilizer bags in huge quantities ending up in warehouses. Coconut oil offers a great deal of
health, wellness and ecological qualities but the American Soybean Association lobbies rigidly to
brand it as saturated animal fat for obvious reasons of trade protectionism.
 The “Tree of Life” – in reference to its numerous uses – remains to be an insignificant label
as the country had largely limited itself to producing traditional products such as copra and coconut
oil. Stiff competition for lauric and vegetable oils in the international market has yet to affect the
industry’s dependence on traditional exports. Practically thriving on its own with very minimal
intervention from government, a levy was imposed on the first sale of copra to generate huge sums
of money that may be used to develop the industry and uplift the lives of the coconut farmers. But
under Martial Rule the coconut farmers found themselves beholden to a monopoly set up from their
own contributions by a handful of cronies. The coco levies ended up in the names of private persons
and entities.
The irony also comes with a positive tenor. Bleak as it appears the coconut industry is yet
facing a rebirth with recent events that should be beneficial enough to drive government and the
stakeholders to nourish the potentials of the once robust industry. The qualities of coconuts are
gaining fast recognition from both local and abroad. Last November 2005 Dr. Justino Arboleda’s
coconet (coconut geotextile) won the “First World Challenge Contest” sponsored by Newsweek
Magazine and the London-based British Broadcasting Corporation (BBC). The contest included
entrepreneurs worldwide whose projects are environmental friendly and helpful to communities.
The virgin coco oil is taking both local and foreign markets by storm for its health benefits
and the “clean air” biodiesel (a.k.a. coco methyl ester) emerged in the middle of a fuel crisis caused
by soaring global prices of petroleum products. The Executive Branch had already supported such
developments with favorable policies. Malacañang issued Memorandum Circular No. 25 directing
the Department of Public Works and Highways to use the coconet to prevent and control soil
erosion. The President had also issued Memorandum Circular No. 55 directing all departments,
bureaus and offices to incorporate the use of one percent (1%) by volume coconut methyl ester
in government’s diesel requirements. Cities of Marikina, Davao, Baguio and Makati had adopted
the use of coco-biodiesel. As for the virgin coco oil, quality standards have been set and the product
is now carried by no less than a multinational company.
The Sandiganbayan, in separate Partial Summary Judgments, ruled that 72.2% shares of the
United Coconut Planters Bank (UCPB), the Coconut Industry Investment Fund (CIIF) Oil Mills, the
fourteen (14) Holding Companies and the so-called CIIF-San Miguel Corporation (SMC) shares are
owned by government in trust for all the coconut farmers. This brings government closer than ever
to gaining a substantial amount from the sale of these assets – the CIIF-SMC shares alone carries a
market value of more than Php 50 billion. The Office of the Solicitor General had filed separate
Motions for Writ of Execution on the said cases and is currently awaiting Sandiganbayan’s ruling.
Pursuant to the Supreme Court decision of December 14, 2001 the government should be
able to mobilize these resources for the specific purpose for which it was collected – the
development of the industry and its farmers. The huge assets have been lurking under
sequestration for fifteen years before a clear-cut judgment was rendered. Since the time the coco
levy was collected (1973) coconut farmers had continuously plummeted to deeper poverty while the
assets and shares have grown tenfold. The combined coconut levy assets are now estimated to be
worth more than a hundred billion pesos (Php 100 B). Having the character of a public fund
government would have the opportunity to deliver justice and relieve the socio-economic conditions
of the lot of coconut farmers through meaningful programs. In order to guarantee good governance
of such huge funds it is imperative that structures and mechanisms of administration, management
and utilization ensure the participation of the coconut farmers, the contributors to the coco levies.
What then is to be done with it remains to be seen as a variety of political poles and
business interests, within and outside of the industry, can be expected to lock into an intense tug-
of-war to wrestle control over the huge funds. But what should ultimately serve as bases for the next
step is a serious look into the condition of the coconut industry and the millions of impoverished
farmers and farm workers as reaffirmed by the series of court decisions on the coconut levy cases.

STATEMENT OF THE PROBLEM

The coconut industry traces its roots to the 17th century. Since the Spanish Colonial period,
the industry had been a cheap source of oils for world trade. Under Spanish Colonial rule selected
villages were required to plant coconut trees, the purpose of which was to supply the galleon trade.
Then again under American rule coconut oil was stockpiled as a source of glycerine for the First
World War.
After the declaration of Philippine independence government intervention in the industry
was nowhere found until shortly before Martial rule and largely during Ferdinand Marcos’
dictatorship. Common to all these government interventions was the exploitation of the coconut
industry and its farmers. In fact, much of the events that transpired under Martial Rule had
influenced the state of the coconut industry. A coconut monopoly that exists until today was set
up with the use of taxes and levies. The following facts reflect a long-time state of the coconut
industry:
The coconut industry substantially contributes to the country’s yearly income. This is why
the industry is often referred to as a “dollar earner and export winner”. Up to the present, 80% of
raw materials coming from coconuts are exported and the remaining 20% are processed
domestically. Export earnings from coconut usually fall within the top-three or top- five dollar
earners.
Of the more than two million metric tons coconut production of the country, 91% is
processed into copra while the other 9% is used for desiccated coconut, coconut cream, nata de
coco, virgin coconut oil, and bukayo. Practically all copra is crushed and largely exported as crude
oil. Cochin oil, semi-refined oil and edible oil (RBD) compose but a small part of the exported
coconut oil. In the international market coconut oil competes with sixteen (16) other oils and fats
led by soybean, palm kernel oil, rapeseed, sunflower seed and cottonseed oil. Palm kernel oil
(PKO) is the closest competitor.
It is the unstable trend in production coupled with fluctuating world market prices that lead
others to view the industry as a sunset industry-- that which will eventually die down and cease
to bring income to those who depend on it. The Philippine Coconut Authority reports that coconut
production in 2004 reached 2.4 Million Metric Tons, an eight percent (8%) decline from the
previous year’s output. “Best farm yield” is pegged at 2.5 tons per hectare but the existing average
yield per hectare is at 0.8 ton.
If rehabilitation is not done at the soonest moment the industry’s end- users (mills and
processing units) will stand to lose drastically from its operations. It should be further noted that a
big part of the industrial segment is composed of companies established with the use of coconut
levy funds during the Marcos dictatorship. The CIIF Oil Mills (LegOil, Granex, CagOil, SPMC,
SOLCOM) is the biggest oil milling group in the country. Its combined copra crushing capacity is
40% of the country’s total copra production. Cocochem, the oleochemical plant in Batangas, was
also set up by the coco levy funds. Coco Lands are known to comprise almost a third of the
whole Philippine agricultural area at 3.2 million hectares. Coco lands are spread in more than 68
of the 79 provinces in the country.
 However, available statistics show that the country’s share for total world hectare for
coconut has gone down from 28.3% in 1988 to 25.5% in 1993. Indonesia, on the other hand, upped
its share from 24% in 1988 to 26.3% in 1993. Today Indonesia leads over the Philippines in
coconut production but applies an exact opposite marketing strategy, 20% export and 80% local use
– the only reason why the Philippines remains to be the lead exporter of coconuts. Massive coconut
tree cutting and land conversion have drastically reduced the coconut lands.
Generally copra goes through a long chain of traders before it reaches the oil mill. These
traders serve as the informal financiers of farmers in the rural areas. Traders offer cash advances to
the farmers for day-to- day needs in between the quarterly harvests in exchange for an assured
copra supply. Merely 26% of the real value of copra is offered at the farm gates by these traders.
More over, the usual practice of traders is to deduct Php1.50 per kilo copra on the given price .
Based on the previous facts, the coconut industry is beset by serious problems. These
problems are not new. They have been deliberated on since the last couple of decades.
Usually government and the business leaders view these problems in the following
manner:
Low Farm Productivity. The average farm production per hectare per year is only
less than one metric ton. Government claims that two to three metric tons per year per hectare
is possible through proper agricultural technology, hybridization and fertilization. The
following reasons were identified to contribute to low productivity:
Twenty-five percent (25%) of coconut bearing trees are senile or over sixty (60) years,
More than ninety-eight (98%) of total land planted is planted to talls which bear fruits after seven
(7) years and yield approximately one-half (1/2) that of hybrids, Absence of fertilizer application
especially in nutritionally deficient coconut land, Improper harvesting and post-harvest practices
resulting in poor copra quality, and, Inadequate intercropping in coconut lands (less than 40% of
coconut farmers practice intercropping).
Low Farmgate Price. Past administrations (prior to 1992) cite the fluctuating world
market prices as the main culprit for low farm gate prices. It was only recently that the problem
was viewed as the result
of the many layers of middlemen, expensive transport and handling cost and cartelized pricing
from coconut processors / exporters.
 Low Utilization Value of the Coconut. Oil, by far, is the only product of value
from the coconut. Most parts are considered wastes with the exception of the shell that is used
as fuel in the process of drying coconut meat for copra production.
Lack of Infrastructure Support. There is need for some building facilities, feeder
roads and irrigation support to coconut farmers. Funds are needed for these.
Lack of Research and Development.  Basically due to a lack in funds, aggressive
research and development has stayed in the backseat. The bulk of the coconut products are
exported in practically raw form as crude coconut oil, copra meal, copra, desiccated coconut
and young coconuts.
Lack of Funds. For decades government has allocated limited funds to develop the
coconut industry due to lack of financial resources and the ever-growing domestic budget
deficit. The same reason prompted
the collection of coconut levies during the Marcos Dictatorship. The huge collection from the
coconut levies, however, benefited only the few privileged individuals close to the dictator.
Until today, the coco levies are subject to various cases filed in the Supreme Court and the
Sandiganbayan. Coconut-related corporations established with the use of the levies were put under
sequestration after the fall of the dictatorship. As of today certain coco levy related cases have been
decided on by the Courts.
Poverty of the coconut farmers. About 90% of coconut farmers and farm workers live
below poverty line -- such a huge irony considering the industry’s contribution to the country’s
economy. Both government and industry leaders have centered on low productivity as
the main barrier to the industry’s development. Low productivity is tantamount to low income.
Standard solutions, therefore, are being applied such as fertilization, replanting programs and
reproduction of hybrid varieties to achieve greater yield – the greater copra yield, the higher
income for the country.
In line with this the Philippine Coconut Authority had undertaken the Small Coconut
Farmers Development Program (SCFDP) in 1996, a fertilization project funded by the World Bank
with US $121.8 million. The project terminated just recently. PCA reports show that the use of
chemical fertilizers do increase coconut yield after constant application in a certain period of years.
To the millions of small coconut farmers and farm workers there are more serious
problems that plague the industry and cause misery to their lives.
 Land Problems. The basic lack of control and ownership of the land bring about their
continuing poverty. Low productivity and income may be seen to emanate from this structural
problem as well. Tied up with an onerous sharing of the fruits of the land and their labor, small
coconut farmers hardly find an incentive to develop the land they till. Any extra income generated
will be hardly be theirs anyway. Despite the inclusion of coconut lands in the Comprehensive
Agrarian Reform Law (RA 6657) in 1988, a great majority of the 3.4 million small coconut farmers
and farm workers do not have control or ownership of the land they till. RA 6657 also mandates
the abolition of agricultural share tenancy in coconut lands. The agricultural leasehold should be
applied instead. The leasehold system allows the tenant / tiller to pay the landowner a fixed rent at a
ratio of 75:25 in favor of the farmer. This had been hardly implemented as well for various
reasons.
Limited Participation in Policy and Decision-making Processes. Considering the
massive number of small coconut farmers and farm workers, participation and representation
in coconut-related agencies is very limited. During the Marcos Regime, the Coconut Producers
Federation (COCOFED) was the only government-recognized national organization of coconut
farmers. This “farmer” organization though was led and controlled solely by big landlords and
businesspeople. COCOFED was made a regular member of the board of PCA. And so with all the
other coco-related institutions. COCOFED officials formed part of the interlocking directorate that
monopolized the industry and figured in the huge coco levy controversy.
Under the Aquino Administration the PCA organized the National Federation of Small
Coconut Farmers Organizations (NFSCFO). The federation became the conduit for the distribution
of free chemical fertilizers from the WB-funded Project. During that time, PCA related only to
farmer-members of the NFSCFO. Other legitimate farmers were ostracized by PCA officials.
Foreign market control and disadvantageous international trade policies.
Foreign market control is established by stipulations (copra: sanitary and phytosanitary
measures, CNO: transport/storage) set by other countries to protect their own produce from
potential competition or to simply be able to have command of price rates. It may also be
manifested by the anti-tropical oils campaigns to discredit competition e.g. American Soybean
Association smear campaign on coconut oil.
The removal of tariff barriers (Asean Free Trade Area) may disadvantage coconut oil in the
local market since it is more expensive than palm oil. Moreover, the existing internal problems of
the industry will render the country less competitive with that of other lauric oil producers. The
GATT-WTO is as well expected to further burden the industry on a domestic scale. In July 1987,
President Aquino issued EO 259 requiring the progressive use of cocochemicals as components
of soaps, shampoos and detergents in order to increase local demand for coconut oil. GATT-WTO
had rendered this issuance useless to allow free entry of other lauric oils into the domestic
market.
Worse, there are apprehensions that patents to certain coconut processing technologies
developed here in the country have been applied for by foreigners. Thus when the principle of
Intellectual Property Rights is applied, the country cannot benefit as much as it can from the
technologies we, ourselves, have developed from our very own resources.

CAUSES OF PROBLEM

Top Level Commitment

The top level commitment on this industry is not seen due to the absence of a sustained
roadmap which is manifested in continuous changes in Philippine Coconut Authority (PCA)
management, and negligible funds budgeted for development. The constant change of leadership
affects the continuity of the program of PCA, in which a lack of political resolve by past
administration has led to a lack of serious development program.

Financing Development

Serious shortage of long term financing for permanent crops remains a significant
limitation on development, and on crop diversification.

Resource Allocation Criteria

Coconut plantations host the largest expanse of idle and underutilized lands today. The
potential for investment and job creation are high. But rice receives by far more budget
allocation than coconut on per ha or per farmer basis. There must be resolve in letting market
forces decide on what to plant and where to plant in the context of replanting, conversion or
intercropping. Intercropping in which farmers plant different variety of fruits and vegetables
aside from coconut to have an extra income and to sustain their daily needs.

Institutional

The Philippine Coconut Authority has been given permission to grant leadership in the
development of the industry. But , n the past year the growth of the industry is too much delayed
due to low level of investments, so the is under-funded in which it only funded short duration of
programs that has been unable to generate sustainable impact on the development.

Implementation

Some sectors felt that program implementation in the industry could benefit by engaging
the stakeholders –the local government unit (LGU) , the private sector, the civil society, and the
academe. With respect to LGU participation or cost sharing, there appears to be limited
involvement in replanting and rehabilitation. LGUs prefer investments in infrastructure and
buildings as well as short gestation projects. Moreover, fourth to sixth class LGUs with low
incomes have little resources for agriculture development.

Engaging Civil Society

Majority of the civil society organizations (i.e., NGOs, POs, producer groups, etc)
appreciate the need to use the levy funds to address the declining farm productivity. They
suggested in a workshop in Mindanao not only to focus on replanting and production issues, but,
more importantly, examine the whole gamut of problems besetting the sector such as the slow
implementation of agrarian reform, the potential of downstream and upstream activities, the need
to dismantle the existing monopolies in the sector, and the abject poverty that is prevalent among
the coconut-dependent households
Global Market Access

The campaign of overseas soybean interests has hurt the coconut oil (CNO) in the US
food usage. Labeling requirements of trans-fatty acids in consumer products and wrong
attribution of the negative impact on all saturated fats, including medium chain triglycerides
from coconut oil, have affected the industry. These non-tariff barriers will not abate as lowering
of tariff barriers makes many countries impose technical barriers to trade.

Laws

The “low intensity” approach to solving the problems of the coconut industry meant lost
opportunities in the areas of poverty alleviation, global competitiveness and sustainable
development in the last two decades. 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.
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.

Poverty Alleviation and Social Equity

Based on Human Development Report, regions with excessively coconut areas tend to
have a high poverty incidence. As there had been little changes in coconut farm productivity
through yield and/or intercrops, success in poverty reduction appears limited, except in areas
where there are alternative employment opportunities like Davao City and Laguna. The slow
growth in production has affected raw material supply to agri-based industries such as coconut
oil milling and activated carbon. In turn, this affected investments and job creation.

Global Competitiveness
 Global competitiveness is defined as the ability of a product to sustainably compete with
exports in the global market or with imports in the local market. As most coconut products, are
exported, the premier measure is cost competitiveness. A sound strategy for competitiveness is
coconut-based farming system comprising two elements: replanting with good clones; and
market-based intercropping with other crops and/or livestock. Marginal lands with senile trees, if
not suitable for intercrops because of distance from market and other constraints must be shifted
to other use such as timber or fruit trees.

ALTERNATIVE SOLUTIONS

- Formulation of industry roadmap consistent with the Agriculture and Fisheries

Modernization Act (AFMA) and Medium Term Development Plan (MTDP) goals which
will cover replanting, fertilization and intercropping targets subject to market and
economic returns.
- Allocate Financial Management Association (FMA) budget for coconut roadmap without
waiting for the coconut levy resolution.
- Install a continuous quality improvement program for copra, products and byproducts.
- Strengthen the Philippine Coconut Association as a major implementation agency.
- Engage in Civil society organizations such as NGOs, Pos, producer group, etc. in
roadmap development implementation, and monitoring. The coconut industry is a study
in contrasts. The coconut farmers form among the largest stakeholders in Philippine
agriculture but are among the most impoverished.
- Land diversification potential is among the highest but derives among the least support
from the government. If the Government desires high growth in agriculture and job
creation in the medium-term, it has to look at the coconut lands as a major vehicle.
- Planting and replanting program. The industry has to expand the planting and replanting
program to increase production to supply a stable and growing market. This must be done
in strategic areas identified as having the most potential for growth.
- Establish standards and enhance marketing given the prospects of value added products,
it is imperative that national standards be established which are acceptable in the
 international markets. Corollary to attaining this is the creation of village level processing
plants as close to the market to arrest quality deterioration.
- Expand production through the use of coconut oil for biodiesel will need a few thousand
hectares given a 1% blend of biodiesel and petroleum diesel. To avoid compounding the
already poor supply reliability in the export market, there must be expansion of
production.

RECOMMENDED SOLUTION, IMPLEMENTATION AND JUSTIFICATION

On Farmer And Industry Development

Development efforts will have to commence with the basic planting, replanting and
rehabilitation of the coconut farms starting with the 750,000 hectares planted to senile trees.
Community-managed coconut nurseries may be set up for this purpose. Involvement of the
coconut farmers and their communities will have far better reach than any government
bureaucracy.A fertilization program needs to be undertaken to address the 490,000 hectares of
nutrient deficient trees. This program can utilize already available cocopeat-based organic fertilizer
formulas. Production of the organic fertilizer may also be community-based.
While most coconut farmers rely solely on copra production technologies for semi-
processing and processing value added products and by-products need to be brought to the farms –
preferably in an integrated approach (similar to the CIIF Coco Farm Development Program) to
optimize various parts of the coconut (husk, shell, water). Copra for oil processing, on the other
hand, can still be delivered to the CIIF Oil Mills in order to maximize its capacity. Production of
specialized uses of coconuts need to be pushed and promoted such as virgin coconut oil (VCO),
geotextiles and coco methyl ester (CME). Again the coconut communities can very well fit into the
production cycle. Quality standards need to be implemented fully in order to avoid repetition of the
“nata de coco experience”.
The Philippine Coconut Authority, for this purpose, should concentrate on improving hybrid
qualities of coconuts and in sustaining copra yield of the farms. Information and technology
dissemination can be done through coconut farmer cooperatives and associations – without
exclusivity to the SCFOs. Farm diversification must be a major thrust to make more productive the
2.1 million monocropped coconut lands and offer added opportunities to the impoverished coconut
farmers. Technologies for farm diversification and intercropping on coconut lands can be
initiated by the Department of Agriculture.
Coverage of the coconut lands by the Comprehensive Agrarian Reform Program need to be
fast-tracked. Considering that barely two years is left for the program, the Department of
Agrarian Reform can prioritize leasehold implementation in coconut lands as the existing prevalent
relation is still that of share tenancy.
Product research and development for coconuts should be undertaken by the Department of
Trade and Industry in order to improve quantity and quality of the various coconut products and by-
products for export and local use. Until today the country has to export fresh coconut juice in its
original package – the whole nut itself.
The UCPB-CIIF Group of Companies (apart from the efforts of the Oil Mills) can be
mobilized to extend various services to the small coconut farmers. UCPB Savings and Rural Bank
can design products to provide agricultural credit facilities. Design a Quedan- style processing for
the coconut farmers where the Oil Mills, after copra crushing services, delivers to Cocochem for
further processing to oleochemicals, thus obtaining higher value for the farmers’ produce than just
merely buying copra.

On Coco Levy Recovery

While actual recovery of the multi-billion coco levy funds and assets is still at bay –
participation of the small coconut farmers in deciding the future of the coconut industry must be
pushed and institutionalized at all levels. Serious effor ts must be made in studying current and
future roles of the UCPB – CIIF Group of Companies for the farmers and the industry. Those
that do not have any bearing at all should be liquefied / privatized instead so that proceeds may
be utilized for coconut farmers
and industry programs. Those that have direct bearing should be developed for the same cause.
Government should exhaust its efforts in obtaining the Writ of Execution from the
Sandiganbayan on the case of the CIIF-SMC shares. The Writ shall enable government to liquefy
the said shares and gain a substantial amount of, at the least, Php 50 billion in liquid cash that it
should use for programs to develop the industry and its farmers.
 Prior to liquefication of any recovered coco levy asset, it is important to determine structures
and mechanisms that shall ensure the delivery of meaningful programs for the farmers and the
industry. To be truly meaningful the structure should ensure the participation of the small
coconut farmers from the nation al to th e Barangay levels.

Philippine Coconut Industry is one of the major sources of foreign exchange and
the Philippines top export earners.  It is among the top ten export produce of the country as
exhibited by the good export performance of both traditional and non-traditional coconut
products. In this case, many products can be made using coconut shell, husk and copra meal. It
can have a lot of value adding products like desiccated coconut milk & powder, buko juice,
virgin coconut oil, delicacies, biodiesel, etc. About one third of the country’s arable agricultural
land or 3.26 million hectares is planted to coconut representing sixty four out of total seventy
nine provinces, and 1,195 out of the 1,554 municipalities in the country. It provides a sustainable
income source for Filipinos by way of employment generation through its many programs. But
there’s a lot of problem facing this coconut industry that the government or the private sectors
should change and have a sustainable development by implementing such policies that will
trigger the increasing of problems with this industry.

REFERENCES:
Agustin, Y., (2005) “A Brief on RP Coconut Industry”, United Coconut
Associations of the Philippines
Philippine National Standards, PNS/BAFPS 22:2004 / Amendment 1:2005
Presidential Decree No. 755 (issued 1975), ordering the acquisition of a bank for
and in behalf of the coconut farmers reflects the intent “to solve the perennial credit
problems of the coconut farmers.”

Faustino, Joey, “Hurdling the Leap Towards Recovery of the Multi-Billion Coco
Levy Funds” (Decem ber 2004)

The 12 Year Cocofund War, VOX POPULI, V4N3-98

Presidential Executive Order No. 828

Chavez, Francisco I., “How Coco Levy Funds were Used in the Acquisition of SMC
Shares”

Rosales, Angie M.,”‘Secret’ deals slammed”, Philippine Post, July 20, 1999

Coco-Dile File (1992)

Policy Update, Volume 4 No. 9 & 10 (September – October 1996)

Domingo, Ronnel W., “US allows duty-free imports of coco products”, Philippine
Daily Inquirer / Business Section, July 14, 2005

Ho, Abigail L., “For RP, CME use means P23B/year in savings”, Philippine Daily
Inquirer / Business Section, October 14, 2005

Domingo, Ronnel W., “RP-China countertrade deal boosts coco exports”. Philippine
Daily Inquirer / Business Section, June 16, 2005

Talavera, C. (2019)., “CFITF to revitalize coco industry”. PhilStar Global.

Retrieved from http://www.philstar-com.cdn.amproject.org

Ramirez, Allan, “The Cooperatives on Direct Copra Marketing and Micro-finance

of the UCPB-CIIF”, Coconut Industry Reform Movement, Inc. (2005)

Faustino, Joey , “One Year of Farmer-Directors in the UCPB-CIIF Grou p” (May

2003) 5 Supreme Court, Cocofed et al. vs. PCGG et al. [GR No. 75713, October 2,
1989, 178 SCRA 236] 6 “P700-M coconut levy ready to benefit farmers – Arroyo”,
Manila Bulletin, July 3, 2002

Gov’t scored for inadequate assistance to coco farmers, BusinessWorld, July 16,
2002

PCA: http://pca.da.gov.ph/
UCAP: www.ucap.org.ph